Stephen Foley: Regulators should resist temptation to gore Google over Frommer's move
There have never been so many options for finding pertinent information
Stephen Foley is a former Associate Business Editor of The Independent, based in New York. He left in August 2012. In a decade at the paper, he covered personal finance, the UK stock market and the pharmaceuticals industry, and had also been the Business section's share tipster. Between arriving with three suitcases in Manhattan in January 2006 and his departure, he witnessed and reported on a great economic boom turning spectacularly to bust. In March 2009, he was named Business and Finance Journalist of the Year at the British Press Awards.
Saturday 18 August 2012
US Outlook: Google's acquisition of Frommer's is a red rag to regulators. Toreador Larry Page, the search engine's chief executive, has dropped any pretence that the company's mission is simply to "organise the world's information", as it has long claimed.
Frommer's is one of America's oldest and biggest publishers of travel guides, and the $25m (£16m) deal puts a herd of travel writers and editors on Google's payroll. The search engine is a content company now.
For all those other companies producing travel guides, the Lonely Planets and the TripAdvisors, Google's move is very bad news indeed. It won't be long until Google starts throwing up Frommer's content at the top of its page when people search for their next holiday destination, and that means we will all be less likely to click on links to other guides – even the ones lucky enough to get on the first page of Google results.
The deal is going to be highly interesting, to say the least, to the competition authorities in the US, Europe and elsewhere, who are already investigating whether Google manipulates its all-powerful search algorithm to favour its own content over rivals'. FairSearch.org, an anti-Google lobby group whose members include Microsoft, TripAdvisor and Expedia, warned of "potentially devastating effects on the online economy".
That is self-serving hyperbole, but there is no dispute that Google has massive power over what succeeds and what fails on the internet. It accounts for two-thirds of all US internet search queries, according to ComScore, and the figure is even higher outside the US. A tweak to the Google search algorithm in 2010, designed to beat back so-called "content farms" that put up low-quality webpages just to attract clicks from search engines, hurt the profitability of About.com so much that its parent company, The New York Times, decided to sell it.
And now that it runs its own snazzy, price-comparison shopping service at the top of the page when you search for "running shoes" or "laptops" or some other consumer item ("Shop for laptops on Google," it says), fewer people are clicking through to e-commerce sites that show up in the normal search listings below. But Google is not that much concerned about which companies happen to win or lose in the never-ending battle for real estate on its search page. It is focused where it should be, on getting its users to the content they want in the shortest possible time. Anyone who has tried to search for good travel information knows that Google search results currently throw up a hair-tearing number of spam sites and low-quality travel agents. If the purchase of Frommer's helps Google make sense of the chaos, great. And if I don't like it, I'll keep going to RoughGuides.com.
But what of the competition question? Is Google abusing a monopoly in search to build a content company that will eventually squeeze out rivals, to the detriment of choice on the internet? Should regulators step in to the battle for real estate on the Google search page, and set rules for whose links go where?
I'm not convinced they should, and the reason is that I'm not convinced Google has a monopoly position in searching the internet. Yes, the 67 per cent market share is large, and Microsoft's Bing has stalled below 16 per cent, but these figures could change quickly if Microsoft – or more likely, a new pair of graduate students at Stanford University – invent a better search engine.
In any case ComScore is measuring only explicit searches on a search engine webpage or in a browser search box. Yet the way we search for information on the web is constantly changing, changing fast and changing to Google's disadvantage.
Just a few things to keep Mr Page on his toes: we are already serendipitously finding our way to content through friends on Facebook and, as the failure of Google+ indicates, there is no guarantee Google will have a monopoly in the coming era of "social search". Apple is working to perfect its voice-activated search engine, Siri. User-generated review sites and apps like Yelp are much better guides to local businesses, such as restaurants, than Google.
Far from feeling entrenched, Google feels scared, such is the speed of innovation on the internet. Right now, there is no sign of users being harmed; quite the opposite, there have never been so many options for finding pertinent information and quality content on the web.
The competition authorities would be wisest to stand back and see what happens, rather than to rush in with an attempt to gore Google.
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