Alexis Ternoy
Alexis Ternoy 19 May 2015
Categories Search Marketing

Google Troubles - Violation Of Europe's Anti-Trust Laws?

When Google puts advertisements on top of the search results, is it in violation of Europe's anti-trust laws?

Google has ten days to file a response to a non-binding resolution by the European Union. At the heart of the case is the idea that Google has reached monopoly status; and that it’s search engine business should be a separate company from it’s advertising division.

Basically, the EU’s theory is that the search engine giant is a monopoly. And as such, putting paid ads above non-paid search results is abusive because ... companies that don’t paid for ad placement have no alternative.

Or do they? ...
When Google puts advertisements on top of the search results, is it in violation of Europe’s anti-trust laws?

At first it seems that there are other search options. There is Google, Bing, Yahoo and the search engine DuckDuckGo. Unfortunately, what seems like competition is not. Yahoo search is really powered by Bing, and DuckDuckGo is powered by Google (DuckDuck just adds a layer of privacy to search - DuckDuck does not track users as they search).

For desktop searches it may be true that Google is essentially the only search engine.

But that is not the case for mobile. A lot of people on a mobile device search via ... Facebook. Yes, it’s true, Facebook. In fact, Google’s real threat is from non-search engine companies. On the desktop, Google has a huge 90% share (with Bing having only 7% and others making up the remainder). At 90%, Google would qualify for monopoly status. But what if a lot of people were searching elsewhere?

Book buyers often go directly to Amazon to search for books - thus bypassing any search engine. Frequent travelers search on their favourite travel site. In search of a craft or used item, search on eBay or Etsy - no need to Google it.

And we still have not touched the social media platforms. A lot of people search for news on ... Twitter, Search for fun topics on Facebook, pictures on Pinterest and contacts on LinkedIn. All these sites run ads and have companies that have products to sell. This chips away at the idea that Google dominates search. And it weakens the idea that sellers have few options, other than the search giant, to reach consumers searching for the products they sell.

As search diverges into niche searches, Google’s dominance is weakening. And that’s not the only issue devaluating the EU’s argument. Google search is in trouble on multiple fronts. #GoogleEU

April 21st, 2015 was the date Google started to remove sites from search listings unless they were mobile-ready. Why? Because Google is loosing the search wars for mobile search. With 50% of all searches coming from mobile, Google is loosing share to apps that allow in app search (think the Facebook app). So Google is facing competition from apps and needs to provide mobile ready sites in it’s search results. But it has no control over the sites themselves. So it’s only option is to exclude sites that are not mobile ready so that it’s results are relevant and useful for mobile users. The relevant part it has, but if a site is not mobile ready, then the user experience from Google search could drive users to Facebook apps were all Facebook page results ARE mobile ready.

Further, not every search is a consumer looking to buy a product. If, for example, I want the latest sports scores, I am not looking to buy anything. Search results come in two varieties - paid ads and what are called “organic search results”. Organic search results are basically non-paid ads that are the result of website indexing by Google. With a search for sports scored, ads placed above organic search results are not an issue.

When someone runs a non-purchase search, the advertisers are not competing with the organic search results. As such, these ads are not reducing competition. That is, the non-paying sites that are the result of a search are NOT loosing traffic due to a site that sells a product. Both ads are the organic sites are competing for attention, but not sales.

It’s only when I search for a new bike, airline tickets or a restaurant WITH GOOGLE, that Google IS placing paid ads above non-paying SELLERS. And that’s the key to the case. When someone does a search to - buy something - is it anti-competitive for Google it use it’s dominance to place paid ads ahead of non-paid results.

Likely Google will argue that not all searches are shopping, or searches to buy something. And likely that will be their best defence. When I search for sports scores, a ticket advertisement is not likely a direct competitor of a news site that has the scores. While both compete for attention, the news site in the organic search is not being squeezed to pay Google or getting lost in a sea of ads.

Unless I search on a travel site, when I search to buy tickets, all the ticket websites must pay Google, with no meaningful alternative, or be placed under the paid ads. This is very different from a newspaper that places ads near articles. In fact, many newspapers separate the news staff from the advertising staff to insure that reporters are not influenced by advertising clients.

SO are Google search results like news sites?


In a way they are. Searchers want a way to find content. And if that content is being manipulated to serve advertisers, then there might be a problem. If every time someone did a search, Google was allowed to place ads on the page at RANDOM, then the organic results would not compete with the ads that showed up. But when Google can show ads based on the keywords of the search, it kinda feels like pay-to-play. If a website that sells the products searched for does NOT pay, their listing is shown UNDER paid advertisers.

Given the fact that there is no real competition for the product seller - in terms of search on Google - Google is a monopoly... But ONLY if you are talking about strict search-engines.

But is breaking up Google really an option?
The problem is that PAID search is Google’s only REAL income stream. There is no two companies to be made. Google search results are paid for by advertising revenue from companies the ONLY want to show up when someone is searching for their product. So how do you break up the company?

Imagine that we have two Google’s ...

Google the Search company would provide search. And Google Advertising would pay to place ads with the search company. Well ... that still results in the same problem.

The only other option would be to have the government take over Google search, and I don’t think anyone wants that to happen.

Given that competition is growing and Google’s market share may have crested. And not all searches are for products. And that companies can advertise on other sites like Facebook. The competition seems really strong and that advertisers are not being harmed. So the EU protections seem silly, unnecessary and unrealistic (Google can’t really be broken into two companies). It’s not just Google that is searching for a way out of this mess, even the proponents of this resolution need to find a better alternative. Which, like search, may be like finding a needle in a hay stack.

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