Eric Clemons points out the fact here that Google’s acquisition of Zagat is evil as Google search engine is deceptive. Google is just making its list of search results according to its advertisement revenues from the the websites. As you see if this business model changed into an intelligent search engine where internet users get good answers not links to paid sites then Google will lose its revenues from advertisers. That is why Google must block the innovative intelligent search engine. I showed many times Google is buying up those scientists who supposedly support that kind of intelligent life. Mr. Clemons must look beyond his horison here to see how Google is evil to kill a coming innovation. It is a Shumpeterian destructive innovation that will eliminate Google from internet.
No Good Can Come From Google’s Acquisition Of Zagat
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As a serious foodie, I have come to rely upon Zagat, HungryGoWhere, and TripAdvisor for a diversity of views on restaurants as I travel around the world. And as a veteran Googlephobe for several years now, I have an increasing aversion to Google’s moves into vertical integration and preemptive line extensions, positioning itself as a direct seller in competition with other online sellers of goods and services. This much power in any search engine provider scares me.
The Google Zagat acquisition has to be blocked, reversed, annulled, undone, or whatever the right word is, to protect consumers, to protect restaurant owners, and to protect competitors. The acquisition of Zagat is not nearly as frightening as the Google acquisition of ITA and Google’s move into travel. Although the Zagat acquisition is only another small step, it is yet another dangerous step into vertical integration, blocking out online competition by merging the process of finding a seller with the process of selling.
The obvious dangers of the acquisition include:
- Preferencing Zagat and Google’s own extensions to Zagat, which will include direct restaurant bookings. Google will put its own stuff higher, and hide the competition. It is simply not going to be possible for anyone to compete with Googzilla’s GopenTable. This is obvious to anyone who had shares in OpenTable when the announcement hit. It’s not necessary to have an integrated Google app for restaurant reviews and restaurant bookings. A third party app could do the job just as well. But this fact merely makes the acquisition unnecessary. Google will place its own reviewing site (Zagat) and its own table-booking system (GopenTable) ahead of any and all competition, just as it allegedly does to discriminate against competition elsewhere. The fact that no one can compete with Zagat once it is integrated with Google sets up two additional problems. These problems are far more scary and far more important than the fact that the acquisition is merely unnecessary for consumers.
- Shakedown Street. In the early days, before hotels.com was disciplined by class action lawsuits, when hotels choose not to cooperate with hotels.com they were listed as “sold out” rather than listed as “uncooperative”. Uncooperative hotesl were punished. In contrast, when hotels did cooperate they were rewarded. They could be listed as “as a three star hotel close to the University of Pennsylvania” (without being close) or “as a four star hotel close to the University of Pennsylvania” (the same hotel, this time without being close or four star, but now listed at a higher price as befitted the fact that the customer was looking for a better hotel). Is there any reason to doubt that a restaurant that does not cooperate with Google might be shown in GopenTable as sold out? Based on recent experience, is there any reason to doubt that the restaurant might simply be shown as closed on the night you were trying to book, or even as permanently closed if it chose not to cooperate with GopenTable? And what would Google do with its power over restaurant reservations? What do you think? Whatever Google is, it is not a charitable foundation dedicated to search neutrality. Booking through GopenTable would be yet another third party payer system, and yet another example of Google’s favorite business model. Restaurants would have to pay a significant fee for bookings made through GopenTable, and consumers would of course pay nothing for the service. Consumers would be happy, and would flock to GopenTable; restaurants that want to survive would pay whatever they have to pay to receive traffic from Gopen Table. And, finally, it has been alleged that websites that accept Google ads somehow have higher rankings in organic search than those that do not; is it possible that restaurants that pay for keywords might somehow score higher in Gopen Table?
- Consumer Deception. Google’s Rank by Relevance algorithm for paid search does not put the most relevant and does not put the highest quality listing on top of the search page, nor does it put the high bidder on top; it puts the highest quality listing on top of the page as long as it pays enough. We’ve seen the damage this can cause when pharmaceutical companies can pay to show up on Google search results; we get the recent scandal neatly finessed through Google’s signing a non-prosecution agreement. Just as rank by relevance makes sure that Google maximizes its revenue while consumers find acceptable but not ideal results through search, there is every reason to believe that GopenTable will maximize Google’s revenues while decreasing the quality of recommendations that consumers receive.
No, I really do not think this is the greatest issue facing Washington today. Obama’s plan for domestic job creation, or international relations and prospects for peace in Libya and Syria after the Arab Spring would have to be considered more important. This is not even the most important regulatory issue concerning Google. But as a foodie and as a foe of vertical integration by any search engine provider, I see this acquisition as a dangerous precedent. If this is not blocked, then the next acquisitions will be larger and more central, and more damaging.