How monopolies like Google can improve user experience
In the light of the recent EU fine for Google, we analyse how Google monopoly has helped to improve user experience in the busy digital ecosystem.
The headlines that accompanied the European Commission’s decision to fine Google €2.42bn for favouring its own shopping ads over its rivals were appropriately doom-laden.
But the Commission’s fine is small beer, amounting to just 3% of Google’s revenue base last year.
What really matters for marketers is the growing risk of an all-out assault on Google’s core business of search advertising.
The risk becomes clear when you look at what’s coming in the wake of the shopping comparison case: two more anti-trust complaints in which the stakes are much higher.
The first of these involves Android. The Commission will argue that when Google gives its OS to phone manufacturers for free, it asks for something in return: a prohibition on pre-installing rival apps from Yahoo or Yandex or Bing. The resulting phones are sold to consumers with a full suite of Google apps installed.
The second case involves AdSense for Search. The biggest third parties for whom Google sources search advertising are its so-called Direct Partners. The Commission suspects that in the past, Google’s contracts with these big “publishers” were anti-competitive: essentially designed to shut out, or minimize, the amount of business that Direct Partners can do with Google’s rivals.
These might look like narrow complaints. But there’s a common thread: the notion that Google has exploited its dominant platforms (search, Android) to minimize competition and maximize its own ad revenues. The resulting rulings could significantly affect Google’s advertising business, both online and mobile, and in multiple verticals, including travel, maps, image search and news.
Google’s long-suffering competitors seem likely to be the main beneficiaries. But what do the implications look like for consumers, advertisers and agencies?
Monopolies aren’t always bad, and they don’t always behave in ways that are illegal. Occasionally, they can be useful. For consumers, the benefits sometimes include Google’s ability to police the user experience in a benign way. For example, from January this year, Google put advertisers on notice that it would downgrade the organic search prominence of websites running intrusive mobile interstitials.
Media owners might not like being incentivised and penalized in this way. But this is a good example of what we might call the positive monopolistic behaviour. By using its search muscle to change the user experience, Google is deploying the same kind of leverage it is alleged to have used -- for self-interested ends -- on Android and in shopping comparison markets.
Google can do this because it pioneered the idea of building an ecosystem within a walled garden. Much of what has resulted has been positive for brands, which are able to deliver a branded landscape when users search for relevant terms and a greater level of personalisation throughout the user journey.
Perhaps loosening the bonds of monopoly will result in more competition, and better, cheaper media options.
But it is just as likely to result in a deteriorating user experience. For example, if Google satisfies the Commission by blending links to rival shopping comparison sites into the results created by a search for a specific product, what happens to the user experience?
Instead of seeing a Google Shopping ad unit showing products and prices, the user will see a set of links, requiring consideration and action. That’s good for rival comparison sites, but for the user, it’s arguably an inconvenience. For the marketer selling a product or service, loss of engagement is the main concern.
In the negotiations with Google about remedies, the Commission will insist on solutions that address the anti-competitive behaviour that has affected Google’s rivals.
But in the interests of everyone else, these solutions need to minimise the negative impact on the user experience. User-centric monopolies like Google have quietly added value over time by developing the kind of seamless experience that’s crucial for both B2C and B2B buying cycles. In doing so, they have removed fragmentation and complexity. It would be a shame to lose these benefits.
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Jul 10, 2017