Engine Troubles

September 2017

At an Oldie literary lunch, you will never go short of a firmly expressed, educated opinion.  Two of the many charming subscribers at my last lunch told me that Google is too powerful and needs its wings clipping.  They were swayed, I think, by the astonishing size of its bank balance ($172bn; at least twenty European countries have a smaller GDP) and their recent fine of almost $3bn imposed by the European Commission for “abusing [its] dominance…by giving illegal advantage to its own comparison shopping service”.  I found myself defending Google, pompously saying that penalising success is a barrier to innovation.  Having thought about it, I’m not so sure.

You may not even know how it is that Google has managed to upset Brussels so much; I’ll demonstrate. Search Google for something, anything, prefixed by the word “buy”.  Perhaps “buy brogues” or “buy The Oldie”.  Sure as eggs is eggs, near the top of the page there will be a few tempting boxes providing links to retailers that Google thinks are selling what you want.  If you click on them and buy something, Google will usually receive a commission, or may even have already been paid to display the link.  You don’t even need the word “buy” most of the time.

You should also understand that the comparison shopping site business is a very big business; there are billions of pounds of revenue worldwide up for grabs, so don’t expect everyone to play nicely.

At first blush, maybe Google’s approach does not sound too evil?  It’s their website, after all, can’t they do what they like with it? However, the complaint is that, because Google is by far the dominant search engine, and as most people start their internet browsing at Google, they will look no further than the links at the top of Google’s page.

Who cares? Well, it is very bad news for the many existing comparison websites (as I said, it’s big business); perhaps Kelkoo and Price Runner are amongst the best known in the UK.  They claim they have been placed at a massive disadvantage to Google’s in-house service; they can’t fairly compete with the prominence that Google affords its own service.

Is Google abusing its position or are the existing sites just behaving like the ostlers who moaned when the car was invented?

First, never forget that whilst Google claims some lofty and high-minded ideals, it is not a charity; the money comes mainly from selling advertising.

So, take with a pinch of salt its mission statement: “to organise the world’s information and make it universally accessible and useful.” That sounds worthy, even altruistic, but Google has a history of giving up on this noble aim when it loses money.  In 2014 the Spanish authorities passed a law requiring Google to pay news organisations when Google News republished items from their websites.  Google’s response was simply to close its Spanish news service; so much for “universally accessible”.  If the EU ruling stands, don’t be surprised if Google closes its shopping service in Europe.

But will that be to our benefit?  Google itself makes the point that their method allows customers to reach their goal more smoothly, with fewer clicks; it claims that as progress.  It implies that to stop them would be, temporarily, good news for their competitors but would ultimately prove to be a luddite attitude, which would wither just as the luddites did.

I can’t decide.  My free marketer heart tells me that Google is only improving the service they offer us but my egalitarian conscience has a lurking fear that if the likes of the EU do not hold behemoths like Google to account from time to time, no one will, and then who knows where we’ll end up.