May 9 (Bloomberg) -- The U.S. Justice Department stood up for consumers last month by requiring Google Inc. to submit to significant conditions on its takeover of ITA Software Inc., a company that specializes in organizing airline data. The department’s enforcement action was important. Almost 40 percent of all online commerce relates to travel, according to comScore Inc., and ITA provides key flight search technology for Orbitz, Kayak.com, Expedia Inc.’s TripAdvisor and many other travel Websites.
According to the department, without the judicially monitored restrictions, Google’s control over this key asset “would have substantially lessened competition among providers of comparative flight search websites in the United States, resulting in reduced choice and less innovation for consumers.”
While the department’s action goes far to protect online travel site users, it doesn’t eliminate the threat to competition posed by Google, both in travel and across the Internet. Google already has control over an even more powerful asset than ITA: its dominant search engine.
Google’s search engine has become the central nervous system that enables users to navigate the hundreds of millions of sites that exist on the Internet. Google accounts for more than 70 percent of searches in the U.S. and more than 90 percent in many other countries, according to StatCounter Global Stats. As a result, Google wields enormous power as it directs users around the Internet.
Competing ‘Vertical’ Services
Initially, Google was only a general search engine and had incentive to direct users to the sites most likely to answer their queries. Now Google also offers services that compete with other sites to provide specialized “vertical” search services in particular segments (such as books, videos, maps and, soon, travel) and information sought by users (such as hotel and restaurant reviews in Google Places).
So Google now has an incentive to use its control over search traffic to steer users to its own services and to foreclose the visibility of competing websites.
There are numerous indications that Google is making it difficult for other sites to compete, including the following:
-- Search Manipulation: Multiple companies have filed complaints with the European Commission alleging that Google improperly lowered their search rankings and essentially made them disappear from Google’s search results.
Foundem, for example, is a UK-based shopping site that saw its rankings drop suddenly and that was only returned to visibility after journalists began asking Google some tough questions.
-- Search Display: Google has led users to expect that the top results it displays are those that its search algorithm indicates are most likely to be relevant to their query. This is why the vast majority of user clicks are on the top three or four results.
Google now steers users to its own pages by inserting links to its services at the top of the search results page, often without disclosing what it has done. If you search for hotels in a particular city, for example, Google frequently inserts links to its Places pages.
-- Use of Content from Others: Google displays content from other sites without their authorization to keep users on its own web pages and away from the sites that invested in the creation of that content.
For example, TripAdvisor has invested millions of dollars to collect more than 40 million high-quality user reviews on local hotels and restaurants. Google scrapes these reviews without authorization from TripAdvisor’s pages and displays them on its Places pages, in a manner that is often misleading and even inaccurate.
When TripAdvisor demanded that Google cease and desist, Google refused and sought to coerce TripAdvisor by tying the removal of TripAdvisor content from Google’s Places pages to removal of all TripAdvisor results from Google’s dominant search engine. Sites such as Yelp have voiced similar complaints.
All of these activities by Google warrant serious antitrust scrutiny. There are signs that the federal antitrust agencies -- Justice and the Federal Trade Commission -- recognize the need to investigate.
The Justice Department in its ITA challenge expressly reserved the question of whether Google’s conduct is unlawfully maintaining or extending its search dominance, and it’s requiring Google to report certain allegations of unfair conduct. For their part, some FTC officials have publicly expressed a concern over the state of competition in online search.
It’s important for consumers that antitrust enforcers thoroughly investigate Google’s activities to ensure that competition and innovation on the Internet remain vibrant. The ITA decision is a great win for consumers; even bigger issues and threats remain.
(Tom Barnett, a partner at the Covington & Burlington law firm, was assistant attorney general for antitrust at the U.S. Justice Department from 2005-2008. He is an external counsel to Expedia Inc. The opinions expressed are his own.)
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