The latest from TechCrunch
- Let's Calm Down On The Google-ITA Deal
- My Message To Google: Stop Cheating
- Weekend Giveaway: Rebtel Wants You To Have A Motorola Atrix
- Solo Drivers In Los Angeles Will Soon Be Allowed To Drive In Carpool Lanes For A Fee
| Let's Calm Down On The Google-ITA Deal | Top |
| This guest post is written by Daniel A. Crane , who is Professor of Law at the University of Michigan Law School. He is an expert in antitrust law. Google's proposed acquisition of ITA Software, which provides a management system for airfare pricing and shopping services, has become ground zero for the burgeoning coalition of interests intent on stopping Google's perceived dominance in Internet search. The Justice Department is reviewing the deal and is reportedly preparing to block it if Google does not agree to substantial concessions. Meanwhile, an anti-Google coalition has made stopping the acquisition its Maginot line. The "FairSearch" coalition, consisting of a host of anti-Google forces including Microsoft, TripAdvisor, Expedia, Kayak, and Hotwire, presents the ITA deal as Exhibit A on its website , warning that the deal will bring "consumers higher prices and less choice in travel." These claims are overblown. Google's competitors naturally fear Google's emergence as a formidable rival in travel search, but that is hardly a reason to block the transaction. Indeed, it's a reason to approve the deal. The most likely scenario is that Google's acquisition of ITA would allow Google a quick and efficient entry point into travel search that would expand consumer options and increase rather than decrease competition. Fairsearch has not articulated a clear and economically supported argument as to how the acquisition would harm competition, but two likely arguments spring to mind. The first is that by acquiring the software "backbone" powering travel search, Google will be able to squeeze out its rivals over time. Google could ostensibly do this by refusing to license ITA's QPX product to travel search sites or by refusing to give them access on terms as favorable as Google's own search site receives. While there are a number of theoretical arguments suggesting that Google would not have an incentive to do that, the most compelling argument is factual. ITA does not power most of the major travel sites. Out of the top five travel search sites, only Orbitz uses QPX . Expedia uses its own proprietary software, Priceline uses the E-Pricing system (owned by Travelport), and Travelocity and Yahoo use ATSE (owned by Travelocity). It's hard to argue that QPX is the crown jewel asset of travel search when only one of the five major players currently uses it. The second possible argument is that Google will use its dominance in travel search to steer consumers to its new travel search site. Under this scenario, when a consumer trustingly enters travel-related search terms into Google (say, "New York to Rome"), Google will steer the consumer to the Google travel site and blacklist rival sites. It's plausible that Google will favor its own service in search hits, but it seems farfetched that such a move would lead Google to monopolize travel search. Only a small percentage of the traffic into travel sites, ranging from 4% for Bing Travel to 12% for Expedia, comes from Google. Consumers are accessing travel search sites from many different origins and it seems unlikely that Google could take over travel search by steering consumers from Google to its own travel site. More generally, the argument that Google should be prohibited from integrating vertically goes well beyond blocking the ITA deal. If the problem is that by vertically integrating Google might favor its own services, then Google should not be allowed to vertically integrate whether by acquisitions or by internal development. If accepted, that argument would set a dangerous precedent for the entire Internet. It would suggest that once a player becomes dominant in one facet of the Internet, it cannot move into adjacent spaces because the Internet's inherent interconnectedness makes dominance spread easily. Such a principle of economic engineering would freeze innovation and progress on the Internet by forbidding the spread of success. Google says that it has plans to use ITA to improve the flexibility and quality of travel search. The integration of Google's search tools and ITA's interface to airline travel data has a lot of promise. In the absence of a compelling antitrust reason to block the deal, the presumption should be in Google's favor. To be sure, antitrust principles have an important role to play in preserving the Internet's openness. Google is under antitrust scrutiny around the world for a variety of its practices. Whether or not "search neutrality" is a viable and legitimate antitrust principle remains to be seen. In the meantime, there is no compelling reason to hold up the ITA deal. Photo credit: Flickr/ BeInspiredDesigns CrunchBase Information Google ITA Software Information provided by CrunchBase | |
| My Message To Google: Stop Cheating | Top |
| In mid February, at the Mobile World Congress in Barcelona, Google Executive Chairman Eric Schmidt expressed pride in Google employee Wael Ghonim's brave struggle against the autocratic Mubarak regime to establish political transparency in Egypt. “We are very, very proud of what Wael and that group was able to do in Egypt," Schmidt said in Barcelona. But what Schmidt needs to do now is apply Ghonim's views about political transparency to Google's own search business. With its 70% control of the global online search market, Google's power to make and break online businesses is unrivalled. So it's not surprising that website owners want more transparency over the reasons why the often autocratic Google sometimes impose penalties on their businesses. But a report issued last week by the newsnavigator OneNewsPage found a distinct lack of transparency in the search business with 88% of respondents saying that paid search advertising costs lacked transparency, while 24% said that they had experienced large, unexplained falls in site traffic as a consequence of changes in their search engine status. Nor is it surprising that the American Antitrust Institute published a report a week ago calling for US regulators to do a thorough investigation of Google's proposed deal to acquire travel software provider ITA. This deal, the report worries, would enable the dominant search engine to dominate the online travel market, thus muddying the church-state distinction between Google as technology provider and Google as a distributor of content. Transparency in search is critical to maintain both innovation and fairness in the digital economy. Yes, Google improved the quality of its search engine by targeting content farms with last week's self-congratulatory tweaks to its algorithm. But this remains little more than a cosmetic change. Rather than spam , fairness is the key issue. Given Google's dominance in search, the company has a responsibility to reveal the mechanics of its ranking algorithm—so that everyone understands why some links are ranked higher and more prominently than others. How can they do that in a way that doesn't invite gaming and spam, so that companies like JC Penny won't take advantage of the system? That is Google's problem. They've cornered the global market in PhD's. If the company can invent a self-driving car then it can certainly figure out how to make its ranking algorithm more transparent without becoming an easy target for content farms like Demand Media. You see, just as we need our government to play by clear rules, so the same is true with search. Thus, a week ago, in a letter to the DOJ Assistant Attorney General for Antitrust, John Conyers, the lead Democrat on the House Judiciary Committee, encouraged the Department of Justice to "carefully" review the Google ITA deal in order "to ensure competition and transparency will be protected in the online travel industry." Last week, 1plusV, the French developer of vertical search engines such as EJustice.fr , filed a complaint with the European Union, accusing Google of "pursuing a strategy of foreclosure against vertical search engines" and of illegally tying the Google search engine with AdSense. Bruno Guillard, 1plusV's founder, said on Bloomberg News that it was technically impossible for his own vertical search engines to use AdSense, thus undermining his ability to build viable business models around these new services. Yes, online transparency—understanding how, exactly, its artificial algorithm works and what information or links gets prioritized for what reasons—matters, particularly given the centrality of Google search in the knowledge economy. In his important new book The Googlization of Everything (and why we should worry) , University of Virginia media scholar Siva Vaidhyanathan claims that Google's control of the Internet is comparable to that of Julius Caesar's rule in 48 BC Rome. The all-controlling Google, Vaidhyanathan argues is "omniscient, omnipotent and omnipresent" and thus needs to be controlled if we are to maintain a level playing field in today's knowledge economy. Unfortunately, however, this is only half of it. Not only is Google's control of today's search engine market omniscient, omnipotent and omnipresent, but it also seems as if the Mountain View leviathan is abusing the very system over which it has such control. That's at least the suspicion of the European Commission which last November, on behalf of the European Union, launched an antitrust investigation into allegations that Google "abused" its already dominant position in search by its "unfavorable" treatment of rival services and by its "preferential treatment" of its own services like YouTube, Google Maps and Blogger. Yes, as everyone from the European Commission to the American Antitrust Institute remind us, transparency matters. In simple terms, it seems, Google has muddied the already disturbingly murky lines between online content and commercial interests by promoting its own products in its supposedly objective search engine. So, for example, when I enter my own name into Google, the first video link that comes up is a YouTube speech I made at Google headquarters in June 2007—even though there are many more professional and popular videos of speeches that I've made since. Coincidence? No, I hardly think so. The truth is that Google's manipulation of its secretive artificial algorithm isn't just a reflection of the paranoia of its less powerful rivals in the search business or my own admittedly highly anecdotal adventures in self-googling. Last November, when the European Commission launched its investigation, the Harvard Business School professor, Benjamin Edelman , published a research paper entitled "Hard-Coding Bias in Google Algorithmic Search Results" which proves that Google has "hard-coded its own links to appear at the top of algorithmic search results." Edelman's scientific research is the real reason why Google sucks . Taking each of the 2,642 terms listed on Google's Health Topics index page , the Harvard academic found that all 2,642 of these individual searches resulted in a link to Google Health appearing in the "absolute top of the page." Edelman discovered the same unnatural biases with stock ticker searches on Google. Here, he found, that the links from any stock ticker search—"the large-type all-caps ticker symbol, the large price chart, and the left-most details link"—will always take you to Google Finance, even though Google's in-house financial service is far from being a market leader in this sector. Google's bias isn't just limited to finance and health. In a January 2011 paper , "Measuring Bias in Organic Web Search," written with Harvard Business School doctoral candidate Benjamin Lockwood, Edelman found that Google listed its own map service as the first result when a user queries "maps.” It's hardly surprising, therefore, that Edelman and Lockwood discovered that 86% of map searches conducted on Google end up with the user clicking on Google Maps. So much, then, for the neutrality of Google search, the digital librarian on which we all-too-innocently trust to navigate our way around today's knowledge economy. Earlier this month, in an interview with the UK newspaper, The Daily Telegraph , Google's former CEO and new Executive Chairman, Eric Schmidt, said that he hoped that the European Commission would "come up with a set of remedies" to the issue of biased search and promised that "Google would consider" implementing. Google, Schmidt told The Telegraph , would be "willing to change some of its algorithm methodology in search" if it led to the quick resolution of the EC enquiry. But Google doesn't really need any commission, European or otherwise, to identity the remedies to Google's manipulation of the search knowledge economy. Instead, as I've suggested, they should listen to Wael Ghonim's observations about the lack of transparency in the Mubarak regime. My message to Mr. Schmidt and Google is very simple: stop cheating. Transform your search engine from a murky algorithm that sometimes benefits your own corporate interests into a transparently neutral guide that benefits both the consumers and the all the companies in our knowledge economy. The need for Google to establish transparency in its search engine and play by the rules is particularly acute today, both in Europe and America. You see, Google isn't quite as omniscient, omnipotent and omnipresent as Siva Vaidhyanathan claims. Indeed, for the first time in over a decade, Google has a genuine online rival challenging its hitherto Caesarian hegemony over the Internet. This emerging superpower in the online economy is Facebook which, with its 600 million members and over $50 billion valuation, is beginning to transform the web from a Google centric network of data to a social network of connected people. Google's recognition of the growing power of the social web is behind both its failed $6 billion acquisition for the social commerce business Groupon and its rumored $10 billion interest in acquiring Twitter—Facebook's main rival in the social networking business. And given Google's much publicized vulnerability in social media, it's particularly important that this multinational corporation makes its search engine honest so that it doesn't become a disreputable tool in Google's battle with Facebook to control the emerging social web. In his new book, The Master Switch , Columbia University law professor Tim Wu —the scholar who invented the term "network neutrality"—argues that the modern media and communications industry has a tendency toward monopoly. But, for the 2 billion Internet consumers like you and I reliant on fair and transparent search as their trusted vehicle for navigating the web, the only thing worse than a monopolist is a cheating monopolist. Google needs to clean up its artificial algorithm now and guarantee search neutrality. Otherwise it won't only be the European Commission investigating the self-interested bias of the Google search engine. Photo credit: Flickr/ Dicemanic CrunchBase Information Google Information provided by CrunchBase | |
| Weekend Giveaway: Rebtel Wants You To Have A Motorola Atrix | Top |
| Rebtel is offering us one hot little Motorola Atrix to give away this weekend to one lucky reader. How do you win? Well first you have to be very very nice to animals and the environment and then you need to click through to comment. Read more… | |
| Solo Drivers In Los Angeles Will Soon Be Allowed To Drive In Carpool Lanes For A Fee | Top |
| This week, Affiliated Computer Services, Inc. (ACS) — which was acquired by Xerox (NYSE: XRX) in February 2010 — announced that it’s building a new, electronic toll system on the two busiest highways in Los Angeles, to allow all single car drivers, even those in diesel guzzling Hummers, to shift into carpool lanes for a fee. When average traffic levels in a carpool lane rise overall, so will the fee. The company and city plan to calibrate the systems to keep traffic at a steady 45 miles per hour in the carpool lane (at least). Once equipped with the new toll system, the carpool lanes along Interstate 10 and Interstate 110 will be called ExpressLanes, instead. Los Angeles and Xerox are building this project with the idea of reducing highway congestion overall, according to a press statement from ACS and reports by Green.Autoblog.com . Is the death of the carpool lane as we know it environmentally sound, though? The faster, wide open appeal of a carpool lane is supposed to motivate Los Angelenos to roll with their homeys, instead of Swingers style; remember that distinctly not-green-scene where Vince Vaughn and his friends drive individually but together to party after party? At least, a carpool lane’s supposed to encourage drivers to buy clean vehicles. The Department of Motor Vehicles and state law in California allows vehicles with a qualifying “clean alternative fuel vehicle sticker” to drive in high occupancy vehicle (HOV) lanes. Ken Philmus, senior vice president and managing director of ACS Transportation Systems and Services, believes that a pay-to-switch-lanes system is a win for the environment, of course. Here’s why, he explained: “When people are stuck in traffic, watching the other lane, they might be encouraged to get into a carpool, later. Only 10 percent of vehicles [in Los Angeles] are multi-occupant, generally. So, there’s under-utilized capacity in [high occupancy vehicle, or HOV] lanes. With this system, as the HOV lane gets more congested, the toll to shift over goes up, which should result in fewer [single car drivers] going in, and a free flow that’s maintained. It should not damage the occupancy of the lane. But it should maintain or improve environmentally positive aspects of the lane, by getting people out of stop and go traffic. That’s where the air quality situation becomes worse, usuall.” ACS and Xerox are not charged with studying things like improvements in air quality, or reduction in diesel consumption in Los Angeles, resulting from this project in any official capacity, Philmus said. That job will be up to the likes of the Federal Highway Administration , local air quality management offices and departments of transportation instead. To participate, Los Angeles drivers will need to sign up for a FasTrak toll account, and install a small transponder in their vehicles. They will be asked to set a switch on the transponder to indicate whether they’re driving solo and the system should charge them; or if they’re part of a carpool and can drive for free in the ExpressLanes. Sensors installed along the interstate will calculate the dynamically priced tolls and deduct the proper amount from a driver's prepaid account, automatically. The ExpressLanes Project in Los Angeles is projected to open to traffic in late 2012. Similar systems have been installed in Miami, where they’re known as HOT lanes (high occupancy toll lanes) , and are averaging around $3.50 or $4.00 a toll during rush hour, and are about 16 miles per hour faster than regular, free lanes according to reports in the Miami Herald. Image: Traffic on Interstate 10, under creative commons license via Florian CrunchBase Information Affiliated Computer Services Xerox U.S. Department of Transportation Information provided by CrunchBase | |
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