What Google's Competitors Want Is Not Exactly What Its Users Want

Jeffrey Katz, the CEO of a company called Nextag, has an op-ed in the Wall Street Journal arguing that Google's practices in search had hurt his company. His op-ed responds to the EU's recent request that Google propose remedies to address competitive concerns raised in the EU, and Katz himself proposes some remedies in his article.

Much of the op-ed laments the power of Google and calls on the company to abandon its business practices "for the sake of Internet freedom." His definition of "Internet freedom," however, seems to be "increased web traffic for Nextag." Nextag provides search results for products, charging merchants to appear in its results. He says simply that his company's "services were better" than Google's for years, and that "they still are." Glad we have that straightened out: a CEO who thinks his company's products are "worse" than their competitors has probably not been born. In Katz's view, Google should place Nextag results ahead of results from a company that advertises on, or is owned by, Google, because Nextag is simply better. If there were an objective measure of "better" search results, he might have an interesting case, but there isn't, and he doesn't, as several academics have shown.

Google has posted a response to many of Katz's accusations. But I will focus on Katz's remedy proposals. A co-author and I have already addressed many of the proposed remedies, both in a detailed report in the Journal of Internet Law and yesterday in an article in Forbes magazine. Katz's recommendations for "fixing" Google are nothing new -- they're the same arguments that have been touted over and over.

First, Katz argues that Google should give users "the unbiased search results" Google originally gave. He accuses Google of favoring its own services in search results (I assume he means product search results). Katz betrays a fundamental misunderstanding of web search: there is no way to measure an "unbiased" result without measuring which results are "better" or "worse." It is a subjective question. If a government agency had to determine that Google was ranking the "best" results first, it would have an impossible task. Bing, Google's top competitor, ranks results differently, and who is to say that Bing's results are more unbiased or "better" (certainly many search users favor Google's results). Moreover, Bing and Yahoo "bias" their results towards their owned property just as much as Google, according to analyses, and they seem to compete in general search based on all their properties. Anyone unhappy with Google can use other search engines -- including DuckDuckGo and Blekko, along with Bing or Yahoo.

Second, Katz first argues that Google needs to be transparent about the placement of paid results and Google-owned properties in search results. He suggests that "the most prominent results are displayed because companies paid Google for that privilege." I have never seen any evidence that Google deceptively allows payment to influence its organic search results, which have always been distinct from the paid advertisements. As for Google-owned properties, nobody is confused that Google also offers specialized shopping, news and map results. As for placement, Google provides users and advertisers information about how it ranks sites and sets advertising prices in many online forums and Google credibly claims that to go any further would do little to improve user experience, and instead would benefit the copycat competitors and low quality sites that earn revenue by manipulating algorithms to draw traffic. (We discuss these efforts in our paper, on pages 25-32).

Third, Katz argues that Google must also provide a "level playing field" for advertisers, and must "grant all companies equal access to advertising opportunities" on the search engine. This recommendation is unclear. Does he want to do away with the market pricing system for online advertising? This has several problems. Google must make some distinctions, for example regarding porn advertising, gimmicky weight-loss advertising, or other "low-rent" advertising off of certain results. But if Google must grant "all companies" access, these companies can complain about being excluded and claim that their advertising is "better" than competitors'. Moreover, Google pays advertisers based not just on payment per click but also by number of clicks. The interplay between the two sets the prices, so a government-regulated price for "equal access" might be difficult to set. Moreover, Google is by no means the only advertising platform in existence. Nor is it the only way for Katz to increase his traffic. Companies like Pinterest and Twitter did not become sensations because of Google search but because of the many ways users find out about great sites.

Katz couches his arguments in terms of a free and open Internet. But his proposals for preserving that Internet would do the opposite -- they would undermine the competitive landscape and invite government actions that would harm consumer welfare and choice just because Katz is so convinced his product is superior. Nothing is stopping him -- or anyone else -- from using it.

Disclosure: I am an advisor to Google, but the ideas here are my own and should not be ascribed to Google.