Google ‘overwhelmingly’ dominates search market: US panel
The US House Judiciary subcommittee that examined the dominance of Amazon, Apple, Facebook and Google and their business practices, has stated that Google ‘overwhelmingly holds market dominance in search and advertising.
“The overwhelmingly dominant provider of general online search is Google, which captures around 81 per cent of all general search queries in the US on desktop and 94 per cent on mobile,” the nearly 450-page report said on Tuesday.
It said that Google, as well as Amazon, Apple and Facebook, enjoyed monopoly power.
“Google maintained its monopoly over general search through a series of anticompetitive tactics. These include an aggressive campaign to undermine vertical search providers, which Google viewed as a significant threat,” the report mentioned.
The subcommittee said that documents show that Google used its search monopoly to misappropriate content from third parties and to boost Google’s own inferior vertical offerings, while imposing search penalties to demote third-party vertical providers.
“Google has steadily proliferated its search results page with ads and with Google’s own content, while also blurring the distinction between paid ads and organic results.
“As a result of these tactics, Google appears to be siphoning off traffic from the rest of the web, while entities seeking to reach users must pay Google steadily increasing sums for ads,” the report added.
In a statement on the report, Google said free products like Search, Maps and Gmail help millions of Americans and they have invested billions of dollars in research and development to build and improve them.
“We compete fairly in a fast-moving and highly competitive industry. We disagree with today’s reports, which feature outdated and inaccurate allegations from commercial rivals about Search and other services,” the company said.
The report came as the US Senate Commerce Committee has asked Facebook CEO Mark Zuckerberg, Alphabet and Google CEO Sundar Pichai and Twitter CEO Jack Dorsey to testify on October 28 over the Section 230 of the Communications Decency Act. The hearing will also cover the topics of privacy and media domination.
Over the course of its investigation, the US House Judiciary subcommittee collected extensive evidence from these companies as well as from third parties — totaling nearly 1.3 million documents.
“Facebook has also maintained its monopoly through a series of anticompetitive business practices. The company used its data advantage to create superior market intelligence to identify nascent competitive threats and then acquire, copy, or kill these firms,” the panel report stated.
Once dominant, Facebook selectively enforced its platform policies based on whether it perceived other companies as competitive threats. In doing so, it advantaged its own services while weakening other firms.
“In the absence of competition, Facebook’s quality has deteriorated over time, resulting in worse privacy protections for its users and a dramatic rise in misinformation on its platform,” it lamented.
On Amazon, the panel report said that the platform has monopoly power over many small- and medium-sized businesses that do not have a viable alternative to Amazon for reaching online consumers.
“Amazon has engaged in extensive anticompetitive conduct in its treatment of third-party sellers. Publicly, Amazon describes third-party sellers as “partners.” But internal documents show that, behind closed doors, the company refers to them as internal competitors.”
Finally, the report said, Amazon Web Services (AWS) provides critical infrastructure for many businesses with which Amazon competes.
“This creates the potential for a conflict of interest where cloud customers are forced to consider patronizing a competitor, as opposed to selecting the best technology for their business”.
When it comes to Apple, the report stated that the company leverages its control of iOS and the App Store to create and enforce barriers to competition and discriminate against and exclude rivals while preferencing its own offerings.
“Apple also uses its power to exploit app developers through misappropriation of competitively sensitive information and to charge app developers supra-competitive prices within the App Store”.
Apple has maintained its dominance due to the presence of network effects, high barriers to entry, and high switching costs in the mobile operating system market.
Apple is primarily a hardware company that derives most of its revenue from sales of devices and accessories.
However, as the market for products like the iPhone have matured, Apple has pivoted to rely increasingly on sales of its applications and services, as well as collecting commissions and fees in the App Store.
“In the absence of competition, Apple’s monopoly power over software distribution to iOS devices has resulted in harms to competitors and competition, reducing quality and innovation among app developers, and increasing prices and reducing choices for consumers,” the report mentioned.