When it comes to a debate on the consumer impact of companies on the Internet marketplace, we too often see a conflation of big with bad. While big companies will always be a red flag to the unhappy rivals, it is critical to remember their very existence is not proof of anticompetitive, illegal behavior.
The Internet search market is currently led by one key player, Google, which roughly has two-thirds of the market in search queries. Google, like many other successful firms, faces calls for increased regulatory intervention or antitrust enforcement. We should not confuse success with market power, and we should recognize the limited circumstances in which regulation is appropriate.
Search continues to evolve, innovate and improve at a dramatic pace, creating new vistas for information access at a rate that no regulator could possibly hope to maintain. Advancements in search come from many sources, and the public's demand for the most user-friendly experience combined with easy access to alternatives ensures a level of competition foreign to most industries. Most importantly, Google has aligned its interests with those of the consumers, which leads to the proliferation of the best technology, all at minimal cost, and often free to consumers.
Government regulation has its place, and regulatory institutions play a vital role in protecting consumers under a specific set of circumstances. The search market, however, is not one of these instances. Calls for regulation understate the considerable success of search firms -- and the technology industry generally -- in an era of unregulated enterprise. Proponents of overt regulation fail to recognize that the search market is, more than any other market, a self-regulating market. And self-regulation is superior to government regulation in several respects -- as former FTC Chairman Robert Pitofsky has observed, self-regulation is more "prompt, flexible and effective than government regulation." And it goes without saying that self-regulation comes without a price tag for taxpayers.
Moreover, market discipline is a nanosecond away in search. The factors at play for search providers -- one click away competition, ease of entry into the market, free product, constantly evolving technology -- compel firms such as Google, Yahoo, and Microsoft to continuously refine their product and make sure they are serving the interests of consumers. In search, consumers recognize the vast alternatives and turn to them readily.
Google and other search engines recognize for search to function effectively they must provide the most accurate information in the most user-accessible fashion that attempts to create an optimal consumer experience to which users will return again and again. In effect, Google recognizes it must self-regulate to keep consumer loyalty.
Google has worked to improve the user experience in a variety of ways, based on what will make the search experience best for consumers. Google's natural search, or non-sponsored search, is based on a dynamic search algorithm that strives to connect customers with exactly what they are looking for. Google accomplishes this, and other search providers try to mimic, by ranking pages according to relevance, visits, popularity, location and other factors that are all part of Google's algorithm. Trade secret laws protect this algorithm -- competitors are free to try and recreate this algorithm, but Google is under absolutely no obligation to share it.
Google also distinguishes itself through its search result display. Google's trademarked simplicity allows the customer to focus on the query, and the result list ensures that the searcher can distinguish between results. Like indexing, this format is not arbitrary. Google's display is the result of its determinations regarding customers' preferences for the search experience. Furthermore, competition allows alternatives. Microsoft, for instance, prides its Bing search service on directness -- a sample search for a simple fact, such as the capital of Rhode Island, displays the answer directly below the search box, and without a link to a reference page. This competition is also good for consumers, and may the best company win.
Again Google self-regulates to protect consumers and optimize the consumer experience. They actively search for and diminish websites that may mislead or deceive. Google has made a decision to place a higher value on websites that reflect consumer preferences, causing some websites to feel as they are being disfavored. For instance, Google has determined that users prefer websites that are updated often, contain content in different media (e.g. blogs, video, newsfeeds), and are constructed with state-of-the-art design software. It disfavors outdated websites, websites that are merely glorified advertisements that don't help a searcher find the information they want, and websites with factually questionable material. These decisions are made not to harm competition, but to protect consumers and save them time and hassle. In being proactive, Google prevents consumers from being victimized from web sites that deceive or take advantage of the unwary.
It is critical to remember that antitrust law is not concerned with the interests of individual competitors, but is designed to protect consumers. The real goal of Google's decisions to weed out the search wheat from the chaff is to protect those consumers.
Google's continued innovation in the search market is unquestionable and unparalleled. Just this September, Google introduced "Google Instant" -- a new search platform that provides predictions of search queries in real time, and adjusts instantaneously as the searcher enters more information. It remains to be seen whether this new approach to search will resonate with consumers. But the fact that consumers have another new option, and that the search providers are striving to further improve the search experience, suggests a market that is functioning well, and not in need of government regulation.
Google recently found other ways to improve the user experience. For instance, Google now aggregates various types of potential sources into one result. Before, a search for Mickey Mouse might give you Disney's page, followed by a news story. To see an image, you would have to make another selection. A similar selection would have to be made for a video. Now, the result combines all of these options into one block. Google realized that vague search terms may be seeking different types of information - in fact, it's highly possibly that the searcher does not even know what he wants specifically. This aggregation provides a solution to that dilemma.
Some have tried to raise concerns about this practice, terming the method "universal search" and claiming that the practice makes it more difficult for competitors to land at the top of the list. The first fallacy leads to the second. This is not about a differentiation in search types, or an inherent right to be at the top of any list -- this is about providing the customer with the best information quickly and accurately. There is one search -- the search for information. There are many competitors to supply this information, and many competitors to index and display this information. Google has devised a system that, it believes, improves the search experience. Apparently others agree -- Bing and Yahoo follow the same strategy now, after observing Google's success.
Why Government Regulation Is Not Appropriate
Government regulation certainly has its place; utilities, banking, and pharmaceuticals are just three examples of industries where it is hard to imagine how consumers can be adequately protected without government intervention. Regulation is appropriate when one of the following three conditions is satisfied: market failure, information asymmetry, or clear evidence of consumer harm. None of these are present, least of all the third, where it is conclusive that Google's product benefits consumers greatly.
Market forces compel Google to structure search in a fashion responsive to consumer demand. If Google were to suddenly stop directing users to the best results, and instead direct them only to its own content, the response would be simple -- Bing and Yahoo would instantly experience higher traffic. Search is not like a bank, where consumers feel committed once they enroll, or like electricity, which requires use of a limited physically infrastructure, or even like a car that is difficult to sell and replace. If a searcher is not happy with the results -- snap -- he is off finding a better option.
Google does not compete in a way that calls for government regulation -- in fact, its consistent innovation and the continued innovation by Google's competitors all point to the success of search at the status quo. Why would we want Google to stop now?
Why Government Regulation Would Not Work
Although there has been much sound and fury proclaiming the need for government regulation of search, the fury diminishes to absolute silence when it comes to the question of how the government would regulate search. Not surprisingly, none of the advocates of regulation have dealt with the difficult issue -- how would regulation work? Although one can envision some type of theoretical regulator, it is almost impossible to discern how a regulator would go about their task. We must ask the practical questions: how are you going to regulate search? Are you going to demand that every provider follow the same algorithm? Allow a regulator to see the algorithm and verify that it is fair? What is fair? Where should search direct consumers? Any plausible solution requires the government to make a subjective evaluation of a moving target.
Internet search providers have done an admirable job of self-regulating, of separating the meaningful from the obscure, of protecting consumers from false and deceptive sites, of optimizing the search experience. More important, because there is competition in search, these providers compete on optimizing the search experience. Regulation would stifle that competition and innovation. Regulating search simply cannot work. And, we don't need it.