One Click Away? Maybe and Maybe Not

What data should federal investigators seek to obtain from Google?

It would be a misreading of antitrust law to suggest, as some writers have, that American jurisprudence says antitrust law is only "about the consumer, stupid." Likewise, it would be a misreading of the law to claim that it is not intended to protect competitors, or that it should not be used to address complaints by competitors. The Sherman Act, which forms the basis of US antitrust law, explicitly seeks to protect consumers by protecting both "competition" and "the competitive environment." Moreover, it does so by prohibiting the following: (1) actions taken to create a monopoly, (2) actions taken to strengthen and maintain a monopoly, or (3) actions taken to exploit a monopoly by using it to create, strengthen, or maintain a monopoly in additional lines of business. It does protect competitors and competition, and it does not just address protecting consumers. The reason for this is clear: even if consumers do not buy steel or aviation fuel, abusive practices that raised the price of steel or aviation fuel would raise the price of cars or air travel.

Google's first line of defense against complaints of monopoly power is its claim that choice is "only one click away."¹ This claim seems plausible, and it is frequently repeated by Google's defenders. It will be essential to assess this, because the claim is fundamental to much of the rest of the investigation. Google is arguing that consumers can readily switch search engines and companies can readily abandon Google's keyword auctions. How can Google have power over consumer search even if its market share is overwhelming, if consumers can readily abandon Google and search elsewhere? How can Google have power over companies that complain about the price of keywords or the structure of its keyword auction, if companies can readily abandon Google and buy keywords elsewhere? How can Google have power over companies that complain that Google discriminates against them, if they can easily position themselves more attractively on other search engines? If consumers are truly "one click away" from competitors in search, and if consumers truly do use their "one click away" option, then establishing abuse by Google will be more difficult. Consequently, the truth of the one click away argument should probably be the first subject of investigation.

The One Click Away Defense

If consumers are not really one click away, then numerous possible antitrust and unfair competition abuses become more plausible, including unfair pricing, unfair presentation of search results, and a host of other alleged violations of Section 2 of the Sherman Act and Section 5 of the FTC Act. All of these can harm competition and directly or indirectly harm consumers. The absence of true one-click mobility for consumers does not prove that abuses have occurred, but it makes their occurrence more plausible, including the major violations alleged in the European Union Complaint against Google.

First, we need to know if consumers switch search engines or not. If consumers principally use only one search engine, and if companies want to reach all consumers, then companies need to participate in both search engines and need to pay the fees demanded by both. Some abuses are indeed possible if consumers use only one search engine, even if they could use more.

Second, we need to know if consumers use an alternative search engine to duplicate the same query. Consider the similar situation of consumer behavior in air travel, which we have analyzed for over two decades. Today, two well-known online travel agencies, Orbitz and Travelocity. Orbitz uses Travelport, and Travelocity uses Sabre. Most travelers check one of the major comparison engines for any single flight, so airlines need to listed in both GDSs and need to pay both of their fees. Similarly, if consumers use Google, Bing, or Yahoo, but seldom use more than one for any given search, then companies have to pay the fees of all search engines to ensure that they are found by all consumers. Some abuses are indeed possible if consumers use only one search engine at a time, even if they do use different search engines at different times.

Investigation The One Click Away Defense

What would an investigation of the one click away defense entail? What does the one click away claim mean, and how would you know if it is true or not? There are at least three separate areas in which data can be obtained from Google and others, to assess the accuracy of the one click away defense.

1. We need to know if consumers act as if they are one click away from other search engines, and if they do not we need to know why. If they do not act as if they are one click away, then the various abuses alleged become possible. And if consumers do not act as if they are one click away because of actions Google may have taken to interfere with competition, then we need to identify these as well. We can debate whether consumers frequently do comparison-shop by using two search engines or do not. We can debate the conditions under which consumers use more than one search engine. We can debate the types of searches for which consumers will abandon a search engine that produces results that surprise them and the types of search for which consumers will stay with a search engine because it provided unexpected recommendations. But we simply do not know.
2. If Google has taken actions intended to make the one click away option less available to consumers, then that raises the possibility of antitrust abuse, based upon the Sherman Section 2 prohibition of actions intended to gain, maintain, or strengthen a monopoly. Exclusive marketing agreements are one way to keep consumers from being one click away. For example, AOL and Google have signed a second 5-year exclusive agreement, and Google is the only search engine available at AOL on any AOL page; I have not figured out how to change the default. Search at sites as diverse as my university and at the New York Times are likewise both powered by Google, and, likewise, I have been unable to figure out how to change the default. Google's SEC filings have indicated that they deliberately overpaid for some of these exclusive deals; perhaps full discovery might disclose Google executives' intent. Other ways to make one click away difficult would include prepackaging integrated search with Chrome (much as Microsoft was accused of doing with Internet Explorer and Windows), or making Google Toolbar persistent and difficult to delete (again, as Microsoft was accused of doing with IE). Android phones are, not surprisingly, Google phones; if I want to set up an Android phone I need a Google account, and my geo-positioning data are reported to Google, and my phone has Google search pre-installed; I cannot, however, uninstall Google search or reset my default search engine to any alternative. I guess I could "one click" start my car, drive to another cellphone provider, and see if I can find one that offers the Android phone without a restrictive agreement on search, but that scarcely fits the common understanding of the meaning of "one click away." Even superior integration of free offerings, like YouTube, could be seen as subsidies to keep consumers with Google. If consumers do not act as if they are one click away, then we need to know whether this is simply because Google is superior, or because Google has limited consumers' mobility; the first is a result of offering superior search, while the second is unfair and illegal competition.
3. If Google has used its monopoly control over its corporate assets to limit competitors' ability to make one click away attractive to consumers, that opens up different possibilities for anticompetitive behavior, again banned by Sherman Section 2 prohibition of actions intended to gain a monopoly, intended to maintain, or strengthen a monopoly, or intended to extend that monopoly to other areas. Google might have take actions to make other search engines less attractive, as by denying them access to Google's books or to YouTube. Even massively subsidized Google phones could be shown to be a Section 2 violation if (i) they were intended to make the phone and its integrated Google search more attractive and (ii) this could be shown to be intended to strengthen monopoly power in search or to extend monopoly power to mobile search or other aspects of mobile marketing. If consumers do not act as if they are one click away, then we need to know whether this is because Google has limited competitors' ability to make their offerings attractive; once again, this is unfair and illegal competition.

Implications and Subsequent Areas for FTC Investigation

Most importantly, as I have noted elsewhere, if consumers are not truly one click away from other search engines, then corporations are not one click away either. If my employer requires that I book through the company's corporate travel agency, then any airline that wants to be found by my company's employees has to pay the fees to be listed in the GDS used by my company's travel agency. If my employer requires that I use Verizon, and I want an Android phone, then I am not one click away and neither are the companies that hope to be found by me or my fellow employees.

Depending on the results of a "one click away" investigation, the following investigations become more or less critical:

1. If consumers cannot or do not readily switch search engines, then Google's extraordinary market share gives it great power to extort monopoly prices from companies that must participate in their keyword, harming consumers who purchase these companies' products.
2. If consumers cannot or do not readily switch search engines, then Google's extraordinary market share gives it great power to influence what consumers find when they search, enabling unfair and deceptive marketing practices.
3. If consumers cannot or do not readily switch search engines, then Google's extraordinary market share gives it great power to influence what consumers find when they search, enabling it to harm competitors in a wide range of businesses in areas other than search, like retailing and travel. This can entail harming companies that would be as efficient and as effective as Google is in these areas but for their limited access to consumers, creating a clear violation of Section 2 of the Sherman Act, of American law on monopolization, and on European competition law.

Subsequent posts will address how to investigate these potential abuses.

¹Indeed, a Google search for "one click away" produces over 9.5 million results, almost as many as "In God we Trust," slightly more than "girls just wanna have fun," and more than 50 times more than "God Save America."

 

Comments

[CenaW]

11:01 AM on 08/17/2011

You can live without google.

http://www.thesearchenginelist.com/

[CenaW]

10:59 AM on 08/17/2011

Informative.
I don't use google, the more I have learned about them
the more I avoid them. I even avoid using sites that use google for their own searches.
I know it is extreme and one person is not important.

[Eric K Clemons]

12:36 PM on 08/17/2011

thanks.

[raoulhubris]

10:34 PM on 08/16/2011

Will Google be best known for creating the three dimensional monopoly?

[Eric K Clemons]

10:45 AM on 08/17/2011

Cute. I have no idea what it means, but cute.

[raoulhubris]

12:49 PM on 08/17/2011

Not sure myself but I know they've got horizontal and vertical sewn up.

[Kangaruhs]

03:58 PM on 08/16/2011

In response to this email, I ran a little experiment:

Typed in Bing into Chrome's omnibox and clicked on the first link.
On Bing's search page, I selected "news"
In Bing's news page, I selected "science/technology"

Google's acquisition of Microsoft is *completely missing* from Bing's News page. What's up with that?

[Eric K Clemons]

10:46 AM on 08/17/2011

I just typed news science technology into google and did not see the acquisition there either. what's your point?

[BuckCarson]

03:30 PM on 08/16/2011

Holy cow. Google, Bing and Yahoo are today sort of like where automobile manufacturing was with Henry Ford.

Why don't we become a little stronger by embracing these companies rather than spending our time on the sidelines taking pot shots at them.

Rather than using my tax monies to sick lawyers at these people, start paying a little more of your time learning the technology and participating in this great era.

The bigger sin is the waste of human talent going into "Management" and "Law" and "Accounting".

These are the professions are sucking the life out of consumers.

[Eric K Clemons]

10:50 AM on 08/17/2011

Well, maybe. And maybe, holy cow, Google is where Standard Oil is with John D. Rockefeller. A one line response may be cute without being an effective rebuttal.

And sometimes the economy is stronger when we monitor and regulate behavior of corporations, and sometimes it is not. An investigation is not a conviction nor does it presuppose any specific outcome.

I believe the verb you were looking for is "sic".

But, without using words like "sin", i think that our economy would be well served with more talent going into engineering and the sciences. I think you and I agree on that.

[BuckCarson]

06:50 PM on 08/18/2011

Perhaps we are better off improving the economy by creating rather than destroying. Perhaps the economy would be better off if we spent time reviewing our own motives in lawsuits.

Children are being separated from parents, men and woman are dying young due to severe anxiety, suicides are occurring at an alarming rate, IRS representation companies are growing rapidly, liens, wage garnishments, homelessness - much of this is due to the severe contamination of cholesterol of our economic bloodstream arising from excessive regulation.

The law, the tax system, the severe negative orientation of our people toward anything non-government dwarfs the impact of Google or any other company enjoying success in America.

Just remember, a man is likely to mind his own business when it is worth minding.

[yegg]

01:45 PM on 08/16/2011

"If Google has used its monopoly control over its corporate assets to limit competitors' ability to make one click away attractive to consumers"

I run a search engine called DuckDuckGo. Google purchased the On2 corporation and inherited duck.com in the process. That domain had been abandoned by On2 and pointed at a history page.

Google kept duck.com pointed at that history page and pointed on2.com at an acquisition page.

I had inquired about purchasing duck.com for my company before the acquisition and after. Eventually Google decided to point the domain right at their main search engine page.

I don't know why they chose to do that, or if it had anything to do with my inquiries, but it has the effect of confusing my users.

For example, this is a piece of feedback someone submitted on our forum, and there are more like it: "I was telling someone about DuckDuckGo and they thought it was Duck.com and they went to Google. Is Google using this to find people who make the mistake to Duck.com instead of DuckDuckGo?" [1]

Matt Cutts recently told people to check us out an official Google Webmaster video [2]. In that video he also alternative search engines are "good for users, as long as people are competing on level, or fair playing ground."

[1] https://duck.co/topic/duck-com-redirects-to-google
[2] http://www.webpronews.com/matt-cutts-blekko-duckduckgo-2011-05

[Nathan Wicker]

11:12 AM on 08/16/2011

"I cannot, however, uninstall Google search or reset my default search engine to any alternative."

Although I cannot uninstall the Google search app, I can install the Bing app and use it instead. In the Android browser, I can choose between Google, Bing, and Yahoo as my default search engine. Even with these options, there is still preferential treatment of Google search through the hardware search button and voice search which both default to Google search without an apparent way to switch. It would be smart for Google to change the Google search app to a general search app and allow users to set a default search engine for the hardware search button and voice search.

[FBuchan]

10:34 AM on 08/16/2011

Based upon Google's defence, which is that at any moment a sea change of consumer opinion could render them irrelevant, one really has to wonder how the shareholders feel about that argument. It seems odd that a company who is that potentially vulnerable is worth much of anything.

Yes, that is sarcasm.

If Google is judged by the same yardstick that nailed Microsoft years ago, they will probably lose their arguments. It was always possible to use another browser, for example, but that did not prevent Microsoft being slapped about regarding Internet Explorer (IE). Hence, by that standard, if even a single Google service is ubiquitous (search is probably so, in this case), all other tied services are potentially in the same position re the Windows/IE argument of old.

A more interesting question is how much innovation is stifled by the stranglehold these large corporations have on patents that are questionable.

[BIGELLOW]

10:45 AM on 08/16/2011

Microsoft didn't get in trouble merely for making Internet Explorer the default in Windows. If they had not already run into legal troubles with Windows, the Internet Explorer debacle would have been a moot point.

The problem with Internet Explorer particularly pertained to the legal troubles Microsoft had already faced with Windows. Windows was a monopoly not because people had no choice, but because making a switch from Windows to another operating system was costly and, in some cases, put consumers and businesses into a position of having to completely change their habits when their usual software was now unavailable to them.

This isn't the case with Google. Bing very much acts just like Google. So, anyone who wants to perform the same type of search they would normally perform at Google may do so at Bing and get a similar experience.

Problems would arise if you could not search using Bing from, say, and Android device. That would be a scenario where owners of Android phones would have to go through a costly switch in order to use a different search engine. Since this isn't the case at the moment, it's definitely an area to keep a close watch.

[Eric K Clemons]

10:52 AM on 08/17/2011

Yes. I'm not sure how much Google has innovated, or even attempted to innovate, and how much they have replicated and attempted to improve. That is the subject of another post because, indeed, patents can be both useful in stimulating innovation and dangerous in stifling it.

[Eagleeyes]

09:59 AM on 08/16/2011

"If consumers cannot or do not readily switch search engines," The "or do not" part of that sentence is what bothers me, I get the cannot part. Consumers can set a browser bookmark to any search engine their little hearts desire, if they "do not" the "great power to extort monopoly prices from companies" becomes an issue.
I can't buy this argument. There's got to be something better to write about... and much better things to investigate.

[BIGELLOW]

10:48 AM on 08/16/2011

I agree. This article makes it sound as though the mere choice by consumers is enough to declare a monopoly. The problem with this is, there is always going to be a #1. If it's up to consumer choice to determine a monopoly, it means that whomever becomes #1 will automatically get the ban-hammer until the #1 position changes, putting the next player into the cross hairs. This isn't the basis of a free market. It's a basis for preventing any business from ever wanting to achieve greatness.

[Eric K Clemons]

10:32 PM on 08/16/2011

Thanks for the chance to clarify. The argument is a bit complicated. i was not saying that if consumers choose Google this demonstrates a monopoly! I was saying that if consumers do exhibit a range of choices then it is hard to dispute the one click away argument and hard to argue that there is a monopoly. I was not saying that the absence of consumers exhibiting a range of choice shows a monopoly! I was however saying that if consumers do not take the one click away option we need to know why.

I hope that is clear. Range of choices undercuts the monopoly argument. No range of choice sets up discussion of monopoly but does not alone prove anything about illegal monopoly. But it makes discussion possible.

That is, I hope, pretty clear. If consumers click away there is no problem. If consumers do not click away there may be a problem and we need to know why.

If consumers do not click away and if Google has acted to make it harder for them to click away, or harder for competitors to induce them to click away, then there could be a problem for Google.

I hope that's more clear now. If consumers do exercise choice in search engines to a significant degree the monopoly argument loses a lot of its power. If consumers do not exercise choice in search engines the monopoly argument is relevant if Google has acted illegally to limit their choice.