Making Results Better For End Users Isn't Acting Like A Monopolist

from the and-again-and-again-and-again dept

With the Justice Department getting closer and closer to going after Google for supposed antitrust violation, we're going to see more and more articles like the one in the New York Times this weekend that tries to highlight the story of a company "harmed" by Google's market power. In this case, it's the story of a guy who runs a directory site that was based entirely on Google arbitrage. He bought ads on Google's search engine to drive people to his directory page, and then littered the page with AdSense to collect revenue from people clicking through. The NY Times presents this as being somewhat harmful, but I have to side with Jeff Jarvis who doesn't see what Google did wrong.

Google arbitrage sites are a problem for the end user. They're based on the simple concept of forcing people to go an extra click to siphon some money away. If I'm looking for a particular site on Google I don't first want to go to a directory -- I want to go directly to the site. That's true for many, many users -- and Google's efforts in punishing arbitrage sites isn't anticompetitive, it's about improving the user experience, which is something that should be praised, not sued. The only problem noticed in the scenario was that the guy chose a bad business model, where he was totally reliant on a single company for both all of his traffic and all of his revenue. He made the decision to base his entire business on a single supplier, and that supplier has every right to change the terms of its deals in an effort to make a better consumer experience. This isn't Google being anticompetitive -- it's Google serving its customers.


Reader Comments (rss)

(Flattened / Threaded)

  •  
    identicon
    Ryan, Sep 15th, 2008 @ 9:48am

    the test

    The real test of whether or not a new web2.0 company or business has merit is if they can describe their business model without using the word "adsense"

     

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    Mel Siffle, Sep 15th, 2008 @ 9:50am

    Disagree

    The issue is not whether Google made a good choice for users. The issue is whether Google has the right to make the choice for users. If not a monopolist, no worries. Alternative providers will take alternative approaches and the best one wins. If a monopolist, not so much; pressure of competition will not force Google to make the choices the market wants.

    And of course, whether buddy has a dumb business model is beside the point. It's one thing if he can rely on a competitive marketplace to make that decision. Quite another if he can't. Maybe his index is a better solution for the customer than leaving it to Google. Who knows. And no one will if the market is not competitive.

     

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      some old guy, Sep 15th, 2008 @ 10:14am

      Re: Disagree

      The issue is whether Google has the right to make the choice for users.
      WRONG!
      The issue is whether or not google has the right to maintain it's own products and repair defects in its algorithm.

      Of course it does, it's fucking stupid to imply otherwise.

       

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      MAtt, Sep 15th, 2008 @ 10:33am

      Re: Disagree

      If Google was the Internet, then I see his point. But Google simply provides a service, and shouldn't be penalized for the fact that someone based a business model on how they worked at one time. In fact, I bet some time ago this guy clicked through a EULA of some kind which told him just that: don't count on this lasting forever.
      I have to wonder: How long can one expect to profit on a business model which continually costs you $500,000 per month to operate? It's not like that charge was paying off a loan; it was operating expense. He should have quit while he was ahead.

       

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    Anonymous Coward, Sep 15th, 2008 @ 10:03am

    screw this guy, keep up the good work Google!

     

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    hegemon13, Sep 15th, 2008 @ 10:13am

    NYT chose a poor example

    I don't even understand how this is an example of hurting competition. This guy was a client of Google, not a competitor. If they were trying to drive people away from a true competitor who offered an independent searching and indexing system, I could understand the problem. But this is a guy who already built his business on top of Google using Google adwords.

    In weeding out that type of site, they helped both their end-users, who don't want to see those garbage sites at the top of the search results, and their advertising clients, who don't want those sites costing them money with bogus or unnecessary clicks. Those sites are not legitimate advertisers, nor are they driving volume to anyone. Rather, they are a slimy and unnecessary middleman trying to get a cut of the pie for doing nothing.

    If Google is not allowed to take action to protect customers on both ends of the advertising, how are they supposed to improve their product?

     

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    Paul, Sep 15th, 2008 @ 11:58am

    I still agree

    I still agree that Google is not acting in the wrong, however, I'd like to point out this wasn't a "slimy and unnecessary" middleman. There was some value in what he offered. It was specialized search. However, the problem is that his means of driving traffic was solely based on Google AdWords, not even a normal web search. He had a valuable service, he just didn't have the business acumen to understand how to provide that service in a profitable and stable manner.

     

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      hegemon13, Sep 16th, 2008 @ 8:11am

      Re: I still agree

      Not having seen his site, I imagined it as more of the landing page variety, the type the pretend to have content, but really just have a slew of spyware and unrelated links. Certainly, if you have used a search engine, you know the type of site I am talking about.

      All the same, Google optimizing their own engine to provide the direct links to content instead of returning another site to search for those links is better for both advertising customers and search engine customers. It is not monopolistic. If his site was really valuable, it would still have users.

       

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    Anonymous Coward, Sep 15th, 2008 @ 12:10pm

    non-topic, the guy is a loser!

    Thanks Google!

     

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    Ryan, Sep 15th, 2008 @ 12:46pm

    the question they use

    The question to ask yourself in all of these cases is:

    "how does this provide more value to the user than simply by searching Google."

    A directory doesn't provide anything more than Google, if Google indexes all those sites in the directory.

    Original content is the key.

     

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    bobbknight, Sep 15th, 2008 @ 1:31pm

    Not A Monopolist

    I can't see how Google can be called a monopolist.
    Maybe close to a monopoly, certainly a market leader.
    I always have the option of Yahoo or Microsoft for search and other things. But to try to live of Google by making those web sites where there are all kinds of crap links to junk sites. Sites that I just don't need to go to. Then this guy starts bitching about it when Google changes things to allow me to not have to see that crap. That's just gall. Very much like the burglar who sues you for a broken leg when he falls through a hole on your porch during a robbery attempt.

    Show of hands, who remembers WebCrawler, Infoseek, Excite, HotBot the list goes on and on...... Google is better.
    In the olden days I had to search with 2 or 3 different search sites at times to find what I wanted.
    Now with Google I often find it on the first page. If this makes Google a monopoly, then thank god for the monopoly.

    Now I just want to point out that I never trust the old gray lady when it come to markets and financials, that I turn over to the WSJ and Barons.

     

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    Anonymous Coward, Sep 15th, 2008 @ 2:26pm

    9 - Just to play devil's advocate:

    It may prove valuable if it is presented in a manner that individuals find more intuitive or more pleasing to the eye. It may prove valuable if it presents a key group of advertisers relevant to a more specific search term. If I type in "turtle exuding wax like substance" and google gives me "Turtlewax" links, then it got it wrong. But if this guy recognized "turtle exuding substance" and linked me to veterinarians, then he's providing value.

    So maybe he WAS providing something more than google. Maybe not the actual links to content, but maybe in his keyword recognition or his layout.

    It's stupid to say that a "directory" doesn't provide more than Google if Google index all those sites in the directory. Someone else can come along and index the same sites and provide value superior to Google - Google did it to Yahoo and Dogpile and Altavista and Webcrawler and AskJeeves.

    So he could have been providing value - but I do agree that there is no way for him to provide evidence that Google is being anticompetitive. In fact, how can you be anticompetitive with someone who is using your service? If a manufacturer starts using a different kind of paint for their toys (ahem, Chinese lead paint tastes delicious), then you either stop selling their product or put a warning label on those toy cars. Right?

     

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    rman, Sep 15th, 2008 @ 2:27pm

    Who else blocks it?

    I personally block adsense at my router. I never look at adsense because they are ads.

    I agree with the first post here. anyone basing their income on a single threaded business model deserves to fail. Especially if it aggravates me as a user. Save the "Click Through" model for the porn sites.

    Block all directories and ad servers! Maybe that will solve more issues for everyone.

     

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    John, Sep 15th, 2008 @ 3:25pm

    Three points

    First, why does it seem like when a company gets big enough, everyone calls them a monopoly: Yahoo, Microsoft, and now Google?
    Why can't they just be considered the market leader?

    Second, even if Google is a monopoly (which it's not), why is that so bad? Are they "fixing the market"? Are they price-gouging customers or unfairly undercutting their competitors?

    It's like if I were writing a software program for use on a Mac: since Apple has a "monopoly" on the hardware and OS, I don't have to worry about users installing bad dll's or using Windows Vista Home Lite or such.

    Third, why do site-owner feel the need to sue Google when their "click pass-through" site no longer makes money? How about suing Firefox for allowing users to block ads? How about suing users for having sense to avoid ad-covered sites? How about suing themselves for almost training users to ignore ad-laden sites?

     

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      isaac K (profile), Sep 15th, 2008 @ 3:47pm

      Re: Three points

      Second, even if Google is a monopoly (which it's not), why is that so bad? Are they "fixing the market"? Are they price-gouging customers or unfairly undercutting their competitors?
      Well, here's the thing... In this case, yes. They decided to arbitrarily raise their rates on a paying advertiser by 2000%, stymieing his source of revenue.

      If we look at Google as a supplier of information to a searcher, its non-cost structure makes it not a monopolizer threat.
      But if we look at the ad business of Google as supplying internet user eyes to advertising sites for a COST (which is HOW GOOGLE MAKES THEIR MONEY) then this form of discrimination is intervening with normal market forces. If people didn't LIKE his site, he wouldn't be getting the CLICKS he got. A person with a poorly constructed site will, by market mechanics, get fewer and fewer traffic clicks. People use the service because the WANT to. He is paying money (same as any other advertiser) to appear on the front page. Denying him that is exerting Google's influence over the advertising sector under the mantra of "doing what's best for the end user."

      Let the end user choose - this mantra smacks of "making the internet safe for the children" that congress is so fond of.

      and before you start flaming, I have no affiliation with the DoJ, Google, or anyone else. I am just an economist who sees this market a bit differently than Masnick.
      Honestly, I can understand in this case how Google can be termed as acting anticompetitive - Mr. Savage paid the same money and bid in the same system as anyone and everyone else, but is now being singled out.

      eh. As I said again, let the market deal with him.

       

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        isaac K (profile), Sep 15th, 2008 @ 3:53pm

        Re: Re: Three points

        Just an additional comment:

        Third, why do site-owner feel the need to sue Google when their "click pass-through" site no longer makes money? How about suing Firefox for allowing users to block ads? How about suing users for having sense to avoid ad-covered sites? How about suing themselves for almost training users to ignore ad-laden sites?


        I agree except for one thing: the sole reason that this person is failing to make money is because Google CHOSE TO RAISE HIS MINIMUM BID in such a manner that he is UNABLE to make money. Google directly acted against HIM personally and HIS MODEL to EXCLUDE HIM from being able to post ads. That is what worries me from an economic perspective, as this DOES smack of monopolistic power.

        Honestly; This is similar to the AppStore delisting the iamrich program. It might not DO anything for the user, but if people WANT to use it, then let them. It doesn't harm apple (google) and in fact generates MONEY for them, but they decided to exercise their prerogative for "quality control" and remove it (apple) or modify it's terms (google)

         

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    isaac K, Sep 15th, 2008 @ 4:02pm

    from the blog you mentioned, Mike

    I quote:
    "The first obvious solution is transparency. If we all knew Google’s standards and trusted that they were, indeed, looking out for the end-user and if Sourcetool knew Google’s standards and abided by them, that would blunt Sourcetool’s complaint. Indeed, part of its complaint is that it can’t find out the standards. But then here comes the Google age wrinkle: If Google revealed its standards, it would only be feeding the needs of evil spammers, giving them to manual to game the system."

    Basically, you are defending Google's secrecy of standards due to Security through Obscurity?!?
    Isn't this EXACTLY the kind of thing you rail against, Mike?

    I tend to agree with your opinions pretty closely, but I am truly surprised to find myself disagreeing with you so strongly on this one.

     

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      Not Mike, Sep 15th, 2008 @ 5:48pm

      Re: from the blog you mentioned, Mike

      Isn't this EXACTLY the kind of thing you rail against, Mike?

      Only when it suits his purpose but Mike is ga-ga for Google.

       

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        Mike (profile), Sep 16th, 2008 @ 3:29am

        Re: Re: from the blog you mentioned, Mike

        Only when it suits his purpose but Mike is ga-ga for Google.

        Hmm. So why is it that I have no problem speaking out against Google when I believe they've made bad decisions? I have many problems with Google, but on this, I think they're being unfairly targeted.

         

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      Mike (profile), Sep 16th, 2008 @ 3:27am

      Re: from the blog you mentioned, Mike

      Basically, you are defending Google's secrecy of standards due to Security through Obscurity?!?
      Isn't this EXACTLY the kind of thing you rail against, Mike?


      A few points:

      1. This isn't "security through obscurity." It's got nothing to do with security.
      2. I do agree that Google would probably be better off if it weren't so secretive.
      3. However, that doesn't mean that it's a violation of antitrust law to be secretive.

       

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    Bill G., Sep 15th, 2008 @ 5:20pm

    Hey, that's what I said!

    "Making Results Better For End Users Isn't Acting Like A Monopolist."

    That's the same thing Microsoft said!

     

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    holy crap, Sep 15th, 2008 @ 5:35pm

    Lame

    Wow - that is really lame.
    Is this the best that the anti-google folks can come with ?
    And our esteemed justice dept seems to be bought and paid for.

    Meanwhile back at the ranch, the SEC is asleep at the wheel allowing the worst financial meltdown since the great depression to occur and doing nothing to stop it, the justice dept is doing very little to pursue and prosecute the perpetrators running off with the loot ........

     

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    Dan, Sep 15th, 2008 @ 10:50pm

    Of course this article comes from the NYT, they probably had McCain's crack technologists research the issue.

     

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    DonD, Sep 16th, 2008 @ 10:07am

    Google's revenue

    It's important to remember that users are not Google's clients. Advertisers are. Users are simply the commodity Google gathers up like seeds of grain and sells by the ton to advertisers -- its customers. They happen to be very good at this so the advertisers keep coming back. Google's action against an opportunist AdSense re-lister is aimed at protecting the value to their customers -- other advertisers who purchase search linkage -- and not necessarily end users who generate no direct income to the companion an individualized basis.

    Compare this to broadcasting, until-now the dominant ad-revenue model which Google will overtake over time and you can see how a single-source market platform will start to look like a monopoly. Broadcasting never became a monopoly because the justice department kept a close eye on RCA. ABC came into existance when the Feds forced RCA to spin out NBC's "Red" and "Blue" networks into separate entities.

    Could that happen with Google? Would it be necessary?

     

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