Does providing Google’s own links first in “onebox” search results provide too much of a competitive advantage and deter new entrants?
Google chairman Eric Schmidt doesn’t think so and he cites Hipmunk’s funding round as proof.
“Finally, we do not have to speculate as to whether there are new entrants in vertical search services such as comparison shopping and local search and review sites,” Schmidt says. “In February of this year, the travel comparison shopping site, Hipmunk, received $4.6 million in venture funding even as Google continues to expand its own flight search and hotel search functionality.”
Incidentally, if Schmidt would have Googled or Binged the Hipmunk February funding round, then he would have found out if was for $4.2 million and not $4.6. (And, Hipmunk’s total funding to date is $5.2 million.)
Schmidt’s defense of Google’s search practices came in voluminous responses to follow-up questions from U.S. Senators on the Subcommittee on Antitrust, Competition Policy and Consumer Rights.
Schmidt had appeared before the subcommittee Sept. 21 to answer concerns about Google’s search practices and whether they amount to an antitrust issue. The subcommittee released Schmidt’s written replies to their follow-up questions Nov. 4.
The reference to Hipmunk came in response to Wisconsin Senator Herb Kohl, who asked in a series of written follow-up questions to Schmidt: “And doesn’t this policy [ranking Google sites first in oneboxes] deter new innovative services from entering the market?”
Schmidt also mentioned Expedia, Travelocity and Amazon in support of his contention that Google is not getting an unfair competitive advantage.
“Amazon, Travelocity and Expedia, among others, provide thematic search results and do not need Google to find an audience — they are quite successful in finding an audience on the Internet.”
Of course, Travelocity and Expedia were members of the FairSearch coalition, and expressed fears that Google’s dominance in search, its acquisition of ITA Software and release of travel-search products would harm their businesses unfairly.
In his answers to Kohl, Schmidt argued that Google’s oneboxes are designed to give consumers what they want.
“Oneboxes are generally displayed to convey an answer that is clear and straightforward, forÂ example, movie showtimes, weather forecasts, mathematical calculations, stock prices, sports scores, and soÂ on,” Schmidt says. “Microsoftâ€™s Bing and Yahoo! display similar ‘oneboxes’ prominently in their results as well,Â demonstrating their belief that these results are useful for consumers.”
Schmidt even argued that Google may lose money on oneboxes, even as Google puts links to its own services first within them.
“The decision whether to display a onebox is determined based on Googleâ€™s assessment of user intent,” Schmidt says. “Contrary to what some of Googleâ€™s critics suggest, Google does not make money when users click onÂ oneboxes. In fact, the opposite is true: oneboxes that are responsive to what users are looking for may drawÂ users away from the ads displayed on the page.”
In a blog post Nov. 4, FairSearch argued that Schmidt’s latest responses to the Senators were evasive and that he “thumb(ed) his nose” at Senators’ concerns. FairSearch says:
“As he did at the hearing, Schmidtâ€™s written answers today minimize and distort the concerns raised by Yelp CEO Jeremy Stoppelmanâ€™s testimony that Googleâ€™s unlicensed use of content from other sites, and placement of Google Products above most other sites steers users to Google and away from competing sites.
“Schmidtâ€™s answers show a lack of respect for the Senate Antitrust Subcommittee, the nationâ€™s antitrust laws, the importance of competition and innovation to the U.S. economy, and to the businesses and consumers that rely on Google to find each other online.”