Google, monopolies, and looking to the future
In “Case against Google may be undercut by rapid changes in technology”, published in The New York Times, Farhad Manjoo discusses the possibility of EU sanctions against Google in light of accusations that the search engine has abused its position of dominance. Manjoo says that any sanctions might soon make no sense, given that the speed with which technology is developing could mean that imbalances in competition tend to sort themselves out: look at the sanctions imposed against Microsoft a few years ago, in reality what brought about the company’s loss of influence and changed things was technological developments that opened up the market to new players.
We’ve already discussed Google’s predatory behavior, and the European Commission has reached its conclusion on the matter.
So now what? Are sanctions really going to change anything? Is it even appropriate that a bunch of eurocrats can decide what a search engine can or can’t do? And let’s not forget that anti-trust legislation isn’t there to punish whoever dominates the market, but to sanction those who carry out practices that artificially restrict competition. In a certain sense, if Google decides to alter its search results to give its products priority of place, can or should it be punished for doing so? Could we punish a newspaper for tailoring its headlines or reporting to suit its editorial line?
Were the early search engines sanctioned for selling the first results to the highest bidder? At bottom, what anti-monopoly legislation should try to do is get the best for consumers and users. Behavior such as scraping, or using the competition’s own information to its own advantage to create its own products could possibly be seen as breaching competition rules (or at least as something that should be avoided), but is in reality more a matter of business ethics than competition. Requiring a search engine to align its results to certain rules is interfering with the development of that company’s product: if its results actually exclude something that could be relevant to a user, and instead offers results that aren’t, then the market will be the one to put it in its place: nobody knows better than Google that there is no such thing as customer loyalty.
In terms of competition, just where is Google right now? Its stock market value is 365 billion dollars, and its income depends overwhelmingly on advertising related to searches. At the same time, it faces competitors whose worth just keeps on growing: Facebook is now valued at 231 million dollars, and its position in areas of advertising that are rapidly expanding could soon convert it into a major rival. Is Google already at the peak of its power, soon to be eclipsed by Facebook? Some analysts say the real struggle right now is for the advertising budgets of companies that have traditionally looked to television, an environment in which Facebook seems to have situated itself particularly well.
In the opinion of many analysts, Facebook is the company that is eating the internet, particularly video: the most successful content, the videos that are being watched more than a million times are no longer on YouTube, but on Facebook. YouTube’s advertising model, on which it depends for revenue, is bothersome and of questionable value to advertisers, as well as barely making any money. Facebook now has a 74 percent market share of social network advertising budgets, and is now the company most advertisers will turn to this year to spend their video budget, aware that Facebook is better segmented and viralized, compared to the mishmash of disorganized content to be found on YouTube. The control that Facebook offers its advertisers, along with features such as the ability to really interact with users, as opposed to YouTube’s threads that are of no use to advertisers. In short, Facebook is the format advertisers are increasingly turning to online.
While Google is trying to change the world with attractive but unprofitable products, Facebook is taking a much more strategic approach, using short-term tactics and buying up any company that in any way might pose a threat.
Should the European Commission spend its time and resources on interfering with how Google sells its products? Stopping anti-ethical behavior such as scraping seems fair enough, if only as a way of showing that just as out in the real world, you can’t get away with everything online. Has Google used its position to prioritize its products? Without doubt, although it has done so outstandingly poorly, and is now trying to defend itself by saying that in reality, its vertical products don’t matter because nobody actually uses them. But has it damaged innovation, has it hurt its users?
Given the unstoppable development of the technology scene, should the regulator’s role be limited to making sure that the law and users’ rights are not breached, rather than pondering whether to force Google or not to show the results of its competitors?
Given the way things are unfolding, it is more than likely that Google’s dominance will come to an of its own accord before the European Commission reaches any deal. If Europe wants to set itself up as a law enforcer, then it will also need to look not just at who dominates the markets today, but who is threatening to do so tomorrow.
(En español, aquí)
