Google – The jury is still out (at least in the EU)

I wrote the post below a while ago after I read Bork and Sidak's article, but never got around to publishing it. In the meantime the google cas in the US has been closed and Google has proposed commitments to the Commission. However, it is still open if the Commission will accept these commitments.

 

Robert H. Bork  and J. Gregory Sidak have written an Article entitled “What does the Chicago School Teach about Internet Search and theAntitrust Treatment Of Google?”, a video presentation which can be seen here. The authors assess accusations concerning anti-competitive conduct made by Google’s competitors from the point of view of the teachings of the Chicago school. While the article is very well written and I highly recommend anyone interested in the Google case to read it, I would like to briefly comment on a small selection of their findings in this post.

1.      Google is not the gateway to the internet

Some of Google’s competitors claim that it is the “gateway or, more extremely put, the “gatekeeper” to the internet. The authors however argue that consumers can navigate to websites by themselves, they are not forced to use Google (or any other search engine) to open a website. Besides typing in an URL, one can also use bookmarks or the browsers’ autocomplete function as well as mobile apps. Nevertheless, this is only correct as long as the user knows exactly where he wants to go. Often this is not the case, which is exactly why search engines exist. They guide users through the internet, specifically to websites they do not know yet. Thus, search engines are the key to new business. For example, if one makes a search for “Restaurants Stockholm” with Google.se, the first hit will lead to Stockholm’s tourist portal followed by a number of restaurants supplemented by a map and trip advisor on third position. Arguably, what is displayed first by the major search engine, Google, will influence the choice made by consumers searching for a restaurant in Stockholm. Thus, while claiming that Google is the “gatekeeper” of the internet might be going too far, Google’s search results still have a significant influence on consumers’ choices especially when it concerns new products. Whether or not the placement of results negatively impacts consumers is another question, but it appears logical that the order in which Google chooses to list results does have some effect on consumers.

2.      Specialised searches benefit consumers

The authors claim that the specialised searches, which Google displays on the top of the first results page has no anti-competitive effects. Specialised searches are for example maps with a number of searched places marked or a number of news stories grouped together when searching for a person or recent event. In fact, such specialised searches are displayed by all major search engines (Bing, Yahoo, Ask.com) and thus, according to the authors, “it is reasonable to infer that this display has “competitive virtues”—it reflects consumer preferences.” (p.2) However, just because all competitors in a certain market are doing something, does not automatically mean that this also benefits consumers. Nobody would claim that consumers benefit if all gas stations agree on a set price for gasoline. Likewise, it is not necessarily beneficial for consumers if all search engines implement specialised searches. Rather, something that is implemented by all competitors can be assumed to benefit all competitors. Specialised searches can for example guide users to other products provided by the search engines, for instance maps services, as in the example above. This does not mean to suggest that specialised searches are detrimental to consumers, but merely that the assumption may be too easily made by the authors. If consumers really benefit from specialised searches would need to be researched further.

3.      Google is not blocking competitors

In their third section, the authors further reject various claims made by Google’s competitors, concerning the blocking of services such as Youtube and Google books from the search results of competitors as well as agreements with hardware manufacturers about the standard search engine pre-installed on their devices. The authors claim that: "By definition, some search engine must be the consumer’s default search engine on computers and devices, because consumers value having a pre-installed search function on their newly purchased computers or phones.” (p.23) Unfortunately, no statistical evidence referring to the preference of consumers with regard to pre-installed default search engines is cited by the authors. In any case, one could argue that pre-installed search engines on computers could be compared to the pre-installed browser discussed in the Microsoft case in the EU. Could users not be presented with a choice screen during setup of their device in which they choose the search engine they would like to use as a default?

The criticisms of the article discussed here show that the jury is still out on the Google case and that more research is perhaps necessary to show if and if so, which of Google’s activities are anti-competitive.