Demolishing The Reasoning Behind Senators Bogus Grandstanding Against Google

Politics

from the why-do-they-hate-success dept

I have no problem calling out Google when I think the company does questionable things, but I’m really at a complete loss over the desire of some in DC to attack the company these days. The best I can figure it out, they don’t like the fact that Google is successful. Back in September there were those bizarrely clueless hearings against Google, which displayed (yet again) a technically clueless Congress wanting to “do something” about a situation they clearly didn’t understand.

It appears that we’re starting to see the next step in this charade as Senators Herb Kohl and Mike Lee are calling for an antitrust investigation by the FTC. Of course, we’re pretty sure the FTC has been investigating Google for antitrust issues for a while now, so it seems a bit strange to send this letter (embedded below) now.

The letter is really quite ridiculous, and demonstrates the insanity of DC these days, where the highly misleading to downright bogus claims by lobbyists for one side are quoted by politicians as fact, with no admission where the numbers come from. Thankfully, the folks at TechFreedom wasted little time in writing what seems like the definitive response to Senators Kohl and Lee. You really should read the whole thing, but just a snippet:

To begin with, the letter asserts that “Google faces competition from only one general search engine, Bing,” suggesting that only Bing (and it, only ineffectively) could keep Google in check. In essence, the Senators are prejudging an essential question on which any case against Google would turn: market definition. But why would the market not include other tools for information retrieval? Is it not at least worth mentioning that more and more Internet users are finding information and spending time on social networks like Facebook and Twitter, while more and more advertisers are spending their money on these Google competitors? Isn’t it clear that search itself is evolving from “ten blue links” into something more social, multi-faceted and interactive?

In a remarkable leap, the senators then identify the specific alleged abuse that Google?s alleged market power leads to: search bias. That’s remarkable because, other than the breathless claims of disgruntled competitors (given plenty of air time at the September hearing), there is actually no evidence that search bias is, in fact, harmful to consumers?which is what antitrust is concerned with. (Read both sides of this debate in TechFreedom’s free ebook, The Next Digital Decade: Essays on the Future of the Internet.)

As our colleague, Josh Wright, has thoroughly demonstrated, this “own-content” bias is actually an infrequent phenomenon and is simply not consistent with an actionable claim of anticompetitive foreclosure. Moreover, among search engines, Google references its own content far less frequently than does Bing (which favors Microsoft content in the first search result when no other search engine does so more than twice as often as Google favors its own content).

Making matters even more ridiculous is that the Senators parrot the claims of Google competitors/companies, who seem to just be jealous of Google, without questioning the sources. Thankfully, TechFreedom is around to step up and help provide some context and debunk some of the more ridiculous claims:

The letter also reports, again with no caveats, claims by the CEOs of Yelp! and Nextag that “75 percent of Yelp!’s web traffic consists of consumers who find its website as a result of Google searches, and . . . 65 percent of Nextag’s traffic originates from Google searches,” and that losing this much traffic to Google preferencing its own content would be catastrophic. But the letter fails to mention that most searches for brand names on Google are “navigational” rather than “informational.” As Google competitor Expedia?s CEO recently explained:

The majority of, at least Expedia?s, and I believe Hotel.com?s traffic that comes from search to our site actually come through people searching for Expedia, for example. So in typing in Expedia in Google or so on, typing in Hotels.com in Google. So of the 25% for Expedia, for example, the majority of that traffic is someone who?s already looking for Expedia, and that person is going to find Expedia one way or the other because they are searching for something very specific. (Expedia earnings call, 10/28/10, quoted here).

Indeed, a recently published independent academic study conducted across search engines concluded that 52% of “business queries” (and 72% of organizational queries) were navigational. In other words, most of the Google traffic going to these sites was likely from users who simply typed in “Yelp” or “NextTag” as a convenient way of getting to those sites. Such searches are not diverted (and not even claimed to be diverted) to Google?s own sites, and the first search result for the search term ?Expedia? will always be expedia.com. Thus, the majority of these searches that are claimed to make up 75% and 65% of the complaining companies? traffic is not in any way threatened by Google?s business model, and is completely irrelevant to assessing the effect of Google preferencing its own content.

Furthermore, the letter does not mention Yelp’s recent boast that over 40% (and growing) of its searches are now conducted on its mobile app?insulating it from whatever “power” Google might exercise over traditional searches.

Oops. If this were an honest debate about Google’s practices, you’d think that the Senators would have been at least a little skeptical of such easily debunked claims by these companies. Unfortunately, in the world of politics today, that’s not how things work. Actually looking at facts or understanding what they’re trying to regulate is ignored in favor of going after targets that generate headlines.

And, of course, if you’re looking for a thorough, detailed and devastating response to any time anyone grandstands about search engines without understanding any of the details, you should always go to the master on the subject, Danny Sullivan, who writes, Dear Congress, It’s Not Ok Not To Know How Search Engines Work, Either, picking up on last week’s meme about SOPA. Sullivan notes that the letter from Kohl and Lee is “jaw-dropping,” not just in how one-sided it is, but in how superficial it is. Again, you should read the entire thing to get tidbits about how the letter seems to not even know what guidelines the FTC has already put out, and about how the Senators (rather shockingly) blatantly misquote Google VP Marissa Mayer and don’t even understand what she’s saying. But there’s also this section, where it appears the Senators have simply no idea about the relationship of Microsoft and Yahoo and what it means relative to Google:

Bing: A Microsoft & Yahoo Production? What really set off my alarm bells was this:

Bing, a partnership of Microsoft and Yahoo

Despite substantial amounts of staff time and money spent to have the hearings, the committee mistakenly believes that Microsoft?s Bing search engine is a Yahoo and Microsoft production.

It?s not. Bing is a wholly-owned part of Microsoft. Yahoo has no ownership in Bing.

But wait. Isn?t there a partnership? Yes, but one that gives Yahoo a minor role handling Bing?s ad sales to ?high volume? advertisers. The deal came after Bing was launched. It wasn?t an essential part of it, nor does it help with Bing building consumer market share against Google.

If the committee fully understood the competitive space, they?ve have said instead:

Yahoo Search, a partnership of Microsoft and Yahoo

That would be far more accurate. That?s because Yahoo no longer has its own core search technology, nor its own search ad serving technology.  It gave all these up to partner with Microsoft (it would have kept them in a deal with Google. See our side-by-side comparison).

Heck, Yahoo?s former CEO Carol Bartz was quite specific that her goal was to use Bing?s technology as a way to somehow beat Bing at its own game. Bing wasn?t a partnership to her; it was the competition. Bing & Yahoo Distant To Google? Perhaps the committee thought that the ?partnership? was the overall ?search alliance? between Bing and Yahoo? If that was the case, then why did the letter go on to say

?which is a distant second in market share and is losing an estimated $2 billion annually?

Those stats only make sense if you?re talking about Bing itself, having a 15% share to Google?s 65% in the United States, as recently reported. If you?re talking about Bing and Yahoo combined, they come up to 30%, much healther competition.

It’s really quite amazing that Congress can get away with such blatantly dishonest grandstanding — but, on tech issues, Congress still seems to think that its own blissful ignorance is a plus when it comes to regulating. For those of us who live in this world, that’s pretty damn scary.

Filed Under: antitrust, ftc, grandstanding, herb kohl, investigation, mike lee, senate
Companies: google, microsoft, yahoo