On April 2015, the European Union released a statement alleging that the company's search results were biased to illegally maintain a monopoly in Europe, and also by saying it had started a new investigation into Google's alleged use of restrictive, uncompetitive agreements to secure Android's dominant market share of the mobile phone business.
As far back as 2008, Google habitually and boldly displayed its comparison shopping service in its general search results pages, regardless of its qualifications. The company will never apply to its own comparison shopping service the slate of penalties-- to which other comparison shopping services are subjected on the basis of predetermined boundaries. This would inevitably result in the lowering of the rank in which they appear in Google's general search results pages.
Froogle, Google's first failed comparison shopping service, never saw any advantages from such biased treatment. As if to compensate for this, the company poured its bias and emphsasis on "Google Product Search" and "Google Shopping," (both subsequent comparison shopping services), which resulted in the artificial growth of the services. This had the direct effect of diminishing rival, (in some cases) greater-quality, comparison shopping services.
Google's infamous reputation and behavior are reflected by its customers and lack of initative from both the company and its rivals. Users' searches may not always display the most relevant comparison shopping results. It follows that rivals are slow to innovate since their products will receive far less priority than Google's product. The basic argument is that Google abuses its position when it displays its own shopping results at the top of the page when you search for items. With this scenario, third-party shopping comparison sites are placed at a disadvantage.
“Don't be evil. …Google users trust our systems to help them with important decisions: medical, financial and many others. Our search results are the best we know how to produce. They are unbiased and objective, and we do not accept payment for them or for inclusion or more frequent updating.” From Google’s 2004 Founders’ IPO Letter
The European Commission has grown wary Google's current business model, which is, in itself, conspicuous by its propensity toward regional dominance. Of course, the question of European Union-antitrust violations arises, prompting the commission to issue a Statement of Objection suggesting that the US-based search company’s shopping comparison system is on a steady course toward being a monopoly. It was inevitable that the Commission would subject the Android operating system to investigation, as it may also violate EU antitrust regulations.
The Commission is also investigating Google’s practice of bundling its own apps such as Gmail, YouTube, and Google Maps along with the Google Play Store. Basically if phone or tablet makers want to ship a phone that has access to the Play Store (and the million or so apps that you can download from that store), they also have to bundle a number of other Google apps
The European Commission’s statement is only based on “preliminary conclusions,” suggesting that Google’s own shopping results should be subject to the same algorithms as other search results. A final decision about concerning actions the Commission will pursue will not appear until after Google issue a formal response.
All Not Quiet on the Western Front
United Kingdom. Google, early in 2013, was subjected to a lawsuit in the United Kingdom for allegedly helping its own business by steering customers away from competitors in search results. The lawsuit has surfaced just a week after the U.S. Federal Trade Commission cleared Google of similar conduct in the United States, and as European regulators conduct their own investigation.
In the lawsuit filed by Foundem, a shopping comparison website, the company owners said that they were unfairly penalized by Google because Foundem offers a competing shopping comparison search service. It lost Web traffic as a result of being pushed down in Google’s search rankings. [Bloomberg, 2013]
Foundem, the British shopping comparison Website, spurred a 2010 investigation by the European Union regarding the monopolistic behavior by Google. In a later lawsuit filed against Google in London, it was "seeking damages for revenue lost as a result of Google's 'anti-competitive conduct". This was yet another instance Foundem has gone after Google in connection with such claims. The EU is still considering actions against Google despite the FTC's 2013 decision in the United States.
The FTC's "formal review" of Google's business practices was issued in June 2011 after similar reviews began in Europe. Meanwhile, the European Commission (the antitrust arm of the EU) began an investigation into the company's search practices after vertical search engines such as eJustice.fr, Microsoft's Ciao, and Foundem issued complaints concerning the company's bias toward its Web services in search results on Google.com.
Google's most infamous reputation is that of spying on its users. In the United Kingdom, the local media alleged that nearly 10 million people may have been victimized by the search giant's spying, which could result in the largest lawsuit in British legal history.
First-order Google stalking: Claimants said they were deluged by phone calls and emails advertising clothes, magazines and bank loans connected to websites they had visited on their iPhones, iPads and laptops.
The case is the latest in a list of concerns over the secretive company, which made £2.6billion in the UK in 2012. It was later doscovered that Google had accumulated data from millions of homes with its Street View cars, which were photographing virtually every road in Britain. The data included passwords and bank details. The company has also been condemned as ‘immoral’ for slashing more than £200million from its UK tax bill in 2011 by pushing revenues offshore. [The Mail]
France. In 2010, the French Competition Authority ordered the company to resume offering its services to a French company,NavX which sells a database to let drivers know where the French police are likely to have radar traps in operation.
“Google holds a dominant position on the advertising market related to online searches. Its search engine enjoys a wide popularity and currently totals around 90 percent of the Web searches made in France. Moreover, there are strong barriers to entry for this activity.” A member of The French Competition Authority.
Google terminated its dealings with the company stating that NavXs customers use the product to help them act illegally with impunity. As a result, those using search terms like “radar trap” in French could no longer learn of the company’s product and, a few clicks later, buy it.
“Google’s dominant position on the advertising market linked to search engines cannot be disputed, especially after the investigation conducted by the French Antitrust Authority, which concluded on December 14th 2010 that Google holds a dominant position." NAVX CEO Jean Cherbonnier
With sales dropping, NavX complained to the French government, that as a result, it had difficulty in raising capital. The authority, having declared Google a monopoly, consequently ordered the search giant to resume selling ads to NavX and to provide clear policies on when advertisers would be rejected.
Germany. Axel Springer, Germany’s biggest publishing company, has long complained again about the search engine’s dominance. The powerhouse publisher succeeded in 2013 to push for the passage of a bill that requires Google to pay for the rights to publish content from German websites that are not links or headlines.
The publisher removed all of its content from Google, along with a number of other publishing companies. Its parent company demanded that Google should pay for the content it was using, to which Google refused.
However, this removal from search resulted in a 40 percent drop in organic search visits, and an 80 percent drop in traffic coming from Google News. The company had no choice but reverse its decision.
Axel Springer stated its regret for relying on Google for financial stability, but conceded to the search engine’s dominance in Germany. Many other EU nations have issued their discontent for the search giant's monopolistic behavior.
Mathias Dopfner, head of Axel Springer, is firmly convinced that 'Google knows so much about its users and could potentially use that data for commercial purposes or more sinister means.' Apparently, the tired urban myth about an omnipresent Google has some validity.
Mathias Dopfner, CEO of Axel Springer, in acknowledging Google's market dominance, stated that competitive search engines did not offer meaningful competition. Indeed, 70 percent market share in search, 60 percent in advertising, runs counter to the "equal ground" philosophy of the internet. In contrast, the biggest German newspaper only has a market share of 9 percent and has been prevented from growing further.
Germany, from experience, realize the serious drawbacks where a single company or organization knows everything about everyone, and the EU is resolute in maintaining privacy laws. The fact that Google's business model has shifted toward obtaining data from its unconsenting users and sabotaging its competitors essentially placed a bullseye on the company.
But we're not the evil empire
In the United States, the most severe punishment for Google's search-algorithm manipulation schemes amounted merely to a harsh scolding from the FTC, despite a 19-month investigation conducted by the agency. To avoid further scrunity and EU-like accusations, Google entered into a voluntary agreement with the FTC to change some of its other business practices.
According to the FTC, there was a lack of evidence to prove allegations from competitors that Google had manipulated its search algorithms to diminish competing Websites and unfairly promote its own competing vertical properties. The initial FTC review in 2011 began after the agency heard complaints from Microsoft, Expedia, TripAdvisor, Yelp and other Websites that Google promotes its Web services above those of competitors. Google, now charged with similar antitrust cases in Europe, will likely experience far more anti-monopolistic sanctions under consideration.
Among the crucial components of the FTC agreement with Google is that the search company voluntarily will end some past business practices that could stifle competition in the markets for popular devices such as smartphones, tablets and gaming consoles, as well as the market for online search advertising, according to the agency. Under a binding settlement with the FTC, Google will allow competitors access "on fair, reasonable, and nondiscriminatory terms to patents on critical standardized technologies needed to make popular devices such as smartphones, laptop and tablet computers, and gaming consoles," the FTC reported.
“That consumers can switch to substitute search engines instantaneously and at zero cost constrains Google’s ability and incentive to act anti-competitively.” Robert Bork, from a 2012 paper commissioned by Google and co-authored by Gregory Sidak, an antitrust expert. The paper had a wide influence; in 2013 the Federal Trade Commission (FTC), which had been looking into action against Google, decided not to proceed.
As part of that agreement, Google will not seek court injunctions to stop competitors from using Google-owned patents that are essential to key technologies used in products developed and sold by competitors, according to the FTC. Many of those patents came from the company's acquisition of Motorola Mobility in May 2012 for more than $12 billion, which included a large patent portfolio of technologies related to mobile and other consumer and business devices.
Google denied all such allegations at that time, noting that its search algorithms analyze Website quality and popularity based on links for placement as part of its PageRank system.
In 2013, Google reached a record $22.5 million settlement with the FTC to resolve charges that Google bypassed Apple Safari browser privacy settings that blocked cookies for their users. While the FTC stated that its investigation was proof of its resolve to protect the public interest, a consumer-rights group attacked the settlement as an example of ineffectual regulation. The group, Consumer Watchdog, is trying to bring more attention to the issue as the FTC completed a separate investigation into complaints that Google has been stifling competition and raising online ad prices by highlight its own services in its influential search engine.
Google Local executives wanted Google to acquire Yelp but were “rebuffed” by Google higher-ups, and an email from from Eric Schmidt, seemingly when he was still Google CEO, has him agreeing to spend a suggested $100 million or so to build up Google Local after a deal for Yelp’s content fell through.
In late 2006, Google decided it needed reviews, addresses, photos, and operating hours of local businesses to compete in local search over rivals. Google eventually revamped Google Maps and Google Local to attract reviews, and seeded them with user reviews from Yelp and TripAdvisor, among others, without attribution or permission, the FTC report states.
Google knew that Yelp and TripAdvisor would be angry about Google launching a competitive product using their reviews as a foundation, and Yelp even eliminated a data feed to Google, the report states, but Google scraped the data anyway. Yelp eventually sent Google a cease and desist letter and started to complain about Google’s practices publicly.
The FTC report notes that Google threatened to remove sites such as Yelp and TripAdvisor entirely from Google search results if they didn’t agree to allow their content, including user reviews, to be used in Google Local.
Yelp, TripAdvisor, and CitySearch sought removal of their user review content from Google Places, which was a competitor. Google told each company that if they wanted to have their content removed from Google Places, they would also have to exclude their websites from being crawled by Google altogether, which meant complete exclusion from Google’s search results in any form.
“While Google never followed through on its threat to remove these websites entirely from its web search results, it is clear that Google’s threat was intended to produce, and did produce, the desired effect (for a significant period of time), which was to coerce Yelp and TripAdvisor into backing down on their efforts to have their valuable content removed from the Google Local product,” the FTC report states. “Google’s threat also sent a message to the broader marketplace that Google could, and would, use its monopoly power over search to extract the fruits of its rivals’ innovations.” [Skift, 2015]
Watchdog groups were particularly disappointed by what they deemed to be a premature decision by the FTC to enter into an on-binding agreement that lacked industry input. As the world awaits the EC’s move, it is clear that the EC has an important role in ensuring that Google is not allowed to engage in behaviour that harms fairplay. Those who felt let down by the FTC settlement will look to the EC to take more aggressive measures against Google and only end with a formal, binding order that holds Google accountable to someone other than itself.
Google is safe--for now. Historically, fast-rising monopolies end up in ugly places. Google, continuously targeted for lawsuits, is destined to spend the rest of its days tied up in one court or another, on both sides of the Atlantic Ocean, rather than directing its focus and return on investments toward its product line and research/development.
There have been calls for Google to be divided into two independent firms, severing its search business from its non-digital activities. Many trade analysts believe that in the interests of promoting competition, big “information monopolies” such as Apple and Google should be forced to choose between being providers of digital content, producers of hardware or information distributors (via such things as cloud-computing services).
However, the exercise would prove harmful. The fact that people have visited these big web firms’ platforms suggests that consumers fully intend to sacrifice some openness for convenience and ease-of-use. Also, the cost of changing providers has fallen dramatically in the broadband era. Switching to a new search engine or music service takes a matter of seconds.
"When placed into appropriate context, Google’s alleged search bias does not amount to anticompetitive foreclosure and the FTC was justified to end its investigation without filing a complaint concerning any monopolistic behavior. These are dynamic markets and it is nearly impossible to identify the power or significance of any player in these markets based on data available today. Such data is already obsolete between the time it is collected and the time it is analyzed. Competition with Google may not and need not look exactly like Google itself, and some of this competition will usher in innovations that Google itself won’t be able to replicate. But this doesn’t make it any less competitive." Geoffrey A. Manne and William Rinehart, Harvard Journal of Law & Technology
The next twenty years. If the current situation persists, one can easily predict a gradual diminishing of the top digital-content providers. As the PC and mobile markets top off, there will be fewer content providers and hardware manufacturers. Rather, the emphasis will go toward big-data technologies, cloud services, and over-the-air (or wireless) content.
The Internet will likely be reduced to an a la carte architecture as an effort to reduce costs and eliminate cyber-crime; the same may be said of cable/satellite tv, wherein the goal is the elimination of the current business model in favor of a video-on-demand model, Internet streaming, and over-the-air digital tv.
The five dominant players in the US, namely Microsoft, Facebook, Amazon, Apple, and Google, will continue to fall under the microscope of global antitrust agencies. This could eventually result in either divestiture or loss of investors; Another, more crucial, factor deciding their fate are the trending technologies. Microsoft, which had long relied upon the PC environment, will likely be absorbed by a consortium of Asian interests for its cloud services, as China and India will become the most populous and strongest economic centers of the world; Facebook will devote all its time and resources to cloud services and big-data technology; Amazon, once fully profitable, will likely rival Baidu, becoming a mega-shopping portal, web and streaming-content provider; Vulnerable to the flattening mobile market, Apple will likely restrict itself to streaming-content and over-the-air digital tv, remaining loyal to its talent.
As for Google, the future is even more clear: first, divestiture, and then, a diminution of its role as a dominant player. The signs (e.g., Google glass, the Google car) were quite evident; possessing an excess of cash to routinely pour into a series of failed ventures; questionable purchases to merely compete in a variety of industries; the application of newly acquired technologies to secure a customer base, even to the point of spying; growing user discontent.
The wearing of Google Glass by Nick Starr in that Seattle restaurant in Nov 2013, followed by restaurant owner stated objection to its use, nearly ignited a social movement. Could this all have been a clever marketing scheme by Google?
Unlike the others mentioned above, Google's growth was based on the availability of new technology, not so much product sales and marketing. Like most large businesses, it will lose its ties with it mission and evolve into an unresponsive, bloated bureaucracy dependent upon favorable government policies to keep it afloat, much like the large banks and General Motors. The company will subcontract its manufacturing arm and will likely cannibalize small mobile carriers to maintain profitability.
Although a fallout will exist among its customer base and its global leadership diminished, it will remain, for a while, America's search engine.
Coming soon:
The eBook version of the popular article If only... will soon be available. This 120-page study tells how General Motors fell into bankruptcy, why Sony is losing marketshare, how IBM had nearly fell to obsolescence, why Russia fell to economic disorder, why Kodak clung to its failing business model, and the maneuvering Apple had to take to save itself from tech oblivion. Indeed, after reading the book, you'll know that the drama involved were just too fantastic to make up!
Post A Comment:
0 comments: