The Federal Trade Commission (FTC) is in the final stages of conducting its Googleinvestigation. As the agency contemplates whether Google is a monopolist in the ill-defined market for search, they may find the competitive ground has shifted beneath their feet in just the 15 months since they began investigating. While a year or two ago, Google’s main competition in search might have been Bing and Yahoo, today it’s Apple and Amazon, and tomorrow it may be Facebook. The market is almost certainly broader than general search engines as we normally think of them.
Just last week, the New York Times ran a storyexplaining that Google and Amazon are “at war to become the pre-eminent online mall.” The story cited survey data from two consultancies that should give the antitrust authority pause:
- Forrester Research found that a third of online users started their product searches on Amazon compared to 13 percent who started their search from a traditional search site; and
- comScore found that product searches on Amazon have grown 73 percent over the last year while shopping searches on Google have been flat.
These impressive statistics suggest that Google lacks market power in a critical segment of search—namely, product searches. Even though searches for items such as power tools or designer jeans account for only 10 to 20 percent of all searches, they are clearly some of the most important queries for search engines from a business perspective, as they are far easier to monetize than informational queries like “Kate Middleton.”
One senses that the FTC has not focused much on competition from Amazon in product search, or that they even think of Amazon as a search engine. Instead, antitrust agencies around the globe have fixated on helping middlemen comparison-shopping sites such as Nextag and PriceGrabber, most of whom charge retailers for listings. Google is taking heat from comparison sites for doing the same thingbecause Google is perceived to be the most important source for online shoppers. That regulators are willing to breathe life into these intermediaries implies they do not recognize the platform-based competition between Google and Amazon for product searches.
Amazon is not the only behemoth that competes with Google for search. Apple’s Siri can do search and whole lot more, from helping Samuel L. Jackson design the perfect dinner to making John Malkovich laugh to helping Martin Scorsese maneuver through New York. As search evolves from links into answers, services like Siri become highly valuable. And the ITunes App Store represents the launching pad for many searches that would otherwise start on Google. A couple in Virginia that enjoys winery tours might begin their search by installing “Virginia Wine in My Pocket” or “Virginia Wineries” on their iPhone rather than search the web. In March of this year, Apple announcedthat more than 25 billion apps had been downloaded from its App Store by the users of the more than 315 million iPhone, iPad, and iPod touch devices worldwide. One wonders whether any of these downloads are being counted by the FTC in their calculations of Google’s market share.
And now Facebook is getting into search. At a Disruptconference last week, Mark Zuckerberg explained that search engines are evolving into places where users go for answers, and that Facebook is uniquely positioned to compete in that market: “And when you think about it from that perspective, Facebook is pretty uniquely positioned to answer a lot of the questions that people have. So what sushi restaurants have my friends gone to in New York in the past six months and liked? . . . . These are queries that you could potentially do at Facebook if we build out this system that you just couldn’t do anywhere else.”
It may not be natural to associate Amazon (an online retailer), Apple (a device maker), and Facebook (a social media site) with search, but in the technology industry, your next competitive threat can come from anywhere. Monopoly and the kind of robust platform competition between Apple, Amazon, Google, and Facebook are mutually exclusive portraits of reality. Will the FTC turn a blind eye toward this advanced form of competition?