February 28, 2004

The power and use of on-line purchase is growing. Google and other search engines have more power to influence the selection and immediacy of Internet purchases, and in more industries than ever.

Subject to any niceties and distinctions of the purists, there is broad agreement that Google controls almost 80% of web search requests. What threats and risks does that situation pose, if any? Google remains a privately owned company, whose technology is available at no cost to end-users.

However, Google does record and store, as no doubt do other search engines, by individual details of everything searched through the Google engine.

This may be released where legally demanded or to satisfy national security or other state interests but that is a separate issue altogether. Its revenues derive primarily from licensing its technology to a number of web based service providers as well as sales of text advertising, the often irritating paid for listings which accompany web search results.

How should we view this apparent monopoly? In a strict commercial sense it seems that Google "has got there through its own merits; the adaptive use of the technology to date has enabled to rise to the top of the pile."

It has not threatened or stifled competitors. Search engines seek to differentiate themselves.

Some do it technologically and this is the route by which Google has become so prominent and, of course, others suggest that superior technologies are coming to market, which will outshine Google, thus providing that competition.

Of course, if Google goes for a public offering of its shares, certain to be a very popular offering, one of the risks could be that the relevant national competition and anti-trust will take a more intrusive look in the nature of Google's monopoly.

Two areas of "monopoly" which do concern commentators and commercial organisations are only indirectly commercial. In one sense, although it is a search engine, Google has some of the powers of a major newspaper or periodical. It does and can exercise editorial control and influence.

Some say this is understandable, if only to avoid exposure of itself and others to action for defamation by the more aggressive organisations who use the instrument of litigation to suppress critical comment. So it may and has edited out links and content of this nature. Unless Competition Authorities view search engines companies as "media company " akin to newspapers or television it is unlikely they will be subject to investigation on this count.

Secondly, the power and use of on-line purchase is growing. Google, and other search engines for that matter, have more power to influence the selection, availability and immediacy of purchases in the way it sets the so-called algorithms for prioritising and selection of websites, bringing distinct commercial advantage to some and disadvantage to others.

Much of that will invariably be determined by the commercial power of advertising revenues. This could trigger investigation by Competition Authorities.

Source: IT Analysis.com

        

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