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Tuesday, 21 September 2010

Is Google a Monopolist? A Debate

by Amit Singhal and Charles Rule

Amit Singhal of Google argues the competition is one click away. Charles Rule, an attorney whose firm represents corporations suing Google, counters that the company commands a share of search advertising in excess of 70%—the threshold for monopoly under the Sherman Act.

By Amit Singhal

Last week, "Googling something" took on a whole new meaning. Instead of typing your question into the search box and hitting Enter, our newest invention—Google Instant—shows constantly evolving results based on the individual letters you type.

Instant is just the latest in a long line of search improvements. Five years ago, search results were just "ten blue links"—simple web pages with some text. Today search engines provide answers in the form of images, books, news, music, maps and even "real time" results from sites such as Twitter.

The reason for all these improvements is simple: It's what you want. When you type in "weather" (or just "w" in the case of Google Instant), you want the weather forecast right away—not a collection of links about meteorology. Type in "flights to San Francisco," and you most likely want flight options and prices, not more links asking you to enter the same query again.

We know these things with a fair degree of certainty. We hire lots of great computer scientists, psychologists, and linguists, who all contribute to the quality of our results. We carefully analyze how people use Google, and what they want. And what they want is quite obvious: the most useful, relevant results, as quickly as possible.

Sounds pretty simple. But as Google has become a bigger part of people's lives, a handful of critics and competitors have raised questions about the "fairness" of our search engine—why do some websites get higher rankings than others?

It's important to remember that we built Google to delight our users—not necessarily website owners. Given that not every website can be at the top of the results, or even appear on the first page of our results, it's not surprising that some less relevant, lower-quality websites will be unhappy with their rankings. Some might say that an alphabetical listing or a perfectly randomized list would be most "fair"—but that would clearly be pretty useless for users.

People often ask how we rank our "own" content, like maps, news or images. In the case of images or news, it's not actually Google's content, but rather snippets and links to content offered by publishers. We're merely grouping particular types of content together to make things easier for users.

In other cases, we might show you a Google Map when you search for an address. But our users expect that, and we make a point of including competing map services in our search results (go ahead, search for "maps" in Google). And sometimes users just want quick answers. If you type "100 US dollars in British pounds," for example, you probably want to know that it's "£63.9p"—not just see links to currency conversion websites.

Google's search algorithm is actually one of the world's worst kept secrets. PageRank, one of our allegedly "secret ingredients," is a formula that can be found in its entirety everywhere from academic journals to Wikipedia. We provide more information about our ranking signals than any other search engine. We operate a webmaster forum, provide tips and YouTube videos, and offer diagnostic tools that help websites identify problems.

Making our systems 100% transparent would not help users, but it would help the bad guys and spammers who try game the system. When you type "Nigeria" you probably want to learn about the country. You probably don't want to see a bunch of sites from folks offering to send you money … if you would only give them your bank account number!

We may be the world's most popular search engine, but at the end of the day our competition is literally just one click away. If we messed with results in a way that didn't serve our users' interests, they would and should simply go elsewhere—not just to other search engines like Bing, but to specialized sites like Amazon, eBay or Zillow. People are increasingly experiencing the Web through social networks like Facebook. And mobile and tablet apps are a newer alternative for accessing information. Search engines aren't the "gatekeepers" that critics claim. For example, according to the research firm Compete, Google is responsible for only 19% of traffic to WSJ.com.

Investment and innovation are considered strong indicators of a competitive marketplace. Last week's launch of Google Instant was a big bet for us—both in terms of the complexity of the computer science and the huge demands it puts on our systems. Competition for eyeballs on the Web helps drive that risk-taking and innovation because consumers really do have the freedom to vote with their clicks and choose another search engine or website. In an industry focused on tough questions, that's clearly the right answer.

Mr. Singhal is a Google fellow who has worked in the field of search for over 15 years, first as an academic researcher and now as an engineer.

'Trust Us' Isn't An Answer
By Charles Rule

'What goes around, comes around." That pretty much sums up the predicament in which Google currently finds itself. If you listen carefully to Google's complaint that antitrust regulators have no business poking around in its business, you'll hear the echoes—if not wholesale appropriation—of the arguments once propounded by Microsoft.

In case you might have missed it, a decade ago Microsoft was a pioneer of sorts in establishing the relationship of antitrust to high-tech. Its Windows operating system was labeled a monopoly, and the company was accused of employing a litany of "bad acts" to prevent rivals like Novell, Netscape and Sun's Java from threatening Window's dominance. I should know. I represented Microsoft then and still represent the company today.

Microsoft countered that, far from being a monopoly, it was under intense competitive pressure and that the allegations of bad acts were actually the self-interested complaints of rivals unable to keep pace with Microsoft's innovations. Taking up the cause of the victims, state and federal antitrust regulators (and counterparts around the world) challenged Microsoft, and after an epic battle, they won.

Google now finds itself in those same antitrust cross-hairs, accused of being today's monopoly gatekeeper to the Internet. There are a growing number of complaints in the U.S. and Europe that Google has used its search monopoly to exclude actual and potential rivals, big and small. How exactly? Rigging clicks by lowering competitors' rankings in Google searches is one way. Another is locking up critical content, like video and books, so that rival search engines are frustrated in trying to provide their users with access to that content. The result has been Google's overwhelming dominance.

Ironically, many of the most ardent defenders of Google are the same individuals—such as Eric Schmidt, Google's CEO who was an executive at Sun and later Novell—who devoted so much time, money and effort to pushing the frontiers of the law and government regulation against Microsoft a decade ago.

Much like Microsoft's arguments about a general software market, Google likes to claim its business is only a drop in the bucket that is the general advertising market. But after lengthy investigations, the Justice Department and Federal Trade Commission have concluded that search advertising is unique and constitutes a separate market. In the U.S., Google commands a share of search advertising well in excess of 70%—the consensus threshold for monopoly under the Sherman Act. Google's share in most places around the world is even higher.

Like Microsoft, Google claims "competition is just a click away." But for an advertiser hoping to reach consumers when they type in a query about the products the advertiser sells, Google is where the queries are and more than 70% of all ad-supported queries flow through Google's search engine. Yahoo once provided a choice, and Bing is still hanging on. But there's reason to believe that Google's strategy has been to deprive any rival—big or small—of the queries and advertisers necessary to create real alternatives for users.

Again like Microsoft, Google claims its antitrust problems are the result of a cabal of disgruntled competitors. And it is true that Microsoft's rivals such as Mr. Schmidt's Sun and Novell provided much of the evidence, and at least some of the impetus, against Microsoft. But in monopolization cases, which are about exclusion of rivals from the marketplace, it is almost always the excluded victims who blow the whistle on monopolists.

Unlike Microsoft, however, Google so far has offered little more than cursory justifications for its actions. Microsoft at least believed what it was doing reflected its innovation, which, though perhaps rough on rivals, benefited consumers.

Google smugly brushes aside allegations against it, expressing indignation that anyone would deign to question such a hip, warm and fuzzy company. Google's defense seems to be: Trust us, whatever we do will be good for the rest of you. And, we're way smarter than you, so you'd never be able to comprehend what we're doing anyway.

Whether Google likes it or not, the Microsoft case resolved antitrust's role in high-tech. And the last 10 years have shown that reasonable antitrust rules can be applied to prevent exclusionary conduct by dominant tech firms without destroying market forces. Complaints by leading Googlers, who were once strong proponents of those rules, that the same rules should not apply to Google are disingenuous at best.

The application of antitrust must be consistent. Failing to apply antitrust rules evenhandedly—particularly to politically well-connected monopolists like Google—would neither be just nor promote the cause of free-market capitalism.

Mr. Rule, head of the Justice Department's Antitrust Division in the Reagan administration, is an attorney with Cadwalader, Wickersham & Taft LLP. His firm represents Microsoft and is counsel of record for two companies currently engaged in antitrust litigation against Google—myTriggers and TradeComet.

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