Google’s Abuse of Its Dominant Position Isn’t Only Maybe Illegal, It Also Makes for Worse Products
David McCabe, reporting for the New York Times on worldwide antitrust investigations into Google’s business practices:
Google has largely stayed quiet about its conversations with federal investigators as the Justice Department has looked into whether the company abused its dominance of the online advertising market.
But a little-noticed 67-page document sent to Australian regulators in May by Google’s advisers may provide clues to how the Silicon Valley titan intends to beat back a legal challenge from the agency.
The crux of the company’s argument: Even though it accounts for almost 30 percent of spending in the global digital ad market, it does not control enough of the industry to overcharge its customers and box out its competitors.
Google has little incentive to squeeze advertisers on ad rates or publishers on fees, write the paper’s authors, a lawyer and an economist hired by the company. It has not built its system to give its own services an advantage, they say, and it competes with a wide range of other companies.
One obvious reason market dominance is concerning is that it allows an advantaged player to raise prices — without serious competition, customers have little choice but to pay. Investigators in the United States, Europe, and Australia are trying to figure out if that’s something Google did in the online ad space. But Google doesn’t necessarily need to do anything illegal to make its products worse, particularly when there is such a vast gulf of exposure to the company between its users and customers.
Gerrit De Vynck, Bloomberg:
Type a query into the Google search bar on a smartphone and there’s a good chance the results will be dominated by advertising.
That stems from a decision in 2015 to test a fourth ad, rather than three, at the top of search results. Some employees opposed the move at the time, saying it could reduce the quality of Google’s responses, according to people familiar with the deliberations. But the company brushed aside those concerns because it was under pressure to meet Wall Street growth expectations, one of the people said.
By 2016, the extra marketing slot was a regular feature. It’s one of the many ways the search leader has altered how it presents results since its early days. Another example is the pre-packaged information Google often displays in a box at the top of a page, rather than sending users to other websites. Phased in gradually over years, changes like these have gone largely unnoticed by legions of consumers who regularly turn to Google to call up information and hunt for bargains. The company says these changes support its mission to organize the world’s information and make it useful and accessible to everyone.
Google’s search engine has long been a de facto directory of the web but, for years, it has primarily been a gateway to Google’s many other services. Searches for products might show shopping ads and Google Maps listings of possible retailers well above any information from the broader web. News-related searches will likely display Google News results, YouTube videos, Google-summarized Wikipedia entries in a biography box, and Google-copied tweets well above web stories. Google also puts its “people also ask” answer box on the results page of many queries, which infinitely replicates with summaries of third-party webpages. And, if you search for many things on your phone, Google juices the results to prioritize pages written in its own AMP language.
Google also owns YouTube; any changes made to its policies directly affect the thousands of people who now earn a living from publishing videos there. Several years ago, YouTube’s advertising policies and recommendation algorithms encouraged producers to create longer videos, upwards of an hour. But Google has now announced that, later this month, it will lower the video length threshold for automatically inserting mid-roll ads from ten to just eight minutes.
This will obviously suck for viewers, as millions of videos uploaded over the past few years will suddenly gain an ad or two in the middle. It looks bad for producers, too, as the many users who are unaware of how these ads work might get the impression that the uploader is responsible for an ad-heavy video.
Of course, it is Google’s prerogative to modify its ad policies on YouTube. If that’s how it wants to respond to what investors considered a mediocre quarter, I guess that’s something we all have to live with. One reason it has been able to ratchet up the number of ads served to users is because they have nowhere else to go. Because it is the dominant platform, YouTube is able to set the standards and expectations for hosted video, even if those standards are poor. Put it this way: if you were designing a video platform that prioritized and respected users, you would not design the YouTube of today.
All of this leads to a great series of articles by Rand Fishkin of SparkToro:
The best, and sometimes only, way to rank atop Google… is to be owned by Google themselves.
It’s a dirty secret that’s not very secret at all. And therein lies the heart of the problem. Google believes they have nothing to fear. They believe they are either A) doing no wrong or B) using their power arbitrarily in ways that cannot be held to account. This problem holds back investment to entrepreneurs who might create better alternatives. It holds back content creators and brands from crafting better solutions.
Google says it believes in a spirit of innovation, and its search engine has historically created a ton of innovative opportunities for web builders. But, when the search monopoly uses its dirty secret of ranking #1: ownership by Google, innovation suffocates.
Users of Google’s products suffer as well — not only because of the company’s self-beneficial changes, but also because of how much it corrupts a user’s experience.
Arguably, the markets Google is floundering in might self-correct. That carries a whole host of problems for those who make a living with Google properties — YouTube producers, in particular, who are reliant upon ad revenue could see a drop in their income. Some may point out that they should not be so dependent, but the reality is that some people are thanks, in part, to arguments Google has made that people can build a career with a YouTube channel. I think that gives the company some responsibility.
Whether users will respond by turning to competitors is anyone’s guess. Old habits are hard to break, and reputation is hard for anyone to take away. We’ve been down this road before with Apple Maps. What began in 2012 as an inadequate replacement on the iPhone has now spread across Apple’s platforms and on the web and, in my use, has become good enough in many places to use as a primary location client. But mistrust lingers: to this day, I don’t feel like I can depend on the business hours shown in an Apple Maps listing, and I almost always use the business’ own website or Google Maps to verify.
While it’s hard for one company to take the reputation of another, it is far easier for that reputation to be shed. For years, Google has invented names of neighbourhoods, making me distrust its cartography. The top of Google search is dominated by ads and self-promotional items, making it harder for me to use. Google’s dominance makes it doubt that users will abandon its properties, so it is compromising its own product quality with confidence.
Companies perform better when they have equally engaged and motivated competitors. In cameras, Canon needs Nikon and, recently, both of them need Sony to keep innovating and moving their products forward. One of the reasons iCloud keeps getting better is because Apple sees Google’s cloud services performance as a benchmark. Google’s complete dominance in many areas of its consumer-facing products has allowed it to get cocky with prioritizing its own interests ahead of its users. It isn’t yet reflected in the company’s balance sheet, but pushing the tolerance of users rarely plays out well in the long term.