The Anticompetitive Nature of Today’s Tech Giants

Sunday, February 5th, 2017 at 10:24 am, by Darren Pouliot

Google, now one of the many companies organized under Alphabet Inc., may again be in the FTC’s crosshairs sometime soon. In a widely followed investigation by the United States Federal Trade Commission which concluded in 2012, the FTC expressed concerns that, among other things, the search giant was using its market position to unfairly favor its own services in the search results users saw.

At the time, Google had begun to move away from purely “organic” search results, i.e. those determined by its algorithm to be the most relevant to the user’s request. Though known globally for its simple Google.com search box, Google actually runs many “search engines.” The main one ordinary users see on Google.com is horizontal, in that it performs the widest possible search of the Internet to return relevant results. It doesn’t search any particular category of websites; it searches them all.

But as anyone who has ever searched for a flight or the weather on Google.com knows, Google has other search engines for specific categories of things. When a user searches for “flights from JFK to SFO,” for example, Google doesn’t merely return a list of links to travel websites. It goes further and provides a list of flights and fares, right on Google.com. This type of deep searching is called “vertical search” because it covers only a particularized category of content and delivers information directly to the user. Google combined its “vertical search engines” with its already-dominant “horizontal search engine,” Google.com. The FTC was concerned that Google unfairly competed with other sites that perform vertical searches and that consumers were being harmed in the process. Many studies, including one by Columbia Law School’s Tim Wu and Harvard Business School’s Michael Luca, indicated that this practice produced lower quality search results. The FTC ultimately concluded there were legitimate business reasons which benefited consumers from Google’s incorporation of its vertical search results into its Google.com results.

One of the most concerning aspects of Google’s conduct was relegated to a footnote by the FTC, and may be front and center again soon. In addition to the improper favoring of Google’s vertical search results, the Commission also investigated allegations that Google had “scraped” content from other websites and “passed this content off as its own, and then threatened to delist these rivals entirely from Google’s search results” if they complained. It survived adverse action by the FTC by agreeing beforehand to end the practice entirely. In 2016, Google may have resurrected this practice in a way that raises many of the same concerns from the 2012 investigation.

Rather than surreptitiously scanning the content of websites and passing it off as its own, Google now does so out in the open. Google calls it Project AMP. AMP (“Accelerated Mobile Pages”) is effectively a new website format that’s only viewable within Google. It’s designed to instantly load publishers’ content and present it to the user while they’re still on Google.com. Google claims it provides a large benefit to users who will no longer have to wait to be redirected to read a site’s content. The content, sans website, will load almost instantly.

A few features of the project conjure up concerns form the FTC’s prior investigation. First, the fundamental problem with website scraping remains: users now see other entities’ content on Google.com. Google still identifies the content as belonging to someone else, but to the user – who no longer has to leave Google – the attribution is somewhat hollow. This is particularly true for Google, where users are driven by the desire for information (indeed, “googling something” has become synonymous with “looking it up”). The issue with incorporating “vertical search” into its results was precisely Google passing off information it obtained with its own engines rather than directing people to an organic list of vertical search engines.

Google will insist that the AMP project is easily distinguishable from its past web scraping practices because participation by publishers is entirely voluntary. Indeed, it is publishers who create AMP pages that Google then displays in its list of search results. However, the FTC may be concerned about the lack of choice in the matter. Google’s algorithm prioritizes AMP pages over similar standard web pages. Further, the publisher’s long-term interest may be negatively impacted. With AMP, users only see a single article and no other part of the website. Publishers’ ability to market themselves and compete for users’ attention depends entirely on the article which the user clicks and the attribution from Google. The ad revenue from users visiting multiple articles in a single website visit is lost. The opportunity to encourage users to create an account or enforce a paywall is lost. Publishers can either hand over their content, stripped of their surrounding website (not to mention the numerous tracking technologies publishers use to analyze their users’ habits), or they can suffer in Google’s ranking.

Finally, AMP pages introduce two novel concerns the FTC didn’t encounter in the prior investigation. First, the AMP format is proprietary in that Google controls the code behind it and every AMP article link redirects the user to Google.com. This has been a trend in 21st century media companies. For example, Facebook introduced Instant Articles in 2015 as a way of keeping users locked into its website and exerting control over publishers.

That relates to the second novel problem: in controlling the format for AMP, Google also controls which ad networks publishers get to use to insert ads into their AMP pages. Facebook exerts similar control over its Instant Articles. According to web analytics firm comScore, the companies turn out to own some of the largest ad networks in the world. When Google and Facebook can control what ad networks publishers use, it eliminates competition in those markets by virtue of the two companies’ dominant online positions. And down the road, nothing is to prevent either company from imposing unfair ad rates on publishers, or taking a cut of any advertising publishers do through AMPs or Instant Articles.

The FTC may soon be concerned about the long-term effects on the publishing industry from a scheme that allows, at least in theory, web giants to bleed dry this socially useful enterprise.