United States v. Google

Earlier this month the FTC announced they are opening an antitrust investigation against Google. Based on the early reporting of what’s being alleged I think the government has it all wrong.

It’s not normally in my DNA to run to the defense of a company like Google. I’m instinctively distrustful of corporations that wield the sort of dominance that Google does over such a large swath of their market. Had the FTC opened an investigation on another company with an equivalent grip on their industry I’d assume there was some fire with the smoke.

But I feel like I know Google pretty well. I know it from the search user-side—like countless millions of others—as a company that provides an extraordinarily valuable service—one I would absolutely pay for if asked to.

And relative to most, I also know Google pretty intimately from the other side of the search equation. Since 2003 my company has spent hundreds of thousands of dollars per year advertising to Google search users. Presumably it’s me (the advertiser-“me”) that the FTC is trying to protect. Why are they doing this? They haven’t really said, but here’s the current speculation…

Google uses its dominance in search to push visitors to preferred sites and paid content
The gist of the case against Google goes like this: they control the majority of the US search market and use that dominance to push visitors towards preferred sites and services. The problem with this argument is that they don’t do anything like that. Every change Google has made to how they display their search results has been to provide users with better, more relevant choices. This singular focus on user experience has often been to the detriment of Google’s short-term profits—such as their concerted efforts to flush out “arbitrage” advertisers which place paid ads that sent users to a site with more ads, or affiliate sites that link to retail sites through third party gateways. Google continuously sacrifices short-term ad revenues in favor of focusing on user experience.

Google limits user choice and unfairly pushes users into their own products
Our company provides audio visual services for meetings and events. Lots of events are held at large hotels, and those hotels have their own in-house AV providers—nothing should be wrong with that. Except that very often these hotels prevent, or make it very difficult, for their clients to hire independent AV companies like ours. Once event clients contract for meeting space, these hotels aggressively attempt to require clients to use their in-house AV provider—which often means clients overpay, and don’t have the option of picking the best provider for their needs. It’s anti-competitive, and bad for consumers. No one likes to pay for overpriced beers at the ballpark. No one likes it anytime when they feel their buying options have been deliberately limited.

Google is being accused of doing something similar—basically leveraging their dominance in search to unfairly limit people’s choices and push them into other Google products.

The logic goes something like this--You use Google for search, now you’re stuck using them for email and word processing.

But does this jibe with your experience? Do you use Gmail or Google Docs? If you’re like me, I’m guessing it has nothing to do with “limited choices”. It’s because these are great products. I use these products because I want to, not because I have to. Other Google products I’ve tried haven’t been as good as what I use already. Google Forms is an example (wufoo.com offers an awesome form builder).

This argument has extended past Google non-search products like Gmail and Docs, into new ways Google search results are displayed, such as Google Places. Places are listings of companies providing local products and services related to the user's search. Google released this new way to display search results to provide more relevant options to users looking for local products and services. This was a great leap forward for Google, as they previously (in my opinion) did a relatively poor job at displaying relevant results for local-oriented searches (i.e. "same day flower delivery Chicago"). They irony is that--contrary to what Google critics claim--these new listings make it less likely someone will click on a paid ad (since Places was added, clicks to our paid ads for local searches have plummeted). Again, Google sacrificed short-term profits in the interest of creating a better user experience.

Companies have no choice - Google has created an environment where businesses must advertise with Google to be competitive
While I'm sure Google (and every company) would appreciate potential clients believing that advertising with them is critical to a company's success, the fact is every business has an infinite number of options for reaching customers and growing their business. In my own community of business owners and entrepreneurs only a fraction of them advertise--or consider advertising--with Google. In the realm of electronic marketing alone (email, search, website display ads) there are tons of choices. Search advertising spend makes up 48% of total 2010 online spend, but display advertising (Facebook is the leader here) is growing at 2x the rate and closing in quickly on search.

The fact is I AM a big believer in Google search advertising—not because I have no choice—but because it works for my company. While most of our business is driven through repeat clients, the majority of new customers find us through Google. We've advertised with MSN, Yahoo, online yellow pages, trade shows, sponsorships, trade journals, and elsewhere--but by far Google gives us the best return on our investment—better than any other form of advertising we've tried. Because of Google we've been able to grow our business aggressively year over year, with no outbound sales team, allowing us to focus our efforts on delivering the best possible experience for our customers.

The “Google Tax”
I read an article authored by a lobbying group of Google critics that suggested that Google’s success has created a “tax” on all consumers in the form of less innovation and fewer jobs created because of reduced competition in the marketplace. In reality, the complete opposite is true. Google, more than any other company I know, has helped drive measurable productivity gains in the US economy and around the world, allowing companies to do more with less, and grow and create jobs. Google is a productivity multiplier for Meeting Tomorrow—both as advertiser and as search users. Google ads provides us with the most efficient and cost-effective way that I know of to reach customers in the market for our services. Google allows us to stretch our marketing dollars farther than any other advertising medium or other means of acquiring customers. As a loyal Google search user I—and almost everyone at my company—uses Google every single day. It’s the most efficient way I know of to find the information, products and services to run our business. We take it for granted, but I am certain without Google our company would be measurably less efficient and productive than we are with it.

Why do I care? Why should you care?
Given how much value my company derives from Google's services my concern about the FTC investigation is driven partially by self-interest. But my passion for this issue runs deeper. I know I'll be accused of drinking the Google Kool Aid--but I really do believe core to Google's every decision is to "do no evil." Not because they say it--but because they live it in the decisions I’ve observed over the past 8 years. Acting it in a way that would inhibit or limit user's choice in pursuit of short-term profits would be contrary to the actions they've taken. Being dishonest, overcharging advertisers (directly or indirectly) would be inconsistent with all of my experiences with them. It’s that integrity and singular focus on providing a better experience for users and advertisers that has made Google so successful. Not by muscling out competitors through heavy-handed bundling deals or other anti-competitive tactics. Not even through advertising (ironically). But by creating a great product that people love.

Every loyal Google user has the same story: they heard about how great it was, tried it, loved it, and told others. Let’s keep on spreading the word to make sure that great companies like Google continue to innovate and do good.