The Google problem

Christopher Caldwell is a terrific columnist. His FT essay this week — a meditation on the implications of the complaints lodged with the EU Commission this week by e-Justice, Foundem and Ciao! — is a model of thoughtful analysis, and a good reminder of why the weekend FT is such a good buy.

There is either a big problem with Google or there is none at all. If you believe that Google is engaged in open competition, many of the complaints against it look like sour grapes. The Initiative for a Competitive Online Marketplace, a Microsoft-funded study group, issued a white paper last summer on “Openness and the Internet” that, in one sense, is little more than a grab-bag of gripes. The paper notes that Google “operates in a manner that shields it from scrutiny by the other actors” (as if other businesses do not), that it is hard to gather data on Google advertising campaigns and to make them interoperable with other search engines (which is an inconvenience for Google’s advertisers but not a duty for Google), and that Google’s pricing policies are opaque (ditto). On the other hand, any of these failings under monopoly conditions would be a serious problem.

Google insists that its searches are neutral both in appearance and fact. Its “natural searches” – the ones that match up searchers with the sites they will most likely want to visit – are done through an “algorithm” that measures hundreds of variables, with no human intervention once the algorithm has been designed. But Google also carries “sponsored links” – advertisements – which appear alongside the natural-search results. Advertisers bid to be listed by Google any time a given word or phrase is searched for. And here the business gets more subjective. Google has an interest in making web-surfing pleasant and convenient. It gives “quality scores” – rankings based on attractiveness, ease of use and percentage of original content – to its bidders. So a website with a low “quality score” must bid more to be included. The nub of Foundem’s complaint is that its quality scores inexplicably fell, driving its cost per hit from 5p to £5. Was this because it is also a Google competitor?

Worth reading in full. I’ve written before that Google is “the next Microsoft” in the sense that it’s going to be the anti-trust problem of the next decade. But the issues that it raises will be much more subtle and complex than anything we had with Bill Gates & Co.