The Story Behind ShopCity And Its Antitrust Complaint Against Google

Google Europe

An “upstart competitor” is claiming Google (NSDQ: GOOG) punted it to the farthest reaches of its search results and is now fighting to level the playing field. Its claim has the makings of a great underdog story — but for the fact that the case looks a lot like other “David vs. Goliath” cases that have come unraveled in the last year.

The David this time around is ShopCity.com, a Silicon Valley valley company that runs a network of local shopping sites like ShopBuffalo.com and ShopPaloAlto.com. Yesterday, Bloomberg reported that the firm filed a complaint with the Federal Trade Commission accusing Google of rigging its search results to make it hard for consumers to find the ShopCity sites. The crux of the complaint is that Google regards ShopCity as a potential competitor to its own shopping sites so the search giant schemed to crush its would-be rival in its crib. For its part, Google alleges that it downgraded ShopCity because, well, its sites are kind of lousy.

To make sense of what is going here, it’s helpful to recall the case of MyTriggers.com, an Ohio-based shopping site that accused Google of a similar plot in 2009. The apparent plight of MyTriggers attracted headlines and fueled calls for investigations into Google’s business practices. Soon after, the Texas attorney general said the state was looking into claims that Google had used its power to suppress MyTriggers and other small sites like Foundem and Trade Comet. The small companies also sued Google in court.

Since 2009, however, various courts have dismissed the claims, and it has emerged that Microsoft (NSDQ: MSFT) has been behind the lawsuits. The Wall Street Journal (NSDQ: NWS) reported, for instance, that MyTriggers was represented by the Washington office of Cadwalader, Wickersham & Taft, a gold-plated law firm that represents Microsoft and that is far beyond the budget of most small companies.

The new ShopCity case appears to resemble these previous ones. This time around, the small company is being represented by Gary Reback, a legendary anti-trust lawyer who directed Microsoft’s campaign against the Google Book Settlement. Reback and Microsoft are likely using ShopCity as a front to help convince regulators and the public that “if there’s smoke, there must be fire” when it comes to Google. [Update: In an email message, a Microsoft spokesperson denied that the company is behind the ShopCity.com complaint]

This attack-by-proxy tactic is also consistent with Microsoft’s efforts to harass Google on other fronts. For instance, the company funded an NYU professor to annotate objections to the Google Book Settlement, and it continues to retain Florian Mueller, a patent blogger who regularly writes negative news reports about Google’s smartphone technology.

None of this means, however, that ShopCity’s claim lacks merit. Despite its protestation that “competition is just a click away,” Google does have dominant market power in the search business — which is the first of a two-part test used to determine if a company is breaching Section 2 of the Sherman Act. The second is whether a company is abusing that dominance, and so far there is no evidence that Google has done so.

Legal tests aside, commonsense also suggests that the ShopCity claim is trumped up. The company’s shopping web sites have a content-farm quality, which, as Marketing Pilgrim and others have noted, doesn’t tend to go over well with either search engines or consumers. This is similar to the now-defunct MyTriggers which, rather than offering a rich shopping experience, simply aggregated a host of trailer-park merchandise like Lil Wayne t-shirts.

The shoddy nature of these sites raises the question of whether they are in fact “competitors” and, more obviously, why Google would risk its reputation and further regulatory attention by crushing them. If Google did in fact want to use its search power to downgrade rivals, it’s a safe bet that it would begin with the likes of Amazon (NSDQ: AMZN) rather than a two-bit start-up.

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