STORMTROOPERS AND MONOPOLIES: GOOGLE’S EMPIRE


By Giovanni Castaldo
Staff Writer

Transgressing its usual strict discretion about the secrets locked in its data centers, Google recently launched a Web site that gives curious users a glance inside its eight centers around the world. The virtual tour of Lenoir—Google’s data center in North Carolina—has taken everybody by surprise because of an unexpected, geeky cameo appearance. Inside the servers’ stock room, a life-sized replica “Star Wars” stormtrooper guards the rows of computers, warning guests that someone is watching them. Probably meant as a self-conscious hint at Google’s own secrecy policies, the stormtrooper has nevertheless stimulated much discussion over its meaning. In Star Wars, wasn’t the army of stormtroopers used to bring about the end of the Inter-Galactic Republic and the ascendancy of the Empire? And wouldn’t that imply that Google sees itself as the Empire, or at least something similar? Fairsearch, a group of businesses and companies like TripAdvisor, Expedia and Microsoft, has committed itself to explaining such a self-perception and raising awareness of Google’s ‘imperialistic’ power.

In the United States alone, about 240 million people regularly use the Internet; last year, their online activity generated almost $170 billion in commerce, online advertising and online transactions. Fairsearch seeks to promote economic growth, innovation and choice across this growing Internet ecosystem by defending competition in online and mobile search. In doing so, it has identified Google as its single biggest obstacle. One of the main reasons for this accusation comes from the way online search works. A search engine copies Web sites to create its own index of everything on the Internet. When people enter their queries, the engine picks the results from its index, displaying them alongside ‘paid results’ or ads. In particular, specific algorithms connect people’s queries with the search’s outcomes. These algorithms greatly impact Web sites’ opportunity for display and, consequently, success. As changes in these algorithms are extremely difficult to individuate, this lack of transparency might enable search engines to exclude, penalize or promote specific sites rather than others. Considering that the top three search results receive 88 percent of users’ clicks, it is understandable that small, undetected changes in a search engine’s algorithms can easily destabilize the online market.

As Fairsearch highlights, Google dominates Internet search: 79 percent of Americans and 94 percent of Europeans use it. It also dominates search advertising, making $28 billion—96 percent of its revenues—in 2010 alone, thanks to users clicking on its paid links. In addition, Google is giving its Android operating system away for free to phone makers. Because more and more people are expected to browse the Internet through their phones rather than through their PCs, Google’s monopoly and revenues are forecasted to increase even more. Indeed, Google’s power over the Web sites’ ranking in search results, the advertising opportunities on its pages, and the price for it makes the American company, as one of its most famous software engineers Amit Singhal put it, “the biggest kingmaker on this Earth”. However, even if the capital needed for maintaining data centers as big as Google’s prevents any kind of competition from attacking Google’s monopoly over what is called horizontal search, or general-purpose search, other Web sites still have a chance on vertical search, or search addressed to a specific category of content. Well, at least in theory.

In practice, Fairsearch claims that Google is enlarging its Empire’s boundaries, crashing competition over vertical search just as it did with horizontal search. First of all, it is using its dominance in search to promote its own vertical sites over those of competitors, rather than just ranking and listing the most relevant results. Secondly, it has acquired a variety of potential competitors. By buying the Android technology, YouTube, ITA Software and Like.com, Google respectively challenged vertical websites in mobile, video, travel and shopping search. Moreover, Google is scrapping other Web sites’ content, like Yelp and TripAdvisor’s reviews, and posting it on its own pages. This enables the colossus to earn advertising revenues and challenge other Web sites’ affluence. Finally, Google is using its contract terms to blackmail other companies. When Motorola wanted to use Skyhook as location technology instead of Google’s, Google threatened to revoke Motorola’s access to Google’s other services, such as the enormous Android market. Obviously, Motorola had to comply, and Skyhook was unjustly cut out of the market.

As Lohr and Miller, two New York Times journalists, have pointed out, the stories of companies being harmed by Google are drastically increasing. Without any alert, Nextag, a price comparison service website, has seen a steady decline in traffic from Google. To address this decline, the company was forced to invest in Google ads. Before the deal, 60 percent of the traffic from Google was from search results and 40 percent from paid ads. After Nextag’s compromise, 70 percent of its traffic started coming from paid ads. Stories like these, the journalists stress, are more and more common in today’s online market ecosystem.

Fairsearch’s goal is to make people understand that Google’s Empire is not just harming online businesses, but also the people themselves. By excluding other vertical sites, Google keeps these sites from gaining the revenue needed to innovate and provide better services to consumers. Furthermore, making Web sites pay more to get traffic through Google’s advertisements, means that online products necessarily become pricier and pricier. Also, by deceiving and manipulating search outcomes, Google cuts consumer access to the online market’s variability. These issues seriously concern antitrust committees such as the U.S. Federal Trade Commission and the European Commission for Competition, which are now investigating Fairsearch’s accusations of Google. The future of online transparency and overall economic growth hangs on the way they tackle the colossus’s monopoly and reshape its empire.

Sources

http://www.fairsearch.org/presentations/the-case-for-fair-search/

http://www.nytimes.com/2012/11/04/technology/google-casts-a-big-shadow-on-smaller-web-sites.html?ref=stevelohr&_r=0

Image by kalexanderson

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