Dear Congress: It’s Not OK Not To Know How Search Engines Work, Either

Add caption

without understanding some fundamentals of the internetrattle your nerves? Welcome to my world of watching the same thing happen about Google and search.

In September, the US Senate Judiciary Committee’s Subcommittee on Antitrust, Competition Policy and Consumer Rights held a hearing called “The Power of Google: Serving Consumers or Threatening Competition?”

Yesterday, the subcommittee released a letter out of that hearing, advising the US Federal Trade Commission to investigate further — something the FTC was already doing.

Reading though the letter made my jaw drop in several places. Despite the subcommittee saying it’s not out to get Google:

It is important to note that the concerns expressed in this letter are not an effort to protect any specific competitor

The conclusions come across pretty one-sided. But more important, it comes across as a pretty superficial examination of a really important topic.

In the spirit of the great piece last week, Dear Congress, It’s No Longer OK To Not Know How The Internet Works, here’s my take when it comes to the current look at Google & search.

Bing: A Microsoft & Yahoo Production?

What really set off my alarm bells was this:

Bing, a partnership of Microsoft and Yahoo

Despite substantial amounts of staff time and money spent to have the hearings, the committee mistakenly believes that Microsoft’s Bing search engine is a Yahoo and Microsoft production.

It’s not. Bing is a wholly-owned part of Microsoft. Yahoo has no ownership in Bing.

But wait. Isn’t there a partnership? Yes, but one that gives Yahoo a minor role handling Bing’s ad sales to “high volume” advertisers. The deal came after Bing was launched. It wasn’t an essential part of it, nor does it help with Bing building consumer market share against Google.

If the committee fully understood the competitive space, they’ve have said instead:

Yahoo Search, a partnership of Microsoft and Yahoo

That would be far more accurate. That’s because Yahoo no longer has its own core search technology, nor its own search ad serving technology.  It gave all these up to partner with Microsoft (it would have kept them in a deal with Google. See our side-by-side comparison).

Heck, Yahoo’s former CEO Carol Bartz was quite specific that her goal was to use Bing’s technology as a way to somehow beat Bing at its own game. Bing wasn’t a partnership to her; it was the competition.

Bing & Yahoo Distant To Google?

Perhaps the committee thought that the “partnership” was the overall “search alliance” between Bing and Yahoo? If that was the case, then why did the letter go on to say

…which is a distant second in market share and is losing an estimated $2 billion annually…

Those stats only make sense if you’re talking about Bing itself, having a 15% share to Google’s 65% in the United States, as recently reported. If you’re talking about Bing and Yahoo combined, they come up to 30%, much healther competition.

Should that bigger figure have been mentioned, since the committee was talking about partnerships? Either the letter was one-sided or simply not comprehensive enough. In either case, I expect more out of the work that went into that hearing.

Google Favors Itself (Like Everyone Else)

This part was fun reading:

Rather than act as an honest broker of unbiased search results, Google’s search results appear to favor the company’s own web products and services

It’s difficult from the letter to understand if the committee is declaring this to be fact or simply saying that Google’s critics are alleging this. To me, it comes off as the former, since the attribution of this claim is tossed into the footnotes:

Google critics also argue that the very layout of the Google search results first page is biased in favor of its own products and services. They point to the amount of the “real estate” in the search result page devoted to Google content, including paid advertising at the top and on the right of the page, and the Google “places” or “onebox” results, which are not designated as Google results separate rom the algorithmic results. Consumers have no way of knowing that these one box results are not pat of the algorithmic results.

On its own, this sounds dramatic. But if you’re looking at how the search industry operates in general, Google’s doing exactly what its competitors Bing and Yahoo do. Consider this:

That’s a side-by-side comparison I did of how Google (on the left) and Bing (on the right) both “favor” themselves in various ways, as part of my Does The FairSearch White Paper On Google Being Anticompetitive Hold Up? article from October.

Pick your search, and you can find Bing or Yahoo “favoring” themselves in all the same ways that Google is accused of. If deemed to have a monopoly, potentially Google will be held to a higher standard. But the suggestion in the letter is that Google is already doing something that’s out of the ordinary. That’s not the case.

Does The Committee Know FTC Guidelines Already Exist?

You’d think the committee would know this. You’d think the committee, after all the research it did, would want to appraise the FTC that such an industry standard exists.

It doesn’t. Instead, the footnote goes on to say:

We believe, under the FTC’s mandate to protect consumers rom misleading and deceptive practices, the FTC should seriously consider requiring Google to label its “onebox” or “places” listing (or other similar listings), as Google products, just as it labels paid search results.

As it turns out, the FTC already pondered this, back in 2002. The FTC issued guidelines relating to paid placement and paid inclusion and deliberately refrained from dealing with one-box type units. As I wrote at the time:

The FTC did not address the issue of content promotion, where a portal site might list its own content over others in search results. For example, at Yahoo, a search usually brings up the “Inside Yahoo” matches at the top of the page. This is Yahoo’s own content, being promoted over others.

Similarly, at MSN Search, the “Featured Listings” area may promote MSN’s own content, or content of advertisers or sponsors, or even content of good web sites for free, if they editorially deserve to be there.

I asked Thomas and Forbes if there was any guidance on this issue, and the view that emerged seemed to be to err on the side of caution. Favoritism of any type should be disclosed, to avoid consumer confusion.

Expanding the guidelines might make sense. They’re nearly 10 years old now. But because the existing guidelines weren’t mentioned, I get the impression the committee was ignorant of them. That’s disturbing, because knowing those guidelines is basic homework that should have been done.

Ignores One FTC Guideline While Pushing For Another

Later in the letter, we have this:

Also at our Subcommittee hearing, Yelp! CEO Jeremy Stoppelman and Nextag CEO Jeffrey Katz testified that Google’s practice of favoring its own content harms them directly by depriving their sites of user traffic and advertising revenue.

Mr. Stoppelman testified that 75 percent of Yelp!’s web traffic consists of consumers who find its website as a result of Google searches, and Mr. Katz testiied that 65 percent of Nextag’s traffic originates from Google  searches.

They testified that losing this trafic would threaten the continued viability of their companies, which would have to spend much more on advertising to make up for lost traffic coming from Google queries.

Let’s set aside the absurdity that Google has been so abusive to both companies that they “only” get 65 to 75% of all their traffic from Google for free. If that’s abuse, please sir, may I have another?

Seriously, no one on the committee questions how a company can claim they’ve been harmed by a competitor that sends them 2/3 to 3/4 of their traffic for free? That doesn’t get a mention, a metaphorical raised eyebrow, in this letter?

Let’s focus instead on the concern that NexTag might have to pay more in advertising if Google were to perhaps send more people into Google Shopping.

When people go into Google Shopping, they find listings from thousands of merchants all across the web, merchants that pay exactly $0 to be listed in the editorial listings.

If Google routed more people to NexTag, then NexTag might not have to advertise so much to get people to come to its own shopping search engine, where people find listings from thousands of merchants across the web — assuming those merchants pay to be listed.

That’s because, you see, while NexTag doesn’t want to pay more for traffic from Google, NexTag apparently has no problem requiring merchants to pay to be listed within its own listings.

As best I can tell, the only way you get listed in NexTag is through paid inclusion. It’s like buying a lottery ticket. There’s no guarantee you’ll win (rank well), but you only have a chance at all if you pay. Merchants who don’t pay don’t get listed.

That brings us back to the FTC, which has guidelines that search engines that run paid inclusion programs disclose this to consumers in specific ways. When I wrote my Does The FairSearch White Paper On Google Being Anticompetitive Hold Up? article, it seemed that NexTag wasn’t doing what’s required.

In short, the committee is holding up NexTag — which might be violating the FTC’s own guidelines — as a poster child for the FTC to potentially create more guidelines aimed specifically at Google.

The committee also oddly seems more motivated to ensure that NexTag pays less in advertising than the fact that regulating NexTag’s inclusion in Google might cause thousands of individual merchants to pay more.

This is another example of the basic fundamentals of search the committee doesn’t seem to grasp, and it’s frightening to witness.

Proof Of Google Favoring Its Own Sites!

Perhaps one of the most damning bits of evidence that Google is favoring itself to the degree might require regulation comes when the letter cites the now-famous words of Google’s Marissa Mayer speaking in 2007:

As discussed at our Subcommittee hearing, Marissa Mayer, Google’s Vice President of Local, Maps, and Location Services, admitted in a 2007 speech that Google did in fact preference its own websites. She acknowledged that, in the past, Google ranked links

“based on popularity … but when we roll[ed] out Google Finance, we did put the Google link first. It seems only fair, right? We do all the work for the search page and all these other things, so we do put it first… That has actually been our policy, since then … So for Google Maps again, it’s the first link, so on and so forth. And later that it’s ranked usually by popularity.”

In response to written follow-up questions asking whether her statement was an accurate statement of Google policy, Eric Schmidt stated that “it is my understanding that she was referring to the placement of links within a onebox … and her description was accurate.”

While the basis for Mr. Schmidt’s “understanding” is not clear, even if her statement was in fact limited to the “onebox” result, this is a clear admission of preferencing Google results.

First, how about watching what she said herself:

(Sorry, the embed was supposed to play beginning at 44m 39s in, but that doesn’t work. Thiswill jump you directly there).

Next, here’s what she actually said from my listening and transcribing:

based on various published metrics like comScore and Media Metrix, so we had the five top finance sites in their order of popularity listed there. So when we rolled out Google Finance, we did put the Google link first.  It seems only fair, right? We do all the work for the search page and all these other things, so we do put it first, but and that’s actually been our policy and because of finance we actually implemented it in other places So for Google Maps again, it’s the first link, so on and so forth. And after that that it’s ranked usually by popularity

Everything in bold is different from what was quoted in the letter. In other words, the transcription of what she said in the letter isn’t correct.

The core meaning is the same, but when the transcription is different, it suggests that no one actually listened to what she said directly and wrote that down, much less listened to the full context of what was discussed, much less fully understood some of the issues involved.

For further context, I’d encourage anyone to watch only a few minutes earlier, when Mayer answers a question about dealing with bias and user trust:

(Sorry, the embed was supposed to play beginning at 42m 15s in, but that doesn’t work. This will jump you directly there).

Mayer talks about providing the best answer, not just the best answer you’re paid to give, how Google has hesitancy over being a content provider to avoid potential conflicts, how it has tried to be agnostic when blending content from its own sites into regular search results, speaking in particular how the company includes video beyond just YouTube.

There are serious issues about Google, or any search engine, hosting content. Google has certainly expanded in this area, but so have its competitors. But it’s clear from Mayer’s talk that it wasn’t just a case of Google deciding it should simply favor itself over all others, as her single quote gives the impression.

This Is Your Smoking Gun?

More important, the committee doesn’t seem to care whether Mayer was talking about a single link in a OneBox unit or a regular search listing. Favoring in any way is an “clear admission of preferencing,” and that seems to be it, case closed.

Let’s look at this in more context. Here’s what was being discussed in Mayer’s talk, which still works today, if a do a search for something like Apple’s stock price:

The link that Mayer was talking about is where the first row of arrows points to. Google Finance comes first in the list under the stock quote, followed by links to five competing finance sites. If it were really favoring itself, you wouldn’t expect Google to be showing any of the other links.

Similarly, below the stock quote, Google lists pages leading to various finance sites around the web. Here, in its “main” results, Google doesn’t list itself first and it does list plenty of competing sites.

Now let’s look at the situation with Google competitor Yahoo:

Yahoo has the same type of OneBox unit at the top of its page that Google does. Unlike Google, Yahoo doesn’t link to any competitors in it. Further down, in the main results, Yahoo does list competing sites, including Google.

Now here’s Bing:

It’s the same situation as with Yahoo. Bing’s own OneBox area only lists Bing, no competitors. Bing’s main results do list competitors. While Bing tops the main results in this search, that’s not always the case.

One of the things I’ve learned covering all these investigations is that if Google is deemed to have a dominant role in the search space, it might have to go above and beyond industry standards to ensure it’s being fair to competitors.

That’s what the screenshots above show. Mayer’s quote, rather than being damning about Google favoring itself, rather demonstrates a long-standing effort of Google going above-and-beyond to be fair.

The industry standard for these types of boxes is that you list your own service first and no others. Google, in contrast, follows the standard practice and then makes an extra effort to include its competitors, in a way they don’t reciprocate.

This is another fundamental that you really should understand, if you’re pushing to regulate search. And alarmingly, the committee clearly either doesn’t understand it or really doesn’t care.

Google Doesn’t Own Motorola Mobility

Further down in the letter, another alarm bell went off:

Additionally, Google owns the popular Android operating system for smart phones and in September 2011 announced its acquisition of Motorola Mobility, a leading mobile phone manufacturer.

That’s incorrect, about Motorola Mobility. Google has announced it wants to buy Motorola Mobility and said that in August 2011, not September 2011. But it won’t acquire the company until reviews are done by US Department of Justice and the European Union.

The letter does qualify that the Motorola Mobility purchase is being reviewed, but that’s in an unrelated footnote. It’s an important enough qualification that it should have happened in the main body, and the date of the announcement should have been correct.

These types of errors again give the impression that the committee failed to fully researched this letter or simply rushed it out, and the issues involved are too important for that. If you’re going to hold a hearing to investigate a cause, follow through properly, with care.

The One-Sided Setup

Near the end, just when I thought there wasn’t anything left to surprise me, I got this:

Google strongly denies the arguments of its critics. Google claims it has done nothing to harm competition and that it merely seeks to serve consumers with the best Internet search results.

Over and over, the letter focuses on accusations from Google’s critics, sometimes restating them as facts. Against that, only Google is cited. No one beyond Google is apparently finding any of the criticisms to be doubtful, even though there are some studies that could have been cited, even some of the same ones used by critics.

So when I get to this part at the end:

We are committed to ensuring that consumers benefit from robust competition in online search and that the Internet remains the source of much free-market innovation. We therefore urge the FTC to investigate the issues raised at our Subcommittee hearing to determine whether Google’s actions violate antitrust law or substantially harm consumers or competition in this vital industry.

I’m not convinced. I feel like we all witnessed a time-consuming and expensive hearing so a few senators could pretend that they actually did something related to curbing Google, assuming that this is somehow something people may want them to do (one survey says no).

Did the sudden disappearance of holiday shopping sites on Google-competitor Bing just before the busy shopping days of Black Friday and Cyber Monday not register at all with the committee or its staffers, when they were compiling the letter? That raises some of the same concernsbeing aired about Google. Or does investigating “search neutrality” only depend on market share?

The hearing did deliver the spectacle of seeing Google Chairman Eric Schmidt admit to having a monopoly in search, only to try and recant that later in written follow-ups. That can and will be used against Google. But it’s not illegal to be a monopoly, only to abuse your power to harm consumers or competitors if so. That case has yet to be proven, and the letter from the hearing offers little to help.

It’s Not Fanboy To Want Fairness

Let me conclude with this. Occasionally, I get accused of being a Google fanboy when I write about these matters. I’m not. I was writing about real reasons why Google might be liable in an antitrust case years ago, before investigations were even near beginning.

I’m trying to provide some balance where balance is needed. I didn’t see a lot of that in these hearings, nor in the letter that came out of it.

Is it good to look into these issues, whether Google is potentially abusing its market position.  Absolutely!

Is it good to look carefully at these issues, getting range of educated viewpoints, to ensure that consumers and the competitive market are well protected? It’s essential!

Is it good to stage political theater where US senators seem uncertain about how search works or unabashedly ask for Google handouts? No. That’s terrible!

But terrible is what we got, so far. Watching all this political discussion happen in September, around an area I know so well, I realized one chilling thing. It’s not that Washington doesn’t know search. It’s not that Washington doesn’t know the internet. It’s that Washington doesn’t know anything but what paid lobbyists are pushing on it.

Fortunately, I have much more faith in the FTC itself. I watched 10 years ago as it grappled with the challenge of how to deal with labeling search results, and it crafted guidelines that helped save consumers from a developing mess. I’ll hope once again it comes through to assess the situation of fairness within search and make appropriate guidelines as needed.