Home » Amazon, Apple, Bestsellers, Legal Stuff » U.S. Escalates Google Case by Hiring Noted Outside Lawyer

U.S. Escalates Google Case by Hiring Noted Outside Lawyer

27 April 2012

From the New York Times:

Federal regulators escalated their antitrust investigation of Google on Thursday by hiring a prominent litigator, sending a strong signal that they are prepared to take the Internet giant to court.

The Federal Trade Commission is examining Google’s immensely powerful and lucrative search technology, which directs users to hundreds of millions of online and offline destinations every day. The case has the potential to be the biggest showdown between regulators and Silicon Valley since the government took on Microsoft 14 years ago.

Then as now, the core question is whether power was abused. The agency’s inquiry has focused on whether Google has manipulated its search results, making it less likely that competing companies or products appear at the top of a results page.

. . . .

The Microsoft case in the late 1990s transformed the tech industry, reining in its most powerful company and allowing for the rise of new companies like Google. Now Google wields the same sort of power that Microsoft once did, and is under the same sort of scrutiny.

. . . .

Mr. Broder said antitrust cases charging the abuse of a monopoly are difficult to prove.

“There is a lot of very complex economics involved,” he said. “It can be done. But Google will undoubtedly bring to bear tremendous resources itself.”

. . . .

The general issue underlying the investigation is whether Google abuses its power in the market for Internet search. Google controls about 66 percent of the United States search market, according to comScore. Microsoft’s Bing accounts for about 15 percent of Internet searches, with Yahoo gathering 14 percent.

Competitors have said that Google at times adjusts the algorithm that produces its search results to lower the likelihood that a link to a competitor or a potential competitor for its products appears near the top of the results.

For example, if Google were to program its system so that a consumer’s search for “washing machines” is more likely to produce as its top result a link to Google-related shopping sites, that could be interpreted as putting its competitors at a disadvantage.

Link to the rest at the New York Times

Passive Guy put this up because of all the recent attention to the recent price-fixing litigation filed against Apple and five big publishers. The response of the defendants has been that Amazon is a monopolist.

As PG has discussed, having a monopoly is not against the law. Abusing a monopoly is.

The anti-Amazon collective is actively searching for any evidence that Amazon is abusing its market position. See the post about Amazon’s Larry Kirshbaum here. One of Kirshbaum’s statements gave rise to a conspiracy theory that Amazon was tweaking its recommendation algorithms to favor Amazon Publishing titles. If true, that would be precisely the sort of thing the US Federal Trade Commission investigation of Google is all about.

Amazon has said Amazon Publishing’s books do not receive special treatment in its recommendation engine.

Amazon has smart lawyers who are undoubtedly watching the Google case closely and PG expects Amazon will be careful to avoid being drawn into a similar situation.

The financial benefits for books that do well with Amazon’s various discovery tools are substantial. David Gaughran has written about the importance of Amazon’s various bestseller and popularity lists here.

Amazon, Apple, Bestsellers, Legal Stuff

5 Comments to “U.S. Escalates Google Case by Hiring Noted Outside Lawyer”

  1. Query! Amazon Select gives books a way to get high up in the Amazon rankings — the free days — that arguably put non-Select works at a disadvantage. Is Amazon’s market dominance (…sure looks dominant to me…), combined with this “go exclusive with us” deal, likely to be considered abusive?

    (Me, I treat it as a “eh, rigged game, whatever” thing and move on; my hot buttons are, as-you-know-bob, different.)

    (Hm. #asyouknowbob?)

  2. The link to Larry Kirshbaum goes to David Gaughran…

  3. http://www.digitalbookworld.com/2012/consumers-like-and-trust-amazon-book-recommendations-despite-industry-jitters/?et_mid=552535&rid=64199279

    As this link suggests, if Amazon start gaming their recommendations then they will lose credibility with their customers. I’m not sure they’re that daft.

    • “I’m not sure they’re that daft.”

      All signs point to “definitely not”. Amazon’s whole model is based on giving customers the best shopping experience possible. If they gamed the system customers would find out and would get really mad. And the word would spread fast on the internet. They just aren’t that stupid.

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