Last week, we featured a piece on how Jio is likely to achieve what no other telecom operator in the world has managed to – creating a layer of profitable services on top of the network access, the primary means of relationship with the subscriber. This article in The Markup with some interesting graphics shows how Google is using its search engine, the primary means of relationship with a user to direct traffic to its own properties by delivering preferential search results.
“We examined more than 15,000 recent popular queries and found that Google devoted 41 percent of the first page of search results on mobile devices to its own properties”
And the properties Google is going after are some seriously profitable and valuable ones, especially in the areas on online travel – flights and hotels. Booking Holdings (erstwhile Priceline, owns Booking.com), one of the world’s largest hotel and flight booking companies is valued at c.$70bn.
“The effects of placing its own products on the search page can be stark: In the nine years since Google Flights and Google Hotels launched, those sites have become market leaders. They garnered almost twice as many U.S. site visits last year as each of their largest competitors, Expedia.com and Booking.com, even though we found Google Flights doesn’t always show users all the options.”
And the effect is amplified as not only Google eats into the business of these companies but it also enhances its core business – ad space “Google makes five times as much revenue through advertising on its own properties as it does selling ad space on third-party websites.
…“Google makes the most money when, long term, they can addict searchers to their platform,” said Rand Fishkin, a search engine analyst and frequent Google critic who found that 12 percent of real-world clicks on the search results page go to Google properties. “If Google can train you, don’t go to Genius.com, don’t go to TripAdvisor, don’t go to the restaurant’s website, just come to Google—always come to Google—then they win.”
Unsurprisingly, this has been a subject of much litigation where Google seems to have got the benefit of doubt from the regulators who argue that Google’s properties such as Youtube and Google Maps are genuinely the best in their category.
“…some regulators have defended the company’s practices, pointing to the Federal Trade Commission’s 2013 ruling that highlighting its products on search “could be plausibly justified as innovations that improved Google’s product”; and a U.K. High Court finding in 2016 that returning Google Maps for location queries was not an abuse of market dominance”
However, the article shows Google’s properties are not always the best for consumers. Amongst other examples, it shows the case study of an online language translation site which has succumbed to Google translation.
“… “Google helped build the free internet. And now they’re helping dismantle what they built,” said Chris Cummings, CEO of Curiosity Media, which owns the translation website SpanishDict.com.
The site provides free translations and dictionary entries, many written by linguists and translators, he said. It is ad-supported and needs web traffic to survive. For years, he said, it grew as Google grew. But then Google began giving the top spot in searches to Google Translate, which is automated and asks users for corrections.
“The big loss is for consumers,” he added, “because nobody thinks that Google Translate is the most accurate translator.”
He said data from the Google Search Console tool for websites shows SpanishDict gets as high as 80 percent or more of the clicks when it’s the top result but only 2 percent when Google Translate appears above it.”
And in travel: “In the industry, Google Flights is not seen as the best product. It did not crack the top 10 of Frommer’s 2020 ranking of airfare search engines, for instance. The Markup found that Google Flights did not always display the cheapest fares or all available flights, even when those fares and flights showed up in ITA Matrix, which is powered by the same software Google acquired in 2010 and used to launch Google Flights.”
Vertical integration isn’t new in business but Google’s competition with its own customers gives a sense of the power of the search engine monopoly:
“…And travel sites aren’t just Google’s competitors; they’re also its customers….Together, Expedia and Booking spent $5.8 billion on Google advertising in the 12 months ending in September 2019, according Skift, the travel research firm. “When they compete against their advertisers … I think it’s bad practice,” Barry Diller, chairman of Expedia Group, said during an earnings call in February in which he called Google an “existential” threat.”
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