As we become increasingly dependent on internet, we need to be increasingly concerned about how it is regulated. The US Federal Communications Commission has proposed ‘network neutrality’ rules, which would prohibit service providers from discriminating against or charging premiums for certain services or applications on the web. The commission is correct that ensuring equal access to the infrastructure of internet is vital, but it errs in directing its regulations only at service providers like AT&T and Comcast.
Today, search engines like Google, Yahoo and Microsoft’s new Bing have become the internet’s gatekeepers, and the crucial role they play in directing users to websites means they are now as essential a component of its infrastructure as the physical network itself. The FCC needs to look beyond network neutrality and include ‘search neutrality’.
The need for search neutrality is particularly pressing because so much market power lies in the hands of one company: Google. With 71 per cent of the United States search market, Google’s dominance of both search and search advertising gives it overwhelming control. Google’s revenues exceeded $21 billion last year, but this pales next to the hundreds of billions of dollars of other companies’ revenues that Google controls indirectly through its search results and sponsored links.
Control
One way that Google exploits this control is by imposing covert ‘penalties’ that can strike legitimate and useful websites, removing them entirely from its search results or placing them so far down the rankings that they will in all likelihood never be found.
Another way that Google exploits its control is through preferential placement. With the introduction in 2007 of what it calls ‘universal search’, Google began promoting its own services at or near the top of its search results, bypassing the algorithms it uses to rank the services of others. Google now favours its own price-comparison results for product queries, its own map results for geographic queries, its own news results for topical queries, and its own YouTube results for video queries. And Google’s stated plans for universal search make it clear that this is only the beginning.
Because of its domination of the global search market and ability to penalise competitors while placing its own services at the top of its search results, Google has a virtually unassailable competitive advantage. And Google can deploy this advantage well beyond the confines of search to any service it chooses. Wherever it does so, incumbents are toppled, new entrants are suppressed and innovation is imperiled.
Without search neutrality rules to constrain Google’s competitive advantage, we may be heading toward a bleakly uniform world of Google Everything. Some will argue that Google is itself so innovative that we needn’t worry. But the company isn’t as innovative as it is regularly given credit for.
AdWords and AdSense, the phenomenally efficient economic engines behind Google’s meteoric success, are essentially borrowed inventions: Google acquired AdSense by purchasing Applied Semantics in 2003; and AdWords, though developed by Google, is used under license from its inventors, Overture.
The FCC is now inviting public comment on its proposed network neutrality rules, so there is still time to persuade the commission to expand the scope of the regulations. In particular, it should ensure that the principles of transparency and nondiscrimination apply to search engines as well as to service providers. The alternative is an internet in which innovation can be squashed at will by an all-powerful search engine.
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