Dominant search engine crosses the line to become a content company
The latest acquisition of Frommer's brand of travel guides from John Wiley & Sons last month may only be a small deal for the Internet giant to whom $23 million is small change: Google makes more than that in profit each day. However, it is an important piece in a much larger jigsaw puzzle which is unarguably depicting the search giant transitioning from being a neutral organiser of information to actually owning and promoting some of the information itself.
Inevitably this is set to cause significant internal conflict for the well-known search provider, which commands a monopolistic market share in excess of 90% of all searches in the UK and Europe.
Frommer's is not the only strategic acquisition by Google in its move towards being a content owner.
In September last year, Google acquired restaurants review company Zagat in a deal worth $114 million. It followed this with its $700 million acquisition of ITA Software, the leading travel software and database provider in July 2010.
Two patterns are emerging with increasing clarity as Google executes its content-acquisition strategy step-by-step:
- Google is extending its presence in so-called "verticals" in search, such as travel, news, video, mapping and more - competing with other providers in those verticals.
- The Internet giant is intentionally blurring the line between offering a neutral, unbiased search engine for web links and promoting its increasing arsenal of content in various verticals - creating a conflict of identity in the process.
John M. Simpson, Consumer Watchdog's Privacy Project Director, highlighted the identity conflict in a TechCrunch article saying: "There is a fundamental conflict between being a search provider and a content provider."
"As Google has increased its content and services, it has unfairly favoured them in its search results and damaged competitors," Simpson said.
Jeff Bercovici of Forbes wrote: "How long can Google be a fair arbiter of all the world's information when it increasingly has information of its own that it wants to promote?"
Google doesn't make it a secret that it seeks to drive its advertising revenues up by promoting its own content pages over and above those of competitors. Former Google executive Marissa Mayer confirmed the Internet giant's strategy at a conference five years ago, saying: "To the degree that we host content, we ultimately have a monetary incentive to drive people to those pages if those pages have ads on it."
The latest moves of the search giant into increasing its own content offering is posing a threat to consumers and online businesses in many verticals.
This anti-competitive threat has been realised by regulators and consumer groups on both sides of the Atlantic. Earlier this year, BEUC, The European Consumers' Organisation, published a letter it sent to the EU's antitrust commissioner, Joaquín Almunia which stated that "Google, may have abused its position in the search market to direct users to its own services and secondly to reduce the visibility of competing websites and services."
Google's current business practices, which arise from its identity conflict are the subject of an ongoing investigation by the European Commission, which has led to the U.S. corporation offering the EU regulator proposals to bring the investigation into its abuse of its dominant position to a close.
Indeed, Google's business practices appear to be everything but fair when it comes to promoting its own content in verticals. I highlighted its use of unexplained "search penalties" in April, which caused my news portal website One News Page to become virtually undiscoverable for online users for a prolonged period of time.
Given its dominant position in search, Google will need to face sufficient pressure from regulators to ensure its identity conflict does not lead to devastating effects on the online economy.