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After the Bell: Searching Google for a solution to the Google problem

After the Bell: Searching Google for a solution to the Google problem
Signage at Google’s office building in New York, 20 January 2023. (Photo: EPA-EFE / Justin Lane)

The SA Competition Commission is one of several competition authorities around the world determined to pare back algorithm companies because it worries about their dominance. But the key question is this: Do these competition authorities really understand the utility of the monsters they are trying to contain?

The Competition Commission has just handed in its Online Intermediation Platforms Market Inquiry report covering five different aspects of the online world. It’s an enormous, complicated beast. The report looks at Takealot, classifieds, apps, food delivery, bookings and more, but I want to focus on just one aspect here, and that is the most complicated of them all: search. But the instincts, philosophy, failures and success of the report apply as much to the other sections as they do to this one.

Let’s go back to basics quickly. What does search do? The process is pretty simple: Google (and a whole bunch of other platforms) built an algorithm to rank content on the internet. People use that ranking to find what they need. The process of searching helps the ranking process by building authority and utility. And that, in turn, helps the search process.

The magic of the process has been, in the view of academic and podcaster Scott Galloway, to take something that is individually valueless and turn it into something collectively enormously valuable.

Juan Mendoza, an expert in researching global media, marketing, data, and technology trends, sums it up thus: “The benefit of algorithmically empowered internet companies is that they paved the way for not only standardising the experience of the web but also optimising it to a general medium that most people can access and understand.

“Algorithms are also a mechanism that, in principle, should make these companies more and more profitable as consumers, sellers and advertisers use their services more. In fact, it’s one of many forces that are reducing worldwide poverty. Access to free information, customers, socialising, and education is one of the absolute miracles of the algorithmic web,” he wrote recently in a blog.

That sounds very theoretical; allow me to cite a practical example. In my local town and those close by, live a bunch of artists, attracted by the picturesque peace of the Karoo and, frankly, the lower cost of living. In the old days, the only way these artists could sell their work was through exhibitions. This was a difficult, costly, time-consuming hurdle. The only potential customers they could hope for were those who came to the exhibitions. They were geographically limited.

Then came the internet. Artists don’t necessarily need to hold exhibitions any more (or pay the 30%-50% cut that many gallery owners charge to display their works). Their addressable audience is the world via social media and, yes, search engines, and for many of them, the result has been life-changing. The internet has been a huge boon to small companies everywhere. Facebook, for example, has 10 million advertisers, mostly small businesses.

Yet, as Mendoza points out, the algorithm companies (Google, Meta, Amazon, Alibaba, Tencent, etc) have also developed monopoly characteristics. SA’s Competition Commission is one of several competition authorities around the world determined to pare back these companies because it worries, correctly I think, about their dominance. But the key question is this: do these competition authorities really understand the utility of the monsters they are trying to contain? They are hugely dominant — Google is now about 90% of search — yet their dominance is of a special type.

So, that brings us back to the report released on Monday. I have to say the report is certainly neither uniformly bad, nor are all its recommendations completely wrong. But the level of understanding of what it is investigating is naïve and the solutions border on laughable. This observation is not unique to South African regulatory authorities, by the way — the congressional hearings on Capitol Hill into TikTok and other internet companies made me wonder if they have ever used a computer, their questions have been so facile.

But to be more specific, if you read the report on search, you would think the commission was talking about Standard Oil. Google is not Standard Oil. There is only the faintest acknowledgement of the utility of search or its ability to aggregate the internet, essentially providing a “table of contents” to improve the customer-user experience.

And, to be frank, customers really don’t feature much in this report at all. The entities that do feature are the notionally struggling small businesses in SA which the Google monster is obliterating (except it’s not — see above). The commission argues that because big companies have big advertising budgets, small SA companies tend to get outspent.

Well, you know, welcome to the world. That is not a Google problem; it is a nature-of-the-universe problem. So, I suppose the commission should be given credit for recognising the issue, even though it’s pretty obvious. But what do they propose doing about it? Well, they want Google to put up a picture of the SA flag against SA “platforms” (online retailers) and the ability to filter search by country.

Really? That’s going to help? Honestly? Because consumers are going to buy the SA-made product in preference to the cheapest, or closest-made, or most appropriate product? It is also — and this is typical of the Department of Trade, Industry and Competition — demanding Google provide R180-million in advertising credits.

And that last item is the true giveaway (literally). Under Trade, Industry and Competition Minister Ebrahim Patel, the core modus operandi, the true heart of the effort, is not to improve competition but to impose an extractive regime. That’s how he rolls — and that’s why it doesn’t work. DM

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