The Federal Trade Commission, the top US consumer protection authority, ended its investigation of Google’s search business this week, without sanctions. The FTC has made the right call. Regulators in Europe should follow suit.
Google has a durable advantage over its competitors in search, which it is leveraging to expand into new businesses – most notably shopping. This fits a pattern set by some forms of anti-competitive behaviour. But the reason for Google’s advantage, and how it is leveraging it, matters. The search engine with the most users has the most data about users, data that can improve search results, so attracting still more users. The traffic in turn leads to profits, and therefore investment, allowing further improvements. The key feature of this cycle is not coercion but a better product.
When Google offers so-called “vertical searches” alongside its basic results – for example, a comparison shopping tool – is it pressing this advantage unfairly? No. Google has not increased the costs of using competitive products. It still remains dead easy to switch.