Interesting problem here

Google faces a new front in its war with Europe over allegations of abusing its search dominance, with the price comparison website Kelkoo suing the internet giant in the High Court.

Kelkoo claims Google has crippled its business by illegally exploiting its monopoly over internet searches, and is seeking damages that could run to millions of pounds.

Well, it doesn’t have a monopoly but we might agree that it has market dominance, yes.

Richard Stables, its chief executive, said Kelkoo’s traffic from Google had dropped by around 95pc in the last few years.

“Google has completely destroyed most of the industry. They set about systematically destroying the likes of Kelkoo,” Mr Stables said. He did not comment on how much Kelkoo was seeking, but said industry-wide damages claims could run into the billions.

It’s an interesting little problem. Google achieved market dominance in search by being very good at it. As far as I’m aware at least there are no cases where Alta Vista or others are challenging what happened, it was plain old market competition and may the best Gal win.

It isn’t true that someone who is very good at something cannot expand their activities. And nor would we want that to be so either. And it seems a fairly natural extension that someone doing search should move to doing price search (this isn’t, from the looks of it, quite a comparison engine, that’s more about insurance policies, electricity etc). We certainly wouldn’t, in theory, want to stop someone good at search from expanding into that area.

But the EU seems to have different ideas.

And some forms of extensions of market dominance can indeed be pernicious. If the dominant car maker will not let dealers who sell rivals access spare parts for their own models then we might cock and eye at that. If the Tube tried to refuse tickets to those who cycled to work occasionally.

But the EU seems to side against the Americans more often than that. And it’s a tricky problem, what is the correct line to take?

No, I dunno either. Other than to be convinced the Commission is on the wrong side of it.

16 comments on “Interesting problem here

  1. It looks like a different problem:

    “Searching Google for “cheap televisions” will prominently display the search engine’s own service, putting rival comparison services like Kelkoo at a disadvantage.”

    Favouring it’s own comparison website is one thing and looks OK to my untutored eye, but if it favoured its own TVs over its rivals that would be different and that looks like what the EU is trying to get at.

    I agree that there does appear to be a lot of anti US corporations going on, but the USA is hardly blameless cf HSBC and other banks.

  2. It is an interesting problem, from several angles. I used to see it doing international trade cases – anti-dumping – in the 80’s. One reason I gave up that line of work was it seemed the Americans lost all their cases in the 70s, and the Japanese were losing all theirs in the 80’s. Good law and analysis never seemed quite to do the trick. There certainly is a huge chip on European shoulders that the Americans dominate the internet. Then there’s the different feeling or approach to anything around data, privacy etc. And the European lack of sympathy with markets and competition generally. Mind you, competition regulators in the US and U.K. also have a bias against letting markets right themselves – they always want to “fix” dominant positions rather than waiting (e.g. ATT, IBM). There really isn’t a clever line to take except to keep plugging away at reasonableness, rule of law and open competition. But you’ll lose some on the way. And Brexit doesn’t help, by taking the strongest advocates of free trade and capitalism out of the court and the commission.

  3. It’s a tough one. In theory we could force Google to also show Kelkoo’s results in its shopping search; but where does that end? Every two-bit website will demand their seat at the table, and of course they’ll all have a massive incentive to fill their spot with clickbait.

  4. I used to use shopping comparison sites. Found them on Google – because I certainly wouldn’t have chanced upon them by accident.
    I can see now that my behaviour was remiss & am now suitably contrite.

  5. Concern about google’s “monopoly” are silly not just for the reasons you give but also because google’s business is selling data for advertising, rather than making money from search itself. Its competitors are not other search companies but other companies selling data for advertising, such as Facebook. There are a great number of those companies!

  6. Google doesn’t push its own services to the top and Kelkoo down the list, the users do.

    Google ranks results based on relevance in a form of A/B testing, users stop searching when their demands have been satisfied.

    The result at which they stop searching is considered to be the most relevant and other users confirm or reject that relevance in further searches moving results up and down the ranks.

    When Google stops returning the results the user wants someone in the market will step in and take the business from them (and Google knows this).

  7. A variant of You always find your car keys / specs / whatever in the last place you looked.

    But the EU wants us to carry on looking.

  8. @BobRocket

    With maps and shopping don’t Google’s own services show up at the top separately to the search results?

    This is different to AltaVista, AskJeeves etc losing out on search because it isn’t just about search – it is about how google uses its dominance of search to effectively cross-promote other services. I can understand calls for the two aspects to be separated.

  9. “If the Tube tried to refuse tickets to those who cycled to work occasionally”

    Isn’t that basically what season tickets do? If you cycle to work once a week you don’t save anything because 4 tickets a week cost as much as a season ticket?

  10. There was a period a few years back when Google searches were becoming rather useless because all the top results were just shopping comparison sites. Not very useful if you were searching for a product hoping to find a link to the manufacturer or an online manual. It’s got better now, the shopping sites have been demoted.
    What Kelkoo et al want is for Google to promote their business for free— why should it? If any of these comparison sites were significantly better than either Google’s own ‘shopping’ search, or researching on Amazon or Ebay they would be in that league, they are not because they are second rate parasites.

  11. Actually to what extent is “Google ranks results based on relevance in a form of A/B testing, users stop searching when their demands have been satisfied” true? Do they really base search result ordering on historical user clicks? I thought the ordering was determined by the PageRank algorithm and hence by the number and quality of links.

  12. MyBurningEars,

    in a word, yes.

    when tested by users, more people stopped searching for ‘map of Manchester’ after viewing a Google map than any of the other available maps (even if it was placed fourth in the list).
    If users stopped after viewing OSM (even though that was fourth in the list) then Google would put that in a separate box at the top.

    I can buy advertising space on the same page as those ‘buy lawnmower’ results are displayed and I can also buy space on the more specific ”buy lawnmower’ top selection box’
    (two selling opportunities for effectively the same thing)

    Google is about providing relevant search results to their users and they know it

  13. MBE,

    ‘by the number and quality of links.’

    used to be that and then link farming became a thing as djc points out.
    Google realised they needed some way to determine relevance, what better than ask the users ?

  14. …what better than ask the users?

    Or, as an economist would say, “observe their users’ revealed preferences.” As noted above, if Kelkoo was all that good (or relevant to users) people wouldn’t be searching on Google – they would be typing “Kelkoo.com” (or whatever) and using the service directly.
    I’m not sure the claim made is even true, although it’s not clear if it is Kelkoo or the Telegraph making it: I just tried the hypothetical in the article, and asked Google to search for “cheap televisions” – the first two results were clearly identified as ads, the following were a mishmash of comparison sites, independent reviews, and retailers. It seems to me that Kelkoo is simply complaining that they can’t make a go of a crap service, and pointing a finger at Google. They claim that referrals from Google are down by 95% but have not made any cogent argument as to why they are entitled to any search referrals from Google at all.

  15. If you don’t want Google to give you a list of television prices, DON’T USE GOOGLE’S PRICES SEARCH FACILITY!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

    I can’t believe how mind bendingly STUPID the complainant is. It’s like going to McDonald’s and complaining they won’t serve you a Burger King meal.

  16. jgh,

    The people have been brainwashed by big corporations and need the wise and guiding hand of bureaucrats in Brussels to save them.

    Where would we be if people were left to make their own decisions? There’d certainly be no need for bureaucrats in Brussels.

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