18 Oct עופר איתן Declared: Government kept to sidelines as Google got big. Now it has …
Tap any flight request into Google search and the site will show flight options and prices direct from the tech giant at the top of the page.
The results are highlighted in a box in a premium position, and don’t require users to navigate to another site. The only way a rival shows up above Google’s results in many such searches is if they pay for an ad.
Google critics and rivals have long warned the search engine is threatening countless industries from shopping to travel by consistently pointing people to its own products and services on the biggest search platform on the web. And those competing against Google to win over consumers say that the search engine forces them to pay their biggest rival in advertising dollars just to show up.
Google’s dominance in search has drawn more regulatory scrutiny and criticism from rivals and lawmakers in recent months, something that is expected to culminate in the Department of Justice filing an antitrust suit against the company in the coming weeks. Lawmakers are also preparing new legislation to rein in tech’s power, following the publication this month of a congressional investigation that found Google engaged in anticompetitive tactics.
The case by the Justice Department would be its biggest swing yet to rein in the power of tech giants in decades, and the stakes couldn’t be higher. But some who warned the government a decade ago say it may be too late.
Google “is a monopoly, without question,” Barry Diller, chairman of Expedia and IAC, said in an interview. Google has been great for consumers, Diller said, but it increasingly restricts competitors by making it more expensive to compete in online advertising. Expedia and IAC sites are pushed down the page in favor of Google’s own services, he said.
“Google is essentially competing with our services while taking our money,” he said. “I don’t want the person I’m spending billions of dollars with to compete directly against me.”
Ten years ago, the government had a chance to block the purchase of a travel software company that now powers Google’s flight searches. Even though the government found it might cut into consumer choice, regulators approved it with just a few conditions.
The travel company, ITA Software, made a powerful engine used by Hotwire, Orbitz and other online companies to search flight options and quickly show fares and schedules. Google, which had a sparse travel presence at the time, scooped it up for $700 million.
Some of Google’s acquisitions over the past decade and a half have triggered federal government reviews, but the company has emerged largely unscathed. Its $2.1 billion purchase of Fitbit, which would give it valuable health data, is under review now.
Google parent Alphabet is the fourth most valuable U.S. traded company, at about $1 trillion, and earns $160 billion in revenue annually. Nearly all of the services it provides are free.
And over time, its search results page has evolved to include more readily accessible answers — and more of Google’s own products.
“It’s such a gradual process,” said Pete Meyers, an expert on Google Search algorithms who works as a marketing scientist at search engine optimization company Moz. “It’s often subtle in the moment. Six months later, when all of these small changes accumulate, Search can look very different.”
The congressional report specifically called out Google’s tendency to fill out search results with its own content or ads, effectively limiting traffic to the outside while simultaneously allowing it to charge more. The report also said Google gives its own products a boost even when inferior to competitors. Google said in a response that many of the committee’s recommendations would harm consumers.
Fifty U.S. states and territories are also investigating Google’s dominance, some in coordination with federal officials. And in Europe, where anticompetition laws are broader, Google has been fined $9 billion over the past few years.
Google defended its practices by saying its services are free and good for users.
“While we continue to engage with ongoing investigations, our focus is firmly on providing free services that help people every day, lower costs for small businesses, and enable increased choice and competition,” spokesperson Julie Tarallo McAlister said in a statement.
Tech giants have had largely unfettered growth for years, thanks to the way federal regulators have interpreted U.S. antitrust law. Now, the Justice Department is facing immense pressure to clamp down after past stumbles.
“There have been so many visible expressions of intent to bring a case, to do something, that they cannot retreat from that if they are to retain any vestige of credibility,” said William Kovacic, the former chairman of the Federal Trade Commission, who is now a professor of law at George Washington University.
Federal regulators have also divvied up Amazon, Apple and Facebook for scrutiny. (Amazon CEO Jeff Bezos owns The Washington Post.)
At a congressional hearing in July, the CEOs of all four companies underwent a five-hour grilling where lawmakers accused them of unfairly shutting out competitors and amassing too much personal user data.
“The evidence seems very clear to me: As Google became the gateway to the internet, it began to abuse its power,” Rep. David N. Cicilline, D-R.I., chairman of the House Judiciary antitrust subcommittee, said during the hearing. “It used its surveillance over web traffic to begin to identify competitive threats and crush them.”
The CEOs cited a key defense: that every move they made helped them create useful and free services that were good for consumers.
That argument has become an important one. U.S. antitrust laws were initially written in 1890 in an era where Standard Oil and, soon after, U.S. Steel, dominated their industries. They controlled so many aspects of the market that small companies had no choice but to work with them, driving up prices.