Making Results Better For End Users Isn't Acting Like A Monopolist

from the and-again-and-again-and-again dept

With the Justice Department getting closer and closer to going after Google for supposed antitrust violation, we're going to see more and more articles like the one in the New York Times this weekend that tries to highlight the story of a company "harmed" by Google's market power. In this case, it's the story of a guy who runs a directory site that was based entirely on Google arbitrage. He bought ads on Google's search engine to drive people to his directory page, and then littered the page with AdSense to collect revenue from people clicking through. The NY Times presents this as being somewhat harmful, but I have to side with Jeff Jarvis who doesn't see what Google did wrong.

Google arbitrage sites are a problem for the end user. They're based on the simple concept of forcing people to go an extra click to siphon some money away. If I'm looking for a particular site on Google I don't first want to go to a directory -- I want to go directly to the site. That's true for many, many users -- and Google's efforts in punishing arbitrage sites isn't anticompetitive, it's about improving the user experience, which is something that should be praised, not sued. The only problem noticed in the scenario was that the guy chose a bad business model, where he was totally reliant on a single company for both all of his traffic and all of his revenue. He made the decision to base his entire business on a single supplier, and that supplier has every right to change the terms of its deals in an effort to make a better consumer experience. This isn't Google being anticompetitive -- it's Google serving its customers.
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Filed Under: antitrust, arbitrage, monopoly, search results
Companies: google

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  1. icon
    isaac K (profile), 15 Sep 2008 @ 3:47pm

    Re: Three points

    Second, even if Google is a monopoly (which it's not), why is that so bad? Are they "fixing the market"? Are they price-gouging customers or unfairly undercutting their competitors?
    Well, here's the thing... In this case, yes. They decided to arbitrarily raise their rates on a paying advertiser by 2000%, stymieing his source of revenue.

    If we look at Google as a supplier of information to a searcher, its non-cost structure makes it not a monopolizer threat.
    But if we look at the ad business of Google as supplying internet user eyes to advertising sites for a COST (which is HOW GOOGLE MAKES THEIR MONEY) then this form of discrimination is intervening with normal market forces. If people didn't LIKE his site, he wouldn't be getting the CLICKS he got. A person with a poorly constructed site will, by market mechanics, get fewer and fewer traffic clicks. People use the service because the WANT to. He is paying money (same as any other advertiser) to appear on the front page. Denying him that is exerting Google's influence over the advertising sector under the mantra of "doing what's best for the end user."

    Let the end user choose - this mantra smacks of "making the internet safe for the children" that congress is so fond of.

    and before you start flaming, I have no affiliation with the DoJ, Google, or anyone else. I am just an economist who sees this market a bit differently than Masnick.
    Honestly, I can understand in this case how Google can be termed as acting anticompetitive - Mr. Savage paid the same money and bid in the same system as anyone and everyone else, but is now being singled out.

    eh. As I said again, let the market deal with him.

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