Google Antitrust Complaint: Don’t Forget Bing

Hi, it’s Mark Bergen. Imagine that picking an online search engine was like picking out a cereal at the grocery store. Would you choose Bing?  Strangely, a version of that question is at the core of a major antitrust suit filed against Google on Tuesday by the U.S. Justice Department and eleven […]

Hi, it’s Mark Bergen. Imagine that picking an online search engine was like picking out a cereal at the grocery store. Would you choose Bing? 

Strangely, a version of that question is at the core of a major antitrust suit filed against Google on Tuesday by the U.S. Justice Department and eleven states. The complaint centers on the deals cut by Alphabet Inc.’s Google to make its search tool the default option on browsers and smartphones. A whopping 60% of all “general search” queries on the internet go to Google via these deals, according to the suit.

Google called the complaint “dubious” and “deeply flawed.” At the heart of its defense, though, is an odd paradox: Google thinks its search is so good that people will choose it, but the company still pays billions a year to make sure it’s first in line.

By way of explanation, Google compared the money it pays to carriers and device makers, like Apple Inc., to a retail “end cap” fee. It’s “just like a cereal brand might pay a supermarket to stock its products at the end of a row or on a shelf at eye level,” Kent Walker, Google’s policy chief, wrote in a blog post.

But that analogy is dubious, said Mark Shmulik, an analyst with Sanford C Bernstein & Co. Most people simply use the search engine baked into their phone or browser, and a majority of the time, that’s Google. “Not only is it the only cereal in the aisle, but you have to go talk to somebody in the store to find a different cereal buried in the back,” Shmulik said.

When the digital shelves have been rearranged elsewhere, it’s been bad news for Google. Three years ago, Russia began requiring the company to include three different choices of search providers on Android devices. Since then, Google’s share of search traffic has dropped nearly 20%, replaced by local rival Yandex, according to Bernstein figures.

Europe recently forced Google to offer a similar search choice model. Bernstein estimates Google could lose up to 10% of its search traffic there.

Google says it’s confident that most U.S. consumers and technology providers would still pick Google search.

The DOJ has yet to offer any edicts for the company. And the case could drag on for years before Google changes its business practices. But if the government forces Google to end these default deals or follows Europe’s model, the biggest victor, ironically, could be the last big tech company the government sued as a monopolist: Microsoft Corp.

Bing, long a search also-ran and the butt of jokes, comes in behind Google in market share (7%, per the DOJ) and has the most resources of any viable competitor. Microsoft recently participated in Europe’s auctions for search engine placement, and it now appears as a choice on phones in Germany, the U.K. and France. The company is also investing heavily its Edge web browser, which includes Bing as the default option.

Some consumers using Edge might even be excused for confusing the items on the shelf. Do a search on Bing using the latest version of the Edge browser, and the results appear in a familiar arrangement of text and photos. “It looks eerily similar to Google,” said Shmulik. —Mark Bergen

If you read one thing

Other fallout from the DOJ suit: Apple could lose a lot of money if Google shuts down deals to be the default search engine on Apple products. The government quoted an unnamed senior employee at Apple saying the tech giants would act as “one company” on their search deal, potentially bad news for Google’s case. Google paid out more than $1 billion to mobile carriers to secure its default search positions. 

And here’s what you need to know in global technology news

Shares of Snap surged more than 20% after the company reported quarterly revenue and user growth that topped estimates. 

Amazon will let its employees work form home through June 2021. 

Pinterest has named veteran media executive Salaam Coleman Smith to it’s board, effective at the end of the month. Smith will be the second woman of color Pinterest has appointed as a director since its former chief operating officer sued the company in August, claiming she was fired after speaking up about gender discrimination.

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