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There has been a flurry a legislative activity in the U.S. in the past few days to stop Google and other big tech firms from using their market power to self-promote their own products, and to break up Google’s advertising businesses, but their outcome is uncertain, and the potential impact would be extremely complex to gauge.
Democratic Senator Chuck Schumer, who’s the majority leader, plans on getting a Senate vote by summer on bipartisan legislation that would thwart Google’s practice of self-preferencing its own products such as its Google Travel advertising business, which includes flights, hotels, vacation rentals, and tours and activities, Axios reported Friday. The New York Senator is trying to run the clock out on the mid-term elections and all of the tumult that they could bring.
A day earlier, Axios reported that four U.S. Senators — two from each party, including conservative firebrand Ted Cruz of Texas and moderate Amy Klobuchar of Minnesota — introduced a bill that would break up the advertising services that Google offers to enable third-party websites to monetize ads and help advertisers run campaigns across the Web.
One bill would curb Google’s bias toward its own businesses, such as when it places hotel listings with photos, maps and rates in a prominent box in search results that are higher than all other relatively vanilla free listings from online travel agency rivals. The bill would be more consequential for the travel industry than would the advertising tech bill. The latter could lead to Google being forced to divest some of the ad tech services it provides that enable skincare or washing machine retailers to advertise their products on Today.com, for example.
Facebook, too, could potentially see its advertising businesses shorn of their power if the ad tech breakup bill eventually becomes law.
Many travel industry leaders aren’t counting on Google’s advertising tactics being overturned as parent company Alphabet has the resources to spread its influence around Washington, D.C., and in the past has been able to use its power to thwart regulatory efforts at the highest levels of government.
Referring to somewhat similar antitrust efforts under way in the European Union, where regulators are considering steps to crimp the power of designated digital “gatekeepers,” Tripadvisor CEO Steve Kaufer told financial analysts earlier this month:
“Yes, I see a number of definite potential benefits. We kind of got to see how it all shakes out and when the appeals are done and all the rest of it, and as I’ve stated many times before, it’s hard to — or we choose not to — craft the strategy around that versus take it as a tailwind if it emerges as good for us.”
Tripadvisor has been a case study in, and a victim of, Google’s years-long efforts to favor its own products in search results over the free search results that turned Tripadvisor into a global household name brand many years ago.
Luther Lowe, senior vice president of public policy at Yelp, another companies that has been victimized and has battled Google over the years, holds the not very popular view that anti-trust legislation to limit Google’s search bias will likely become law. He tweeted Thursday about the prospect of a Senate vote before the mid-terms: “Never in my career did I imagine the political stars would align such that Congress would pass legislation to curb self-preferencing. This HUGE development means it is much more likely than not that #S2992 becomes law.”
Never in my career did I imagine the political stars would align such that Congress would pass legislation to curb of self-preferencing. This HUGE development means it is much more likely than not that #S2992 becomes law. https://t.co/eIgGijjT2r
— Luther Lowe (@lutherlowe) May 20, 2022
Expedia, which has been outspoken in the last couple of years with calls for regulators to limit Google’s bias toward its own travel business given its market power, declined to comment for this story.
With political sentiment in the U.S. turning against big tech in the last couple of years, Google, Facebook, Amazon and Apple face the potential dismemberment of their businesses or other measures with challenges coming not only from Congress and the White House, but also from the U.S. Department of Justice, and states attorneys general.
States attorneys general lining up behind the State of Colorado in a lawsuit are looking to combat Google’s self-preferencing activities with parallels to the Senate bill, the American Innovation and Choice Online Act, and other attorneys general are backing a lawsuit led by the State of Texas that is similar to the ad tech bill, known as the Competition and Transparency in Digital Advertising Act.
Many observers view Google’s move in 2021 to supplement its paid advertising with free links in Google Hotels and Google Maps as an attempt to convince antitrust advocates that the search engine provides somewhat of a level playing field to competitors. However, the way Google displays the paid ads relative to the free links assures that the companies generating click revenue for Google have the upper hand by far.
Of the new legislation that could break up Google’s ad tech businesses, a Google spokesperson stated:“Advertising tools from Google and many competitors help American websites and apps fund their content, help businesses grow, and help protect users from privacy risks and misleading ads. Breaking those tools would hurt publishers and advertisers, lower ad quality, and create new privacy risks. And, at a time of heightened inflation, it would handicap small businesses looking for easy and effective ways to grow online. The real issue is low-quality data brokers who threaten Americans’ privacy and flood them with spammy ads. In short, this is the wrong bill, at the wrong time, aimed at the wrong target.”
Google likewise was unenthusiastic about the anti-preferencing legislation in January.
Kent Walker, president of global affairs, Google and Alphabet, wrote that breaking up Google search, Maps and Gmail would harm consumers.
“Antitrust law is about ensuring that companies are competing hard to build their best products for consumers. But the vague and sweeping provisions of these bills would break popular products that help consumers and small businesses, only to benefit a handful of companies who brought their pleas to Washington,” Walker wrote.
The prospect of Alphabet being forced to divest Google Maps, Gmail, YouTube or its ad-tech businesses is a long-shot with potentially complex and unintended outcomes. You can easily make various arguments as to whether it would ultimately benefit or harm consumers.
For example, consumers could potentially benefit from getting improved access to free Google search results involving companies that provide travel services that are currently buried on page 3 of search results because they don’t pay their tribute to Google. Companies that advertise heavily in Google could potential lower their rates if they gain some relief from what some refer to as the Google tax.
On the other hand, if a company to be named later ends up owning the former Google Maps, then consumers might lose the convenience of being able to relatively easily find a hotel rate or restaurant location on their phones.
Online travel agencies and big hotels would certainly benefit if Google didn’t automatically place Google Travel search results above those of competitors, but on the other hand if Google were forced to separate or sell some of its advertising businesses, then there would be winners and losers among Google’s advertisers and partners.
What’s clear is that none of this will be resolved within the next few years pending further lobbying, jockeying for position, lawsuits, deal-making, political changes, and appeals.
Some travel industry executives — even those who Google has pushed around — are fearful of government intervention.
Said Steve Hafner, Kayak’s CEO: “I’m always distrustful about government intervention in markets they don’t really understand.”
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