google logo 311.
(photo credit: Courtesy)
Google was founded just over a decade ago with the goal to “organize the world’s
information and make it universally accessible and useful.” Its main product is
a search engine, which is the gate through which approximately two-thirds of all
the world’s searches pass, with the other third being divided up among various
competitors including Yahoo and Bing.
One of its other projects is the
Google Books initiative to digitize a large fraction of the world’s books to
make them searchable and available.
Early this month Google took another
step to make the world’s information more accessible and useful: It
ITA corporation, which collects and provides information on airline
does not sell airline tickets, nor is it a travel agent that matches
ticket sellers. It isn’t even a service to help travelers search for
is strategically located at the source of information: It obtains the
information from airlines and makes it available to existing
If you visit one of these sites and type in your place
of departure, destination and travel dates, ITA’s software provides you
information about available flights.
So far it sounds simple: Google
exists to make information accessible and useful; ITA has a unique tool
one particular kind of information accessible and useful; Google
Google will now be able to make flight information available through an
However, competitors and regulators are worried that this
could be unfair and anticompetitive.
What are the possible problems? One
issue is the trust people place in the Google search. Google allows
pay to have their searches prominently displayed, but these “paid
clearly marked so that the user can distinguish them from “impartial”
by Google’s search engine.
One of the reasons Google’s service is so
popular is that people trust it to provide what they want to see and not
Google would like them to see. That trust is easy to maintain when
just a search provider. But when it is a content provider, it might not
to convince users that Google isn’t subtly tweaking its search engine to
them to Google’s businesses.
An additional problem is fair conduct toward
its customers. The vast majority of Google’s revenue comes from
and a fair chunk of this revenue comes from companies that might now be
Barry Diller, chairman of the travel service Expedia, told
the Financial Times his company gives “very many hundreds of millions of
dollars” to Google each year for advertising and expressed concern that
is giving prominence to its own services.
Airlines also pay Google a
fortune in advertising, and they could be wary of having Google
being a supplier and a competitor. Advertising is not an arm’s-length
and Google obtains information about these businesses from its
the advertising firms.
The regulators are worried about “vertical
integration.” Vertical integration means that a company merges with a
Today’s flight search could start with Google to find a
search service and go from there to an online travel agent or airline.
will certainly merge the first two and will have the option of doing all
Vertical integration can be a pro-competitive step, giving
customers better service and better prices through efficiencies of
But it can also be anticompetitive; it can leverage market power (the
dictate prices) in one market to obtain market power in another
Some of the problems could be solved by creating a fire wall
between the regular search service and the travel search service.
search would have an arm’s-length relationship with the flight search.
doesn’t seem very practical. It violates the business logic that
deal in the first place: making information more accessible and useful
enabling you to find a flight directly from a text search.
There is also
the problem of trust. Google’s algorithm is secret, to keep people from
it. It might not be easy for them to convince customers that they aren’t
tweaking it to their advantage, as Diller fears.
Google’s efforts to
reassure customers might be complicated by its recent conduct in Europe.
turns out that the Street View vehicles Google used to photograph
facades also collected information about private wireless networks –
disclosing this fact. So the public trust in its pronouncements is not
necessarily at an all-time high.
Mergers can be pro-competitive, taking
advantage of integration to provide better service and lower prices, or
anticompetitive, leveraging the increased concentration to obtain
and an unfair advantage over competitors. Google has its work cut out
for it in
its latest acquisition: to create both the reality and the image of a
whose only goal is to provide better service to the
email@example.com Asher Meir is
research director at the
Business Ethics Center of Jerusalem, an independent institute in the
College of Technology (Machon Lev).