Google: Anti-trust case waiting to happen?

by Mathew on December 20, 2006 · 21 comments

Depending on whom you talk to about Google’s share of the Web-search market, you are likely to get estimates of anywhere from 30 per cent to the upper 40-per-cent range. Rich Skrenta of Topix, however, says that the true number is closer to about 70 per cent, and that anyone who is currently running a Web business and is familiar with the search business already knows that.

In regular releases from the major traffic-measurement firms such as comScore and Nielsen NetRatings — including this one — Google is given a market share of 44 per cent and 49 per cent respectively. But Skrenta says that “Everybody involved in the search industry and everyone who actually runs a website knows these numbers are completely wrong.”

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He describes how he “picked a basket of medium-to-large websites and looked at the inbound search traffic percentages using Hitwise,” and that Google came out with an average of 70-per-cent market share. Don Dodge notes that this could be a result of looking at search referrals versus raw searches, but I think that’s a bit of a red herring. The fact is that Google owns about 70 per cent of search that drives people to websites. And that is money.

Google has already been sued by someone who claimed that their business was being adversely affected by the company’s policies, and that this was illegal because Google had what amounts to monopoly power. If that sounds familiar, it’s because Microsoft was accused of pretty much the same thing in a federal anti-trust case that was launched in 1998 and dragged on for years.

Is Google a potential anti-trust target? Nick Carr has said he thinks so, and Mike Masnick at Techdirt has also said it’s in the realm of possibility. I don’t think that kind of claim has a hope of succeeding (and didn’t think that it made much sense in the Microsoft case either), but stats like Rich Skrenta is throwing around are likely to raise some red flags with the policy wonks in Washington.

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  • http://dondodge.typepad.com/the_next_big_thing/2006/02/interview_with_.html Don Dodge

    Mathew, Just curious…what do your traffic logs show? Mine showed 70% of referrals came from Google, which mirrors exactly what Skrenta found.

    However, I just noticed that his link to WeBsideStory was from March of 2004…almost 3 years ago. A more recent press release from them says that Google accounts for 75% of referrals in the UK…more in line with what we are seeing. Here is the more recent link. http://www.websidestory.com/company/news-events/press-releases/2006-03-24.html

    In any case, there is a big difference between share of referral traffic versus market share of total searches. Either way Google is #1 so it is just academic.

    Don Dodge

  • Mathew Ingram

    Mine show about 60 per cent of referrals coming from Google, last time I looked. And I would agree that share of search overall and share of search referrals are two different things — but when it comes to questions of monopoly power, which is what an anti-trust case (assuming there was one) would look at, I think referrals would be more important than simple search itself. Of course, I’m not a lawyer — I just play one on the Internet :-)

  • http://www.robhyndman.com Rob Hyndman

    Wot’s this then? Internetlawyering without a license? Next thing you know we’ll all play internetjournalist!

    Oh …

  • Mathew Ingram

    :-)

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  • http://iwtiwil.blogspot.com Andrew

    You need to make sure that the corpus of site you are examining isn’t demographically skewed. If you look at tech sites (or even smart people sites :) ) then you will find a lot of people using Google (and Firefox).

  • Mathew Ingram

    A fair point, Andrew. That said, however, Rich’s data for the New York Times and USA Today — unlikely to be geek hotspots — are still well over the 60-per-cent mark.

  • http://iwtiwil.blogspot.com Andrew

    I agree, those two wouldn’t be geekspots, but it’s important to note that this is a terribly difficult question to frame and answer properly

    For kicks, here’s some statistics from the website of a regional bank with about 90 locations. These are the percent of all referrals by month for February-October.

    Just an anecdote…

    Google Yahoo MSN
    1.4% 1.1% 1.1%
    2.7% 2.3% 2.1%
    2.8% 2.2% 2.0%
    3.0% 2.1% 2.0%
    3.1% 2.0% 2.0%
    3.2% 2.2% 1.9%
    3.3% 2.3% 2.0%
    2.7% 1.7% 1.3%
    3.1% 2.1% 1.8%

    For a conflicting anecdote, my blog gets nearly 100% of its searches from Google: iwtiwil.blogspot.com

    Most of my search referrals come from Wii Tennis terms.

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  • Mathew Ingram

    I assume those percentages are so low because people don’t tend to search for the bank, but rather go to the site directly from bookmarks or from other links, yes?

  • http://www.aripaparo.com Ari Paparo

    Being a monopoly is not illegal. Google could have 100% of search share and do nothing illegal. It is only the abuse of monopoly through pricing or tying that can cause problems. For example, if they required publishers to accept CheckOut in order to appear in search results, or if they required advertisers to buy display advertising with search.

  • Mathew Ingram

    You are quite right, Ari. A monopoly is not illegal — but using that monopoly to distort the market, harm competitors or reduce customer choice is. As I said, I don’t think a case against Google would succeed, but when it does things like putting its own products above other competitors in search results or AdWords, I think it comes closer and closer to attracting such a case.

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  • http://www.lawmall.com/google Carl E. Person

    I am suing Google for monopolization, claiming that Google has a monopoly (a share of 66% or more)in search advertising, and that Google is using its monopoly to monopolize the monetizing of traffic for social networking websites, through its various deals with YouTube, MySpace and others.

    You are invited to read my appellant’s brief on appeal to the 9th Circuit filed on November 1, 2007, the very day that the New York Post, in its financial pages, features an article about Google stating that Google was expanding into social networking websites.

    Links to my brief, the record, the NYP article and other information is located at http://www.lawmall.com/google

    Carl E. Person
    212-307-4444

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