Australia Institute report warns of search engines restricting online competition

However, search experts warn that engines such as Google, Bing and Yahoo are only one part of a group of options that entrepreneurs can use to market their business, and say that Google goes out of its way to tell developers how they can get better rankings.

"What the Government could do to make the playing field more level I have no idea," says Reseo chief executive Chris Thomas. "This is where social media and those sorts of strategies have enabled businesses to spread their risk."

According to the new Australia Institute survey, 46% of respondents said the order in which search results appear "always" or "sometimes" influences their purchasing decisions, and only 15% said they look past the first page of results.

The survey, which was sponsored by the Microsoft-sponsored Initiative for a Competitive Online Marketplace, questioned 1,084 people in July 2011. It found that 37% did not know search engines displayed paid advertising, 34% did not know search rankings would change based on what engine they use and 42% believed that relevance was more important than paid advertising.

Achieving a high ranking in search results is the primary goal for many SMEs. Ranking first is closely linked with higher sales and brand recognition, and requires a significant amount of time and effort, especially if your business is associated with very general keywords that have millions of results.

Australia Institute executive director and co-author Richard Denniss says the "How Market Concentration Threatens Internet Diversity" report shows that search engines can amplify market concentration.

"Unless regulators pay more attention to the need for online diversity, and there is greater understanding of how search engines function, online retail could come to resemble today's shopping centres, in which the appearance of choice exists but actual choices are limited to a small number of players," Dennis writes.

He also commented that search engines have become an essential service, and that details of how they work "and the nature of their commercial arrangements with advertisers, are currently shielded from public scrutiny".

Ultimately the report suggests that there are a "range of measures" regulators can take to deal with the causes and effects of market concentration online.

"It may be that the principle of 'search neutrality' – under which search engines would need to vet all webpages, including those that they are commercially affiliated with, without discrimination – will become just as important as network neutrality."

However, Chris Thomas says Google provides businesses with plenty of resources for them in order to achieve higher rankings, and says this been helping developers for a number of years.

"The big question I've got around this is about the spammers who use black hat to get unfair results. That's something that Google has a whole team dedicated to, in order to keep the search results fair."

Thomas says if businesses are only using search engines to get traffic, they are missing out on a wide range of possibilities open to them.

"There are other avenues to get people to your website and social media is one of them. Whether you're advertising through Facebook, Google or so on, it's really just about ROI and getting those conversions right."

He also says Google has given developers plenty of support, especially for SMEs.

"Businesses have a huge amount of opportunity to optimise images, optimise video and that sort of thing. Google Places is available as well. To be fair to Google, they are making it all the more relevant, and certainly do a lot to support small businesses."

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written by Jim Stewart, August 17, 2011

I agree with Chris, it's a fairly nonsensical idea to get Gov involvement. Google is dominant because it is a great product. That is the great thing about the Internet, it's a level playing field. Before we had Google we had Altavista, looksmart, Yahoo!, eXcite and a raft of others. Then Google came along as a real competitor with a better product and the others faded away. Google did not do any advertising before they got 500 million users. They did not corner the market through unfair business practices, or monopolistic tactics, they got there because of a superior product. That is what competition is. Just because Mr Deniss doesnt understand how the search engines work doesn't mean the industry doesn't. How many of a large offline retailers for instance have setup the Google shopping feeds? Maybe Woolworths & JBHiFi from what I can see. The problem is not with the search engines. This notion that Google keeps secrets "and the nature of their commercial arrangements with advertisers, are currently shielded from public scrutiny" is truly a nonsense. Just go and ask any agency running adwords campaigns and you find out what the arrangements are. I find the idea that regulators should get involved in an unregulated medium to ensure competition, patently absurd. #justsayin

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written by Dean Atkins, August 17, 2011

It's a bit late in the game to start changing the rules!
Too many businesses have spent too much on SEO to have the results of thier efforts taken away from them. Google work hard to offer tools and information to help businesses build their SEO. Why would a regulatory body think that they could come up with a better formula? Surely if they did, they would join the private sector and compete with Google... I hear it pays a little better too!

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written by mark ferrari, August 18, 2011

If Google is the new Yellow pages then it stands to reason that by making paid ads more identifiable in Google search results will actually increase clicks by consumers. Why? Yellow pages has always provided businesses credibility as the consumer assumes legitimacy of a business based on the fact that they have paid money to advertise in a credible publication. If you extend this logic to Google then it's reasonable to assume the consumer will use the same logic. So What? Governments should stay away from what they don't understand and leave the market forces ( Local directories, newspapers, flyers, brochures etc) to compete with search engines.

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written by agittins, August 18, 2011

I suspect that the comments about unfair play are more correctly leveled at players other than google - I think certain other search engines are less transparent about how they work and it is perhaps those who need to be looked into. Whether this is something our Government should be allocating resources to outside of existing programs though is questionable.