Engine trouble
The European Union is right to take a closer look at Google
THIS year is turning into an annus horribilis for Google. First the search giant attracted almost universal opprobrium and a tonne of legal headaches when it accidentally recorded personal data from unprotected wireless networks in various countries. Then some much-hyped new services flopped, in particular Google Wave (see article).
Now it faces a formal investigation by the European Union into allegations that it has broken antitrust rules by abusing its dominant position in the online-search business to stifle competition.
The European Commission, which announced the investigation on November 30th, says it will look into several issues. One is whether Google has manipulated the algorithms that underpin its search engine in order to penalise links to competitors in search rankings. Another is whether it has tried to impose agreements on websites that prevent them from running ads that compete with those delivered by Google.
News of the investigation predictably sparked complaints in America that Europe was once again out to bash a wildly successful American firm. Yet such gripes overlook the fact that Ciao, one of several companies that have complained to the EU about Google’s behaviour, is owned by America’s Microsoft, which also has links to another complainant. They also ignore the fact that the gravity of the allegations merits a close look by regulators.
The Essay on Google Search
What are the company’s key resources and competitive capabilities? What competitive liabilities and resource weaknesses does it have? What opportunities exist? What threats to its continued success are present? The key resources and competitive capabilities of the search industry are due to the huge company’s success. For instance, Google gains the trust of users through reliable, accurate ...
Google is confident that the investigation will conclude it has done nothing wrong. It acknowledges that an element of judgment is involved in deciding what results its search engine should prioritise; without this, the information that it serves up would be less relevant to users and riddled with spam. But it insists that it has never tinkered with the results of searches to give its businesses an unfair advantage. And it says that the notion that it has a dominant market position in European markets is wrong, as the competition is just a click away.
Perhaps, but Google has been able to turn itself into a verb precisely because the company has become a default option for so many folk combing the web. Indeed, its stickiness is such that its share of online searches in many European countries is even higher than in America, where it accounts for two-thirds. Google also dominates the market for search-related online ads. And its strong position does not come as a surprise. Because of scale economies and network effects, the information-technology business tends to spawn networks that swiftly become dominant—think of Facebook in social networking.
Can you dominate and not be evil?
This leaves firms open to accusations of abuse unless their pricing and rules of engagement are crystal clear. Google argues that it is more open than most and offers firms plenty of tips about how to get stellar rankings in the form of blogs, a webmaster site and other formats. Yet it has been found wanting. Earlier this year, antitrust officials in France concluded that Google had abused its dominant position there when it barred Navx, a company that provides location data, from advertising on its AdWords service. And they called on Google to be clearer about the rules governing AdWords, which experts liken to a “black box”.
Given all this, the EU is justified in shining a light on Google’s activities. The search firm may not like this, but because of its clout it should not be surprised at being the subject of intense scrutiny. Google has been able to grow so fast on the web by insisting that others be as open as possible with their information. It can hardly object when the tables are turned.
The Essay on Google Searching
Searching for information on Google is like trying to find a needle in a haystack. Is that true? Google was founded by Larry Page and Sergey Brin in 1998. They got its name from the mathematical term googol (a number that has a one followed by a hundred zeros. The intention of Goggle was to help control the all the information on the web. That being said they have made searching for information ...