As a law student in 2017, Federal Trade Commission chairwoman Lina Khan quickly gained notoriety for a “note” in the Yale Law Journal titled, “Amazon’s Antitrust Paradox.” Her focus was on protecting rivals from Amazon’s low — “predatory” — prices, suggesting that we either “forc[e] it to split up its retail and Marketplace operations” or hobble it with “public utility regulations and common carrier duties.” The article had only ancillary grumbles about Google and offered no suggestions that Facebook was a monopoly either. (Khan, however, has recently tried to make that case at the FTC without much success.)
Yet just four pages into that 2017 essay, Ms. Khan stumbled on something important. She astutely observed that, “Close to half of all online buyers go directly to Amazon ﬁrst to search for products.” Think about that for a minute: If half of all searches for consumer products start with Amazon, how can the Justice Department now claim, as it does, that “Google has accounted for almost 90 percent of all search queries in the United States”?
In other words, more than three years before the DOJ launched its October 2020 market-share allegation against Google, Lina Khan had already rebutted it.
Wall Street Journal writer Tripp Mickle recently offered more support for the point, noting that “Amazon’s commanding lead in e-commerce [an estimated 39 percent of U.S. online retail] has made it the starting point for an estimated 53% of U.S. searches for consumer goods . . . lifting Amazon’s share of ad sales to a fifth of the market and reducing Google’s share to 57% from 61% in 2019, according to . . . eMarketer.”
Mickle adds that “Amazon’s accelerating ad business has raised alarms inside Google. . . . [The company] is seeking to protect its core search and advertising business from Amazon’s continued encroachment and the ambitions of Walmart Inc., Target Corp. and others that have begun selling ads as part of e-commerce operations.”
First, Google’s estimated 57 percent share of online-ad sales is greatly exaggerated because total retail advertising “excludes travel and event tickets . . . food services and drinking places”— and apparently online wholesale sales between businesses, too. Besides, online ads account for only half of all ad spending, and online retailing for a smaller share of total sales. The Commerce Department estimates that second-quarter e-commerce accounted for just 13 percent of total retail sales, making neither Amazon nor Google as important as commonly assumed.
Yet, according to StatCounter, Google supposedly has an estimated 87.9 percent share of what the Justice Department calls the “general search” market in the U.S. That empty factoid is the DOJ’s only evidence that Google has a monopoly of something. A monopoly of what, exactly? StatCounter defines this market as offering only four alternatives to Google, and Amazon is not one of them. Neither are dozens of other sites commonly used to search for household and business services — online and otherwise — as well as goods.
Google’s market-share estimate of “nearly 90%” relies on a preposterously constricted view of how people search for goods and services. Such an estimate assumes shoppers’ only option is what the Justice Department calls a “general search engine.” If you are not sure what you are looking for or are just curious about something — such as, say, the weather, a map, a celebrity’s age, or how to fix a tech glitch — then Google or Bing are excellent places to search. But if you are searching for specific services or branded goods, there are many better alternatives.
Amazon’s search option alone belies any claim that Google dominates online advertising by dominating searches for consumer goods. But Amazon is just one option among hundreds.
When trying to estimate who has what share of “search advertising” — while realizing that online ads are just half of total advertising — we must include specialized ads for specific services and goods — not just generalized mega-searches and certainly not just physical consumer goods in an economy dominated by services. Most household, personal, and business services are not, in fact, provided online even though they may be discovered and sometimes paid for there.
Think about it: Are you really as dependent on Google searches as the DOJ suggests? Even if Google is your default search engine, is that really the only place you ever search for anything? Consider just a few examples.
If you were looking for a restaurant, would you start with Google or try restaurant-rating and booking sites such as Open Table, Yelp, Zagat, or Trip Advisor? If looking for home services, such as repair or cleaning, would you start with Google or with, say, Home Advisor, Thumbtack, Angi, or Home Depot? If looking for a new physician, would you wing it on Google or look at AMA Doctor Finder, Healthgrades, RateMDs, or WebMD? If searching for clothing, would you ask Google for the generic type of clothing — say, a white, men’s shirt — or go directly to sites selling clothing brands you prefer? When searching for home decor, would you try posing general questions on Google or look for help at Houzz, Pinterest, Wayfair, or specialized sites for lighting, rugs, and furniture? When planning travel, would you shun information from Expedia, KAYAK, Trivago, or Priceline in favor of Google? If looking for a book or CD, might you consider checking Amazon or Apple rather than just Google? If looking for someone to date, would you consult Google or a dating site? You get the point.
If the DOJ hopes to win an antitrust case against Google by relying on its pretense about the company’s 88 percent share of a totally irrelevant market, their case is on even shakier ground than the FTC’s tottering case against Facebook.