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Summary:

Google has made new concessions to guarantee its rivals a place in search results — but the new terms offer no strategic threat to the company’s overall position.

Google search

In the latest twist in Google’s long-running squabble with regulators over its search dominance in Europe, the company is proposing to cut the minimum rate that rivals can pay in order to ensure they appear on so-called “vertical” search sites like Google Travel or Google Flights.

Under the plan, Google proposes to offer three guaranteed slots via an auction where the minimum reserve bid for rivals like would sell for 3 euro cents (about $0.04) — down from Google’s original reserve price proposal of 10 euro cents. The winners of the auction would then see links to their competitor search sites appear in Google’s search results (full details here).

The plan comes as part of Google’s proposed response to EU regulators’ concern over its dominant market position in Europe. In particular, this aspect of the plan is meant to address how Google favors its own results over in certain retail verticals — the idea is that a user who searches for “Greek Food” on a Google restaurant vertical would also see links to sites like Yelp. In response to complaints about loopholes, the company is also proposing to guarantee its rivals a placement on all devices.

The concessions, the broad outlines of which were announced earlier this year, seem significant at first; however, they still amount to small beer for Google. That’s because the discounted, guaranteed slots apply only to the “verticals” and not to Google’s general search page, where most people perform searches and where the company says its results are still determined by a neutral algorithm.

While the specialized verticals are a growing area of search, they’re still a small part of Google’s overall revenue. The plan to permit rivals to buy a bit of cheap real estate on certain verticals amounts, in effect, to little more than a way for rivals to arbitrage a portion of Google’s search traffic. It does not pose a strategic threat to Google.

In the meantime, Google’s ongoing dominance is likely to come from new forms of search and discovery like maps (one Google rival told Bloomberg that the EU concessions won’t even touch mapping) and social advertising.

This doesn’t mean, of course, that EU regulators should force Google to do more, especially as much of the to-do over “fair search” in Europe is being driven by arch-rival Microsoft (in America, meanwhile, Google’s search results are a matter of free speech). The lesson here, instead, is that Google appears to have weathered the EU’s latest regulatory assault without having to give up much of its market power.

  1. Having every full length feature movie and published song from every major recording studio on youtube, all of the closed source software published in google code, all of the print copy books in google scholor, all of the newspapers aggregated through google news, the entire world maped in 3D streetview, email, and 260 Million Watts of power to deliver it all for FREE is even easier now that the NSA writes blank cheques…

    Unfortuntately, everyone else was just laid off and now has to write SED scripts for communists… But the best thing is everything is still FREE.

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