Saturday, July 11, 2015

Google Antitrust Case Spotlights Decline of Shopping Site

We found that Google manipulated the results when we created words that did not exist and the ad word rate was increased when no real word existed. Aivars Lode avantce

Google Antitrust Case Spotlights Decline of Shopping Sites

Nextag, BizRate, LeGuide have been crushed by the rise of new ways of finding goods online

Some comparison-shopping companies Google cited as rivals are suffering. Photo: Virginia Mayo/Associated Press 
By Alistair Barr and Rolfe Winkler 
April 16, 2015 7:45 p.m. ET 

The biggest antitrust battle in a decade centers on comparison-shopping websites like Nextag, BizRate and LeGuide, which have been crushed by the rise of new ways of finding goods and services online.
Depending on whom you ask, their demise is due to either illegal, anticompetitive moves by Google Inc. or superior technology from Inc. and other e-commerce companies. Which view prevails will help decide whether Google must pay billions of dollars in fines and undergo potentially damaging changes to its search-advertising money machine.
“There’s a lot at stake for both Google and consumers,” said Todd Murtha, a Nextag executive who led the company’s legal department from late 2007.
The European Commission filed formal charges against Google this week alleging the Mountain View, Calif., company abused its dominance in the general search market to give its shopping service an unfair advantage against rivals. 
The regulator didn’t name companies, but comparison-shopping players Nextag, Twenga and Visual Meta, owned by Axel Springer, have complained to the commission about Google. 
Google denies breaking antitrust rules. The company responded Wednesday by highlighting the strong competition it faces in online shopping from companies including Amazon and eBay Inc.

However, Amazon and eBay can be viewed as both retailers, since they hold inventory, and as marketplaces, where consumers can buy goods from a variety of vendors. 
Comparison-shopping sites, by contrast, list products from a variety of merchants or marketplaces and take a referral fee when shoppers click through.
“Google is trying to expand the shopping market so it doesn’t seem so dominant,” said Gary Reback, an antitrust attorney who represents Nextag and has been a longtime critic of Google.
Some comparison-shopping companies Google cited in a Tuesday memo to staff as rivals are suffering. 
LeGuide has seen big declines in online traffic and revenue, which it blames on Google.
At issue in the case are Google Shopping ads, which the search giant places atop or to the right of search results. 

Unlike Google’s traditional text links, these ads look similar to listings found on sites like, including product images, prices, reviews and ratings. Merchants bid to appear in these listings, which Google introduced in 2012 in the U.S. and 2013 in Europe.
Rival comparison-shopping sites argue that giving such prominent placement to Google’s own offerings in search results draws shoppers’ attention so they don’t click on free, organic links that point to other shopping sites. 
They also say Google keeps tweaking its search algorithm to push links to their sites down in search results, cutting into their revenue.
LeGuide said an October change in Google’s algorithm led to a 26% decline in fourth-quarter revenue. To cope with the shortfall, LeGuide closed a Munich office, the company said.
LadenZeile, a comparison-shopping site run by Visual Meta, saw a 60% slump in traffic in Germany in late 2012, after Google changed its search algorithm. That caused a similar drop in revenue, according to Robert Maier, founder of Visual Meta.
“Google has the power to destroy a company’s existence,” he said in a September presentation on European e-commerce competition in Brussels.
Google argues that its actions had nothing to do with the decline of comparison-shopping sites. It said the trouble at those sites was caused by a broader revolution in online shopping in recent years. More consumers and merchants choose to buy and list products via Amazon or other direct-sale sites, rather than visiting comparison sites, Google said.
‘Google has the power to destroy a company’s existence’ 
—Robert Maier, founder of Visual Meta
“People are going directly to merchants. They’re going to Amazon and they’re going to eBay,” said a person familiar with the company’s arguments.
Some e-commerce experts agree. 
Google has to compete more with Amazon by giving shoppers answers quickly and helping them buy products with as few clicks as possible, according to Matt Ackley, chief marketing officer of Marin Software, an advertising technology firm. If Google shows consumers links to comparison-shopping sites, the company is effectively making them do product searches twice, which is a bad user experience, he added. 
From 2013 to early 2015, leading shopping-comparison sites in Germany, such as Nextag, Ciao and Twenga, saw their organic search visibility drop 91% on average, while visibility for Google Shopping surged more than tenfold in the country, according to Searchmetrics, an online search analytics firm. Visibility measures how likely websites are to receive traffic from search engines.
Comparison-shopping engines have been in Google’s cross hairs since 2006, when the company “sought to demote all comparison shopping websites,” according to a report prepared by the U.S. Federal Trade Commission.
Indeed, Google compiled a list of comparison-shopping sites and repeatedly tested techniques to demote them in favor of merchant sites, eventually choosing one and rolling it out in an update in July 2007, according to the FTC report. 
But users recruited by Google to rate its search results said they preferred the comparative listings of similar products that Nextag and BizRate provided, the report said.
The FTC decided not to take antitrust action against Google.
A spokesman for BizRate, which is now part of Connexity, declined to comment.
“After many years of natural-search traffic going up and users enjoying the experience, something changed strategically at Google and they decided to change how they did shopping search,” Nextag’s Mr. Murtha said.
When Nextag’s traffic dropped, its revenue fell, which made it difficult to maintain its comparison-shopping service and invest in new initiatives, Mr. Murtha said. The reduction in traffic also meant that fewer merchants were willing to list their products on Nextag’s site. That in turn gave consumers fewer products to compare, denting traffic further, Mr. Murtha said.
“It’s really brilliant of Google. They started the snowball rolling downhill,” he added.
Mr. Murtha said that if Google had not changed its search engine to favor its own shopping service, then Nextag would have had the revenue to invest in new products to keep up with the changing e-commerce landscape.

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