No surprise here: the Federal Trade Commission is investigating Google. The company is wildly successful. There is anxiety both amongst its competitors and also Web sites who aim to be top destinations. For example, Kayak.com seems to be worried that in exchange for a fee Google will deliver search results that give competitive travel vendors precedence over Kayak.
“We believe there’s a very compelling case that Google is abusing its dominant position in search to stifle competition and to extend its control over how information and commerce flows over the Internet,” says Robert Birge, Kayak’s chief marketing officer.
Birge offers an example. Say you want to go to Tahiti. “I think what would happen if you search for hotels from Tahiti, you’re going to see a number of search results that appear to be unbiased search results from the Google search engine, when in fact they’re a part of a new product that Google has launched last year — that’s their own product — and is based on what advertisers are paying them,” he says.
In other words, Kayak is worried that if it wants precedence, it may have to pay Google for precedence.
Google offers a valuable product. The company has invested billions of dollars in sophisticated algorithms and massive server farms to deliver relevant search results instantaneously. Google is not a public utility; it is not legally entitled to a reasonable profit in a closed market. Google has to earn a profit in a free market.
Google has to attract users by delivering relevant search results. If Google delivers useless search results, consumers will search elsewhere and Google will wither and die. Google also has to satisfy the investors who pay its bills. It cannot give away its services for free. Google has elected to shift its costs from searchers to vendors like Kayak who would be dead in the water without the referrals that Google generates.
Like it or not, businesses have to invest in advertising to drive sales. Kayak seems to think that antitrust provides an escape. This desire derives from the fantasy that the Internet is free. Or that it can be. In fact, the Internet is the result of massive private investment based on an expectation of profit.
An antitrust investigation by the FTC will uncover what it will, but Google is entitled to monetize the valuable services it provides. It would be very curious indeed if the government were to force Google to shift all of its costs onto consumers so that producers do not have to pay anything for advertising.
And let’s not have any of this talk about Google being a monopoly. Aside from the other search engines that compete against Google directly, there are the social networking sites which allow consumers to query their acquaintances for commercial leads.
Whether or not Google has engaged in aggressive competition, the company is most likely being investigated because it is an American success story.