On 31 May 2012, Google announced the conversion of its up to now free service Google Product Search into a pay-to-play listing website that shares some characteristics with Google AdWords. Although the results displayed will apparently be labelled as having an advertising character (differentiating them from the ‘organic’ search results), Google will continue to display links to its own commercial services above those of its competitors, which will continue to be artificially relegated down the results page. Moreover, merchants will now pay to have their products displayed, in a classic predatory move by Goggle and providing further proof of its dominance.
Google Product Search, already known in some countries as Google Shopping, was a free price comparison service launched by Google in December 2002 under the name of Froogle. Working like a vertical search engine for products, Google Product Search offered its users pricing and product information provided by merchants. Google Product Search did not charge fees for listings, nor accept payment to rank products more highly, nor charge commission on any resulting sales. Google Product Search experienced a major boom in its traffic and activity after May 2007, when Google introduced Universal Search, a service that injected links to commercial services offered by Google (including Google Product Search) into the highest positions of its ‘organic’ search results.
The transformation of Google Product Search to pay-to-play announced last week is more than a rebranding to Google Shopping. Once the transition phase is completed in autumn 2012, the ranking for a given search term will be based on a combination of relevance and bid price. This change arrives at a crucial stage in the antitrust investigation being undertaken by the European Commission. On 30 May 2012, the Commission announced that it had sent Google a letter outlining the four areas where it reached the provisional conclusion that Google was abusing its dominant position at the expense of online competitors and to the detriment of consumers. One of the areas of concern relates to Universal Search.
In transforming Google Product Search into Google Shopping, and labelling the results as “sponsored”, Google may be attempting to meet concerns that its current practices are deceptive. However, it is also important to consider what effects this change is likely to have on competition and consumer choice. In particular, the results of Google Product Search will continue to be displayed among the highest results for a given query, and competing product comparison websites will continue to be pushed down the results list, where consumers are unlikely to find them. As a result, merchants and competing vertical search engines are likely to have to turn to alternative means to gain access to consumers. Given Google’s overwhelming dominance in Search, those choices are unfortunately limited to paying for AdWords or for being included in Google Product Search.
Google’s strategy is clear. Five years after the discriminatory preferencing of Google Product Search results was introduced, Google’s product comparison service is the most visited in the market. Having driven competitors down its rankings or out of business, Google is now in a position to charge for services it previously provided for free. It is not the first time Google has pursued a strategy of monopolising online markets, driving out competition and then imposing monopoly prices – for example, it has already started to charge intensive users of Google Maps. Such behaviour is a classic textbook example of abusive predation and exploitation, aimed at profit maximisation and the eliminiation of competition.
David Wood,
ICOMP Legal Counsel
