The Value Of Search
Now more than ever, search engines are a staple in the everyday lives of consumers. The search market is consumer-driven and hypercompetitive, with alternating between search platforms proving to be markedly easy. Search neutrality doctrines could hamper that “ability to switch,” harming search innovation well into the future. As you consider the current state of search, keep these key points in mind:
— Consumers can switch between search services with ease, opting to use the engine that best meets their needs, such as voice search.
— Today’s search sector is competitive—and growing.
— Overbearing search neutrality doctrines could have detrimental effects on consumers and broader innovative efforts.
Consumers can switch between search services with ease, opting to use the engine that best meets their needs, such as voice search.
Switching between search platforms is “trivially easy,” reminds Sam Bowman and Geoffrey Manne of the International Center for Law & Economics. “Nothing in these deals limits the ability of users to switch from Google to another search engine if they want to, and switching is trivially easy… Moreover, the competition among general search engines to secure these default positions isn’t constrained by Google, and that competition should encourage all search providers to invest in their products.”
Americans highly value today’s search engines—so much that they would have to be paid up to $17.5K to forgo using them for a year, as highlighted in the Economist. “One way to quantify how much these internet services are worth is by asking people how much money they would have to be paid to forgo using them for a year. A new working paper by Erik Brynjolfsson, Felix Eggers and Avinash Gannamaneni, three economists, does exactly this and finds that the value for consumers of some internet services can be substantial. Survey respondents said that they would have to be paid $3,600 to give up internet maps for a year, and $8,400 to give up e-mail. Search engines appear to be especially valuable: consumers surveyed said that they would have to be paid $17,500 to forgo their use for a year.”
Search services are dynamic, often performing a “bundle of functions” for consumers, reminds Dirk Auer in Truth on the Market. “Search engines are just the latest iteration (but certainly not the last) of technology that enables human beings to access specific pieces of information more rapidly. Before the advent of online search, consumers used phone directories, paper maps, encyclopedias, and other tools to find the information they were looking for. They would read newspapers and watch television to know the weather forecast. They went to public libraries to undertake research projects (some still do), etc. And, in some respects, the search engine is already obsolete for many of these uses… The upshot is that Google Search and other search engines perform a bundle of functions. Most of these can be done via alternative means, and this will increasingly be the case as technology continues to advance.”
Consumers—not companies—drive the search sector, reminds Ryan Young in National Review. “Consumers do. If they like something else better, they can make that known in seconds. Language matters. According to the complaint, Google doesn’t monopolize search, but rather ‘general search.’ This phrasing allows the government to elide major portions of Google’s relevant market. This is the relevant market fallacy. To strengthen their case, regulators often accuse a company of monopolizing a market far narrower than its actual relevant market.”
Today’s search sector is competitive—and growing.
Occupying “prime real estate” in search does not translate to proof of anticompetitive harm, as noted by Sam Bowman and Geoffrey Manne of the International Center for Law & Economics. “While a default position is clearly valuable, it is more like a central piece of real estate for a retail store that makes shopping more convenient for potential customers, not something that prevents them from accessing competitors at all. As with commercial real estate, there is competition for the best spots. Having won, it’s not anticompetitive for the winner to occupy the prime real estate.”
Yahoo is a case-in-point that being a unique search provider does not translate to having unique market power, as shown by Dirk Auer in Truth on the Market. “If consumers suddenly decided to access information via other means, Google could be the only firm to provide general search results and yet have absolutely no market power. Take the example of Yahoo: Despite arguably remaining the most successful ‘web directory’, it likely lost any market power that it had when Google launched a superior — and significantly more successful — type of search engine. Google Search may not have provided a complete, literal directory of the web (as did Yahoo), but it offered users faster access to the information they wanted. In short, the Yahoo example shows that being unique is not equivalent to having market power. Accordingly, any market definition exercise that merely focuses on the idiosyncrasies of firms is likely to overstate their actual market power.”
New entrants in the search space—most recently including Apple—showcase competition, via Tim Bradshaw and Patrick McGee in the Financial Times. “In a little-noticed change to the latest version of the iPhone operating system, iOS 14, Apple has begun to show its own search results and link directly to websites when users type queries from its home screen. That web search capability marks an important advance in Apple’s in-house development and could form the foundation of a fuller attack on Google, according to several people in the industry.”
Overbearing search neutrality doctrines could have detrimental effects on consumers and broader innovative efforts.
Platform and search neutrality doctrines threaten to “chill innovation,” notes Geoffrey Manne of the International Center For Law & Economics. “The set of claims that are adduced under the rubric of ‘search neutrality’ or the ‘essential facilities doctrine’ against Internet search engines in general and, as a practical matter, Google in particular, are deeply problematic. They risk encouraging courts and other decision makers to find antitrust violations where none actually exist, threatening to chill innovation and efficiency-enhancing conduct. In part for this reason, the essential facilities doctrine has been relegated by most antitrust experts to the dustbin of history.”
Overregulation of leading search services could impede search innovation and delivery for consumers, reminds Jim Pethokoukis of the American Enterprise Institute. “Just who will decide what sorts of search results are fair and by what method? Does anyone want alphabetical results or one based on simple popularity? Before Google, 1990s web searches on ‘President Clinton’ would produce the ‘President Clinton Joke of the Day’ as the top result rather than the White House. Government regulation would also risk impeding further search innovation, while greater algorithm transparency might help spammers or foreign powers game the system.”