ICOMP

Computer programs are only as good as the humans who create them. In other words, they are fallible. A type of program that performs set tasks, like complicated calculations or pattern recognition, is the algorithm. It’s algorithms that allow sites such as Amazon to recommend books or music to its customers based on their previous buying or browsing habits.

One of the biggest website owners to use algorithms is Google. Programmed by Google staff, algorithms determine which websites are seen by users when they search the internet. They control which websites get the all-essential traffic, and which ones are buried far down the stack of results pages and effectively hidden from the Web.

Google regularly refreshes its search algorithms because it has to keep up to date with an ever expanding Web, with millions of new sites and blogs created each year, the vast majority have dynamic, constantly changing content.

However, Google is notoriously secretive about protecting its algorithms, which are an important part of its intellectual property (IP) and into which many hundreds of millions of dollars have been invested, and which have helped Google garner around 80% of the world market in internet search.
Of course Google has every right to protect its algorithms, which are a key part of its intellectual property. But because of its dominance in search, Google must remember its duty to be open, reactive and transparent with website owners, especially if they have inadvertently incurred a ranking penalty and wish desperately to address the reason why.

When Google’s algorithms get it wrong decent and honest website businesses suffer. A few months ago rather than tweaking its algorithms, Google introduced a major change in how it ranks many websites. Such was the scope of the change, made under the name of ‘Panda’, Google made the rare move of publicly discussing the reasons for the initiative on its blog.
The intention behind Panda, it said, was ‘… to reduce rankings for low-quality sites—sites which are low-value add for users, copy content from other websites or sites that are just not very useful.’
But unfortunately Panda led to many good quality smaller sites slipping massively down the search rankings.

A good example is eHow.com. This very popular site provides more than 2 million articles and videos on “how to do things”. Post the second roll out of Panda in June, eHow’s traffic was 40% lower.

And what hope does a small site have of growing to be the giant of tomorrow, if it has been doomed to anonymity by Panda? The answer is virtually none.
An official Google blog post prompting for website owner reactions to Panda has generated more than 6,000 replies:

The comments on the forum are telling. Here are just a few examples:
Homeconstructionimprovement.com, an original content site almost 5 years old, said:.

‘I’ve felt a HUGE impact to my site and I have to say the results in the SERPS are disturbing at best. I would VERY much like to speak with someone at Google to find out why….I’m an expert in construction, DIY and home improvement. I’m a respected member of the profession and I travel all over at the request of many large corporations. So when it comes to quality content I’m very certain I offer that. I also receive thousands of comments from folks thanking me for my content and wishing that had found the site sooner.’

The frustrating thing is that website owners were not been given any help or advice by Google about what they needed to do.
And it also begged the question, if Panda is a quality filter, what are its criteria of what constitutes a good site? At least if this was made plain, honest sites could make sure they complied with the quality thresholds.
Naturally, it would have been fairer if Google had warned site owners about the real ranking criteria behind Panda and allowed them time to prepare and comply.
Right now, website owners have no idea how improve their site content in the light of Panda. This sort of lack of transparency in web search is precisely why we launched our “Have I Been Penalized..?” campaign last year.
Currently, if a site has been given a search penalty, some search engines including Google make it virtually impossible for owners to find out what sort of penalty has been imposed on their site, and why.

Like with the lack of clarity over Panda, we want the leading search engines to allow us to know if we have faced a penalty and, if so, what we can do to quickly put things right.

We say if the search engines operated more transparently, it would make the online market place fairer, which is better for all site owners, and ultimately users.
Panda is a prime example of how high quality sites, large and small, were affected, and the net result is that Web users have less chance to visit perfectly good sites. We think that Google hiding behind its “algorithm” excuse is no longer acceptable. Quite simply much more transparency across Web search is needed. Not tomorrow, but now.

Dr. Marc Pinter-Krainer
Founder & CEO
OneNewsPage

I posted a blog earlier today on Eric Schmidt’s testimony before a US Senate Subcommittee yesterday. As with many others, I focussed on Dr Schmidt and what he said, pointing out what I thought to be an acknowledgement of a fairly substantial shift over time in Google’s practices and the way it defends those practices.

The testimony of some of the other witnesses also deserves some attention. Two in particular stand out as representing cogent analysis from online commerce pioneers and entrepreneurs: Jeffrey Katz, CEO Nextag Inc and Jeremy Stoppelman, Cofounder and CEO, Yelp! Inc.

Jeffrey Katz told the Senate Subcommittee that “Google is not a search engine anymore, it’s a commerce site, biased and organized to suit Google’s commercial needs… But the consumer doesn’t know that. It’s not stated clearly in any way that that is what is occurring. It is not stated that good options have been excluded or obscured because Google believes that is best for Google. If they dominate a marketplace, they have at least the responsibility to provide fair access.”

In turn, Jeremy Stoppelman recounted his company’s history with Google and how the relationship turned sour: “Shortly after the FTC announced its investigation into Google’s practices, and shortly after Yelp publicly presented its concerns at the Conference of Western Attorneys General in July 2011, Google announced that it would cease misappropriating content from its competitors. The victory was short-lived, however. Just one week later, it was revealed that Google Local was continuing to use content from services like Yelp in order to power its own local business search product, driving traffic to its own pages. We again asked that Google cease its practice of co-opting content from Yelp for its own benefit. Google responded by removing Yelp links from portions of Google’s web search product, providing a new twist on the same old false choice: if we chose not to help power Google Places, we could not appear in the “merged” portions of Google’s web search results. To date, consumers cannot find links to Yelp in Google’s merged results, belying Google’s public pronouncements that “the competition is just one click away.”

The extraordinary thing is that these are not unique stories – a number of ICOMP members have experienced similar fates. Nor are they in any sense trivial. The companies being harmed are major contributors to the online economy, offering consumers choice, innovation and value.

However, it is more extraordinary is that Dr Schmidt was allowed to disparage competing businesses. Dr Schmidt claimed to the Senate that “most of these complaints come from websites that don’t like where their sites rank on Google’s search results”. The truth is that the complaints come from web sites which do not like how Google harms competition, eliminates rivals and misleads consumers. The practices complained of are not that poor sites do badly, but that good sites are downgraded so that Google can place its own, often lower quality sites, higher. This is not only bad for competitors, it is bad for consumers since they are deprived of choice and innovation.

By David Wood,
ICOMP Legal Counsel

Eric Schmidt’s testimony before a US Senate Subcommittee yesterday told us much about Google’s planned strategy to defend itself in the face of a large number of competition law investigations. Simply put, the defence is that Google has no market power and is only trying to keep its customers happy. ICOMP and its members believe that these main lines of defence will not prove successful.

A number of competition authorities – including the European Commission and the two main US antitrust enforcement authorities, the Department of Justice and the Federal Trade Commission – have already found that Google does indeed have such a high degree of market power as to be under a special responsibility not to harm competition further. This was even acknowledged by Dr Schmidt in his oral observations yesterday.

With respect to actually harming consumers and competitors, ICOMP believes that it has been amply shown that over time Google has steadily and inexorably moved to eliminate competitive threats in many directions, including vertical search, maps, video and travel. Far from benefitting consumers, Google has steadily eroded consumer choice and put up barriers to prevent the ‘next Google’ from emerging.

This change in direction over time was amply spelled out in Dr Schmidt’s written comments to the Senate. He reminded them that the original invention of Page and Brin, PageRank, was intended “to identify the most relevant websites for any given query”. However, this aim has been perverted over the course of time. According to Dr Schmidt, the objective now is “to provide relevant answers as quickly as possible”. Instead of providing the most relevant answers, Google now seeks to provide the “information consumers will find most useful”.

Do these apparently subtle changes matter? Yes. They mask a fundamental shift in the business nature of Google. They seek to camouflage a sustained campaign to use Google’s over-whelmingly dominant search platform to harm the ability of direct and indirect competitors (including competing search engines, vertical search providers and audio-visual content creators) to reach audiences and provide those audiences with new and innovative content and services.

Google’s monopoly power in search and search advertising is being used on a daily basis to extend and leverage the power of Google into new areas of the online ecosystem. The Senate Hearing helped to shed light not just on the business practices of Google, but more importantly how their strategy of defence has had to shift to reflect the new more aggressive business practices being deployed.

By David Wood,
ICOMP Legal Counsel

On Wednesday 21st September, Eric Schmidt, Google’s executive Chairman will be testifying before the United States Senate Judiciary Committee, where he will give his views on Google’s impact on the online marketplace as well as consumers. His interview with Christiane Amanpour, of ABC News programme “This Week” gives an insight into some of the themes that are likely to reappear during the session. During the interview with Ms Amanpour, Mr Schmidt emphasises the company’s focus on the consumer, and appears to downplay the growing concerns that regulators have. ICOMP and its members look forward to hearing what Mr Schmidt has to say, and would like to see some of the following key questions answered:

1. For the past 3-4 years power has been particularly concentrated around a single player in the online marketplace; in Europe Google now enjoys a 90%+ market share within all key local markets. What is Google doing to ensure that it fulfils its responsibilities as a dominant player to ensure that the remaining competition in the market is not impeded?

2. Google is currently coming under scrutiny for the preferential placement of its own services or websites in its search result pages. How can this be justified when consumers expect results to be unbiased and rankings to be based solely on the relevance of the answer to their queries?

3. Recent updates to Google’s algorithm have been billed as removing low quality sites from search. But who defines ‘low quality’; and by what metrics? Why is this not made public?

4. Many results cannot be explained unless they are the result of manipulation or manual adjustment. Are uniform judgments applied evenly to all sites by the algorithm, or are there other subjective filters applied?

5. The decision to stop copying content from rivals such as Yelp to support Google Places was a step in the right direction. When will the company take this process a step further and expand this so that other publishers’ IP is similarly protected?

By David Wood,
ICOMP Legal Counsel

On Thursday 8th September, representatives of the online licensing and content communities joined ICOMP members in London to close the 11th Council Meeting with a discussion on how to take forward the European Position on IP.

ICOMP Director Auke Haagsma opened by casting minds back to comments made by Business Secretary Vince Cable at the previous day’s ICOMP parliamentary lunch. Dr Cable had declared how keen he was to engage with digital stakeholders to promote business and innovation in the online space but regretted the fact that there was no single body or association which he could speak to, knowing that it represented the whole spectrum of industry opinion.

The session then heard from Lisa Peets, IP law specialist with Covington & Burling, who gave a succinct and incisive appraisal of the UK Government’s recent response to the Hargreaves Review before opening up the floor to what proved to be a fascinating and passionate debate about the future of IP regulation.

When the review was conceived in a whirlwind of rhetoric about how Google could not have started its business in such a permission-striated regulatory framework as the UK’s, rights holders naturally feared the worst but as the discussion unfolded, it emerged that attendees were cautiously optimistic about the thrust of the Review’s recommendations. Indeed, as Angela Murphy, Consultant at The Image Business stated: “it is important to be positive about this; this is the closest we’ve come to a workable solution.”

The session also agreed, however, that the fuzzy economic analysis and apparent lack of thought which underlay many of the Review’s recommendations was deeply concerning. The two areas of the Review which received the most vigorous analysis in the session were the policy on orphan works and the proposed Digital Content Exchange.

Orphan Works – a scheme is proposed for this Autumn in order to aid the cultural and commercial exploitation of orphan works

The scheme provides that if after conducting some cursory due diligence as to the ownership of the content (the required extent of which is unclear), it can be legitimately classed as “orphaned” and then be licensed for commercial and cultural use under certain criteria (the ambit of which has been extended). A rights holder must actively opt out of this process.

While the report does provide that orphan works will be subject to “licensing at market rates for commercial use”, it fails to address whether the proposed scheme would require parties that have digitised orphan works to provide access to their databases on FRAND terms – an important principle for ICOMP given the massive head start in online books (and the resulting improvements to Google’s search engine) that Google has enjoyed as a result of its decision to scan orphan works without waiting for a legislative scheme to emerge.

This is an issue which continues to concern ICOMP members.

Digital Content Exchange – an exchange-forum which will aim to bring together rights-holders and rights-users in a bid to make licensing simpler

This recommendation was generally perceived as laudable in intent but utterly lacking in practical detail. Questions abounded about what form this nebulous exchange was intended to take. Would the initiative be a loosely-connected network of interoperable databases or an Amazon-style hub? Would it be truly voluntary or would non-participation be so heavily victimised as to make a mockery of the notion? Would it be government-led at the risk of failing to address market concerns or industry-led at the risk of confusing the issue of funding? These sentiments echoed industry doubts expressed at the recent Westminster Legal Policy Forum (WLPF) where delegates questioned the practicalities behind the DCE and the lack of clarity of certain economic proof points; Chairman Ben Wishart (vice-chair All-Party Parliamentary Intellectual Property Group) characterising as a “bold claim” the assumption that DCE would increase UK GDP.

The session came out in favour of an industry-led solution which would ensure that business needs were met and would also prevent the imposition of a “one size fits all” model on a vast and growing content-pool consisting of so many different media. This also chimed with the consensus among delegates at the WLPF where Andrew Yeates of the Copyright Licensing Agency lamented the failure of the review to appreciate that “one size will not” in fact “fit all.” This being said, they also recognised the need for a certain degree of regulatory supervision to ensure a fair and equitable playing field for smaller enterprises.

The technology is already in existence to bring this to fruition. New ICOMP member PicScout, for example, provides a service which enables users to identify the ownership of an image’s copyright by searching for the image. ICOMP member PPL and PRS for Music already effectively constitute the sort of content exchanges which the recommendation envisages. What is now required is some incentives for rights-holders to list their wares on these databases and some coordination to ensure a basic level of interoperability between them.

As the session and ICOMP’s 11th Council Meeting drew to a close, it was not with any silver bullet solutions to the ailments of EU IP law. What had become clear however was that this was precisely the sort of organisation, composed of members from across the online ecosystem and able to articulate the voices of the industry as a whole, with which the Business Secretary had expressed such a desire to consult the previous day.

Going forward, ICOMP will seek to play as active a role as possible in the government’s forthcoming consultation around the Review. The message to Dr Cable will be a clear one: “next time you want to speak to the online marketplace, talk to us.”

Bright and early on Wednesday morning, an audience of industry stakeholders, regulators and press from across the online marketplace and, indeed, the globe gathered in London for the opening event of ICOMP’s 11th meeting of Council Members: a panel discussion on advertising, the creative industries and the online marketplace.

The objective of the seminar was to draw together voices from across the online ecosystem to discuss the role of advertising revenue in funding online content and the impact of search and search advertising dominance on publishers, the creative industries and the wider online marketplace.

ICOMP Legal Counsel David Wood opened by introducing our panel of experts for the session; Professor Howard Williams of the Oxford Institute, Justin Taylor, Managing Director of MEC Digital, Lee Baker, Director of the Association of Online Publishers and the Right Honourable John Whittingdale MP, Chair of the Culture, Media and Sport Select Committee of the UK House of Commons.

Professor Howard Williams, co-author of the ICOMP Whitepaper The Perils of Dominance discussed the mechanisms by which advertising space is bought and sold. He explained that “advertising is a match-making service”; the science of placing the ad amid content to which it relates and which will make it more likely to be seen and accessed by its target audience.

Lee Baker then elaborated on the challenges facing broadcasters and publishers. Publishers in particular, he explained, are suffering an evaporation of revenue streams as the digital era consigns paper editions to the shredders. “Advertising still props up Madison Avenue”, Lee commented, “and our members frequently sit around the table with Google…because as often as not it is Google’s table!”

Lee remarked that over 50% of his members were now instituting registration requirements but that this is less for short-term revenue reasons and more in order to understand their users and establishing what content they can charge for long term. David Wood commented that this demonstrates the current trade-off between consumers and publishers, namely: “access to content for access to data.”

Justin Taylor and John Whittingdale MP then gave the perspectives of the advertising industry and legislators respectively; Justin highlighting the eternal quest for great content and John lamenting the fact that with the pace of digital evolution, any legislation enacted would always be playing catch-up.

The debate was then opened up to discussion focused on the way in which search is evolving beyond a tool into which consumers merely plug a selection of search terms. It now increasingly provides (or perhaps imposes on users, depending on how you look at it) a passive, behavioural search service where a consumer’s GPS location, their purchase history, their very online footprint becomes a search term.

ICOMP Chairman Lord Watson of Richmond closed the session by commenting that if regulation was foredoomed to be belated and self-policing was all too often a hostage to self-interest, we should aim to fill the gap in between: creating an environment where the industry is incentivized to come up with best practices and use constructive peer-pressure to implement them. A lively and successful event which augurs well for a productive council meeting.

ICOMP Australia signatory Uglii has been a vocal advocate in leveling the playing field in search.

Uglii is a business with two main areas: Uglii Global Directory Services; and Uglii Market Place Services. The system allows businesses who are registered to be found more easily, particularly for consumers searching for local businesses.

The video below is an interview with Uglii’s CEO John Knorr who talks about the Uglii business model, and how it can benefit businesses in being found on the Internet.

Regards,
The ICOMP Secretariat

Alan Fels speaks about innovation and the digital economyLast month, ICOMP Australia hosted its inaugural forum in Canberra titled “Innovation and the Digital Economy: A Regulatory Challenge?”, in co-operation with the Council of Australian Small Businesses (COSBOA). The forum was attended by government policy makers, academia, and representatives from Australia’s online business industry.

The forum featured former Australian Competition and Consumer Commission (ACCC) commissioner Alan Fels, who set the tone of the forum through a video address by speaking on the regulatory challenges and opportunities posed by Australia’s developing digital economy.

Fels spoke of the need to promote the principles of fairness and transparency online, the importance of maintaining equal access to the online marketplace, and the current threats to the growth of Australia’s digital economy. “There are concerns of transparency that can deceive consumers which can inhibit Australia’s digital economy,” he said.

Following Alan Fels, Foundem co-founder Shivaun Raff who is also a special adviser to ICOMP provided the keynote address informing the audience of Foundem’s experience in search and claimed how they had been penalised.

The forum concluded with a panel session including Shivaun Raff; Billy Tucker CEO of group buying site CUDO (and Special Adviser to ICOMP Australia); Peter Strong, Executive Director of COSBOA; Paul Simos, REA Group; and Professor David Round from the University of South Australia and member of the Australian Competition Tribunal. The panel agreed that current competition laws required enforcement.

The Council of Small Business’ Peter Strong argued “We need to go out there and be more aggressive in enforcing what we currently have and say … we are going to fight and fight hard to make sure this is fair and transparent,” he said.

Regards,
The ICOMP Secretariat