Does Google deserve the Microsoft treatment?

The search engine giant is feeling the antitrust heat. Not all of it is justified -- but some is

Topics: Google, How the World Works,

Does Google deserve the Microsoft treatment?Eric Schmidt

Here is what happens when one company controls 40 percent of the $30 billion U.S. online advertising market and 65 percent of online search. The knives come out — and they’re sharp.

It’s been a long year for Google. In February, European antitrust regulators launched an investigation into whether Google was using its search results to privilege its own services over those of competitors. In June, the Federal Trade Commission started looking into whether Google’s relationship with handset manufacturers using the Android operating system improperly promoted Google search. In August, Texas’s state attorney general joined the fun. And on Wednesday, Google Executive Chairman Eric Schmidt will testify before the Senate Judiciary Committee’s subcommittee on Antitrust, Competition, and Consumer Rights. The name of the hearing: “The Power of Google: Serving Consumers or Threatening Competition?”

My first reaction to that title was a semi-serious, Wait, why is that an either-or question? Can’t they do both? It is something of a stretch to question whether Google is “serving consumers.” Google’s success is built on the bedrock of giving consumers exactly what they want, better and faster than anyone else. And for free! That’s a pretty good deal, and I and millions of others are happy to take advantage of it multiple times a day. I personally made my peace long ago with the fact that Google knows an uncomfortably large amount of information about how I live my life via the combined power of Gmail, Search, Google Reader, Google+ and other services. My bottom line? The price — zero — is right.



In the past, the fact that Google has refrained from digging its pound of flesh — à la Microsoft — out of my hide has encouraged me to take a skeptical stance about the merits of Google antitrust enforcement. Back in the good old days of the epic antitrust showdown between the Clinton Justice Department and Microsoft, my feelings were different, even though, superficially, the circumstances seem pretty similar. In the ’90s, a hugely profitable tech company was obviously leveraging its control over the PC operating system to crush competitors and promote its own products. Today, a hugely profitable tech company is suspected of leveraging its dominant share of the search market to do exactly the same thing.

But we would all do well to recall that after President Bush took office, the Justice Department dropped its suit. Microsoft ended up losing its unrivaled supremacy over the tech ecology, not through the pressure of regulators, but because competitors like Apple made better products and upstarts like Google took advantage of the opportunities presented by the Internet to grab consumer attention. It’s tough to stay at the top in the age of the Internet. Remember Friendster? MySpace? Google is obviously self-serving when it notes, in its perhaps overly defensive Guide to the Senate Judiciary Hearing, that users “can switch with just one click,” but that doesn’t mean it isn’t true. Facebook, alone, is a bigger threat to Google every single day than any single company posed to Microsoft in its heyday.

Nonetheless, constant scrutiny and pressure from regulators is not out of place. The online search marketplace is continuing to evolve quickly, providing new opportunities for mischief. To take just one recent example, just two days before Schmidt’s testimony, Google announced a new product: Google Wallet. It will be interesting to see whether any senators quiz Schmidt on the provocative implications of this newest offering. Because if you think it through, nothing Google has done recently makes it easier to understand how Google can use its power over search to steer consumer behavior.

Google Wallet is the latest entry in a market space crowded with big financial institutions, tiny start-ups and great technological ferment. The goal is to make it easy to use your phone to pay for products at the retail establishment of your choice. No more labored effort swiping a plastic card. Just click — and cha-ching.

Google Wallet won’t be an instantaneous 800-pound gorilla. The service will only be available on the Sprint Nexus S and a limited number of retailers. But even if it might seem ridiculous to think that what the modern capitalist world needs right now is a way to make purchasing stuff even easier, there is still good reason to assume that sooner or later most smartphones will offer mobile payment services. Consumers might not crave the option — but advertisers and search providers certainly do.

SearchEngineLand’s Greg Sterling theorizes that mobile payment systems open up the possibility of creating a “closed loop” that stretches from online-intent-to-buy to advertisement to offline-purchase. That’s kind of a big deal.

Here’s how it could work. Suppose you are wandering San Francisco’s Chinatown looking for a Buddha pendant. You pull out your Android smartphone and enter “Buddha pendant” in the Google query box. Your GPS-enabled phone knows exactly where you are, and Google Maps pops up with a list of nearby retail establishments that offer more Buddhas than you can shake a joss stick at. Even better, a text ad appears at the top of your screen offering you a discount if you purchase your Buddha at the Buddhas-R-Us around the corner. A couple minutes later, you are waving your Google Wallet at a barcoded Avalokiteshvara and clicking the cha-ching button.

As a consumer, I might find this experience pretty neat. As an advertiser, I’d be extraordinarily happy with the ability to exquisitely judge the impact of targeted ads on offline consumer activity. But the potential for trouble is also obviously great. Whose ads get served and what retail outlets get promoted? What if the best selection of cheap Buddha pendants is at some tiny outlet that doesn’t steer any advertising dollars to Google at all?

The integration of Google-owned services into Google search results has clearly hurt some competitors of Google. Google Maps offers a terrific example. When Google started including a Google Maps thumbnail at the top of its search results for relevant queries, Yahoo’s MapQuest service saw its traffic crash. MapQuest is now a has-been.

The story is complicated by the fact that, in my view, at least, Google Maps was a far superior product to MapQuest. So I was delighted when Google started integrating Google Maps into its search results. It made my life better, even as it made Yahoo’s worse. Consumers were served and competitors were threatened.

But the closer the lines get drawn between search-advertisement-and-purchase, the more opportunities there will be for crossing the line inappropriately. There are enough blemishes on Google’s record to make any unthinking trust in its “Don’t Be Evil” mantra more than a little unwise. Will it serve me if Yelp and Kayak and Shopzilla all go the way of MapQuest, unable to compete with Google’s dominance over mobile search? Probably not. 

Break up Google? Not necessary, yet. But watch ‘em like a hawk? Absolutely.

Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

More Related Stories

Featured Slide Shows

  • Share on Twitter
  • Share on Facebook
  • 1 of 22
  • Close
  • Fullscreen
  • Thumbnails

    Once upon a time on the Bowery

    Talking Heads, 1977
    This was their first weekend as a foursome at CBGB’s, after adding Jerry Harrison, before they started recording the LP “Talking Heads: 77.”

    Once upon a time on the Bowery

    Patti Smith, Bowery 1976
    Patti lit up by the Bowery streetlights. I tapped her on the shoulder, asked if I could do a picture, took two shots and everyone went back to what they were doing. 1/4 second at f/5.6 no tripod.

    Once upon a time on the Bowery

    Blondie, 1977
    This was taken at the Punk Magazine Benefit show. According to Chris Stein (seated, on slide guitar), they were playing “Little Red Rooster.”

    Once upon a time on the Bowery

    No Wave Punks, Bowery Summer 1978
    They were sitting just like this when I walked out of CBGB's. Me: “Don’t move” They didn’t. L to R: Harold Paris, Kristian Hoffman, Diego Cortez, Anya Phillips, Lydia Lunch, James Chance, Jim Sclavunos, Bradley Field, Liz Seidman.

    Once upon a time on the Bowery

    Richard Hell + Bob Quine, 1978
    Richard Hell and the Voidoids, playing CBGB's in 1978, with Richard’s peerless guitar player Robert Quine. Sorely missed, Quine died in 2004.

    Once upon a time on the Bowery

    Bathroom, 1977
    This photograph of mine was used to create the “replica” CBGB's bathroom in the Punk Couture show last summer at the Metropolitan Museum of Art. So I got into the Met with a bathroom photo.

    Once upon a time on the Bowery

    Stiv Bators + Divine, 1978
    Stiv Bators, Divine and the Dead Boys at the Blitz Benefit show for injured Dead Boys drummer Johnny Blitz.

    Once upon a time on the Bowery

    Ramones, 1977
    “The kids are all hopped up and ready to go…” View from the unique "side stage" at CBGB's that you had to walk past to get to the basement bathrooms.

    Once upon a time on the Bowery

    Klaus Nomi, Christopher Parker, Jim Jarmusch – Bowery 1978
    Jarmusch was still in film school, Parker was starring in Jim’s first film "Permanent Vacation" and Klaus just appeared out of nowhere.

    Once upon a time on the Bowery

    Hilly Kristal, Bowery 1977
    When I used to show people this picture of owner Hilly Kristal, they would ask me “Why did you photograph that guy? He’s not a punk!” Now they know why. None of these pictures would have existed without Hilly Kristal.

    Once upon a time on the Bowery

    Dictators, Bowery 1976
    Handsome Dick Manitoba of the Dictators with his girlfriend Jody. I took this shot as a thank you for him returning the wallet I’d lost the night before at CBGB's. He doesn’t like that I tell people he returned it with everything in it.

    Once upon a time on the Bowery

    Alex Chilton, Bowery 1977
    We were on the median strip on the Bowery shooting what became a 45 single sleeve for Alex’s “Bangkok.” A drop of rain landed on the camera lens by accident. Definitely a lucky night!

    Once upon a time on the Bowery

    Bowery view, 1977
    The view from across the Bowery in the summer of 1977.

    Once upon a time on the Bowery

    Ramones, 1977 – never before printed
    I loved shooting The Ramones. They would play two sets a night, four nights a week at CBGB's, and I’d be there for all of them. This shot is notable for Johnny playing a Strat, rather than his usual Mosrite. Maybe he’d just broken a string. Love that hair.

    Once upon a time on the Bowery

    Richard Hell, Bowery 1977 – never before printed
    Richard exiting CBGB's with his guitar at 4am, about to step into a Bowery rainstorm. I’ve always printed the shots of him in the rain, but this one is a real standout to me now.

    Once upon a time on the Bowery

    Patti Smith + Ronnie Spector, 1979
    May 24th – Bob Dylan Birthday show – Patti “invited” everyone at that night’s Palladium show on 14th Street down to CBGB's to celebrate Bob Dylan’s birthday. Here, Patti and Ronnie are doing “Be My Baby.”

    Once upon a time on the Bowery

    Legs McNeil, 1977
    Legs, ready for his close-up, near the front door of CBGB's.

    Once upon a time on the Bowery

    Suicide, 1977
    Rev and Alan Vega – I thought Alan was going to hit me with that chain. This was the Punk Magazine Benefit show.

    Once upon a time on the Bowery

    Ian Hunter and Fans, outside bathroom
    I always think of “All the Young Dudes” when I look at this shot. These fans had caught Ian Hunter in the CBGB's basement outside the bathrooms, and I just stepped in to record the moment.

    Once upon a time on the Bowery

    Tommy Ramone, 1977
    Only at CBGB's could I have gotten this shot of Tommy Ramone seen through Johnny Ramones legs.

    Once upon a time on the Bowery

    Bowery 4am, 1977
    End of the night garbage run. Time to go home.

  • Recent Slide Shows

Comments

0 Comments

Comment Preview

Your name will appear as username ( settings | log out )

You may use these HTML tags and attributes: <a href=""> <b> <em> <strong> <i> <blockquote>