Google

Last week, a judge handed down a momentous ruling against Google, declaring what everyone already knew - the company has unfairly maintained its search dominance for years through a combination of anticompetitive practices.

We’ve talked about Google’s clear cut search monopoly in the past. The company built up a competitive advantage over the years, earning billions via its advances in advertising technology which it used to dig a wide moat against competition.

Many people - including the judge in the case - describe Google’s search as the ‘best’ engine available, and I want to spend a little time with this, because I think it’s an incomplete depiction of what Google did to search.

Google does maintain the largest index of websites and content on the Internet, because its ‘crawler’ has been in operation for more than two decades, and the company has near limitless resources to throw at its search product.

This is also how it maintains its dominance. Google keeps its index proprietary, claiming trade secrets. As Google grew to become the dominant search engine, site owners welcomed its crawler (you can, in theory, tell Google not to index your website, but few companies do this, and as modern AI companies have shown, they can just ignore you) but, critically, other companies couldn’t keep pace. It took vast amounts of storage and computing to keep track of all that website data, and Google used its deep pockets to outpace its rivals.

The term ‘SEO’ has meant a lot of things over the years, but it came to describe the efforts of website owners who were trying to attain a high rank in the Google listings, which delivered traffic they could monetize. Publicly, Google defended its shadowy algorithm changes to ‘page rank’ by insisting it was simply rewarding the best, most informative websites with higher listings. Was it? It’s impossible to know. It claimed it did, and for years people believed it did, because searches often turned up useful results. None of this changed the reality that Google was in complete control over what showed in search rankings.

Then came the ads. First it was one or two ads above the search results, styled differently enough to be obvious. Then it was the sidebar, a column of postage stamp ads hovering in what had previously been blank space:

As the years passed we got shopping ads, video ads, local ads, comparison ads, and a myriad of tools built by Google to help you find the information Google believed you wanted. Now a simple search can turn up a wall of products, or YouTube videos, or a list of businesses unrelated to what you’re trying to find. And Google is making money on most of the links you click, which it uses to make sure you only see Google on any device you use to search.

In a sense, search is no longer a process of discovery - it is Google making educated guesses at what it thinks you want to see. In the old days, savvy users knew the hacks to get a search engine to return what they were looking for - quotes, plus signs, and other tricks told the engine what to do. Now, people add ‘reddit’ on the end of searches specifically to circumvent Google’s impenetrable wall of widgets - ironically, with the most powerful search engine ever created at their fingertips, people would rather get answers from a message board with a UI from 2005. We’ve come full circle, where asking another person is easier than asking an impossibly powerful computer for a coherent response.

Google’s search is not ‘best’, because it is operated by Google, a company run by McKinsey consultants and bloodless advertising executives whose sole focus is keeping shareholders happy by driving engagement. Emails in the DoJ’s case detailed Google executives pushing for more ‘query growth’, corporate-speak for forcing people to do more searches by making results less helpful. Google’s search product is worse than its been in years, because the company’s primary concern is increasing the metrics that improve its share price, which runs counter to helping people find things quickly and easily.

So, what happens now? The judge in the case has a variety of options at his disposal. He could force Google to break up its company, splitting off search into its own business. This is the most extreme option, and the least likely. He could prevent Google from bribing every device and app company to use its search, allowing others into the fray. This wouldn’t be terrible, but as we’ve discussed, Google’s index is exponentially larger than any of its competitors, and most people would continue to use Google for search.

An interesting idea I’ve seen floated would require Google to open up its index, making it publicly available. This might foster the innovation Google denies it’s suppressing, because developers, start-ups, and enthusiasts could use index data to build their own tools, perhaps returning us to an era of being able to find shit on the Internet.

Google will, of course, fight the decision in court, though it may find itself light on allies - the case was filed by Trump’s DoJ, and multiple Democratic AGs and Biden’s FTC have brought additional lawsuits against the company. In their shameless pursuit of shareholder returns, Google has alienated nearly everyone by making the experience of using search so needlessly unpleasant. Now they may be forced to fix it.

Hotels

Google’s brazen monopolistic practices almost seem quaint compared to what is happening all over the country, entire industries engaged in algorithmic collusion to fix prices on the food we eat, the apartments we live in, and the hotels we stay in to experience expensive food and rent in a different geographic location.

As I write this newsletter, I am preparing to head to Atlantic City for a day off by a pool. It turns out the operator of the hotel I’ve booked has been using software to rip me off:

An ongoing federal lawsuit filed last year alleges that many of Atlantic City's casino-hotels, including Caesars, Harrah's, Tropicana, Borgata, and Hard Rock, are "engaging in an ongoing conspiracy to fix, raise, and stabilize the prices" of rooms. Collectively, these properties control about three-quarters of the rooms in Atlantic City. According to the lawsuit, the casino-hotels conspire through the use of "a shared pricing algorithm platform," Cendyn.

If this sounds familiar, it’s because Cendyn bought a company called Rainmaker (subtle) after it sold off its real estate price fixing tool to a company called RealPage. Both companies are facing a raft of lawsuits as it becomes clear their tools and business models not only enable but actively encourage collusion between their clients.

Cendyn receives data from all the hotels it counts as clients, collates that information, and ‘suggests’ higher room rates. Its clients almost always take those suggestions, and in cities like AC you see nearly every hotel price rise in tandem as a result.

Not content to simply suggest, Cendyn and RealPage have been caught threatening to drop clients if they don’t follow pricing advice.

Nor is the price fixing limited to a bunch of seedy casinos on a boardwalk. Elsewhere, a company called Smith Travel Research is being sued for providing the same services to major luxury hotel chains:

The lawsuit involves many of the most prominent luxury hotel brands in the country (Hilton, Hyatt, Intercontinental, and Marriott) operating in 15 major cities (Austin, Boston, Chicago, Denver, Kansas City, Los Angeles, Miami, Nashville, New York, Phoenix, Portland, San Diego, San Francisco, Washington D.C. and Seattle). According to the complaint, these luxury hotels "have agreed to continuously share their detailed, audited, competitively-sensitive information about their prices, supply, and future plans" through STR. This allows the hotels "to set prices higher than they would have been absent this agreement to exchange information."

As is often the case, when the average American looks around and thinks the cost of everything seems to only go up, with no reasonable explanation other than hand-wavey ‘inflation’, what is actually happening behind the scenes is greedflation, price fixing, and collusion among many of the country’s biggest goods and services companies.

Social Media

There is a certain kind of reactionary white dude who believes a large following on social media correlates to popularity. If millions of people read my every stray thought, they reason, they must also think I am a smart, handsome, interesting person. In a world where likes and shares can correlate to wealth and success, these men might believe they can parlay these huge online followings into riches.

This week, Donald Trump returned to Twitter, because Elon Musk has become his biggest (and only, among top CEOs) booster and the two of them hatched a plan to do an ‘interview’ on Elon’s platform. Predictably, it was a dull disaster, starting nearly an hour late and suffering major technical issues - when it wasn’t being used to send people to crypto scams. A mere million people tuned in - many hopping on and off throughout the lengthy gripe session - far short of the number Musk predicted.

Even on the platform most friendly to him, boosted by the world’s richest egomaniac, the event garnered less viewers than a Fortnite skin reveal. It is a clear indicator of a growing public fatigue with the antics of our two most clownish, attention-starved fascists.

Elsewhere, Elon is suing advertisers, accusing them of criminal conspiracy to not run ads on his Nazi-infested fever swamp. He’s succeeded in getting a small brand safety project set up by the advertiser consortium temporarily shut down, though his attempts at judge shopping failed when an arch-conservative Trump appointee recused himself. Twitter’s revenues are down more than 50% year-over-year, and his embrace of Trump and hard-right racism aren’t likely to improve the site’s finances.

Trump’s social media platform isn’t faring much better, with revenues down thirty percent - a difficult thing to do when your company barely makes any money. The company is still losing tens of millions of dollars a quarter because no one uses Truth Social and its executives are all making six- and seven-figure salaries to run what is ultimately a pump-and-dump scam.

Elsewhere, Trump booster Bill Ackman had to pull the planed IPO of his new closed-end fund because his Twitter popularity did not in fact translate into people wanting to invest billions with him. Ackman believed that despite every other closed-end fund trading below net assets, his would trade above because people like his Tweets. Large investors did not buy this argument, and he was on track to raise barely ten percent of his target before he was forced to admit defeat.

If you are a loud man on social media with terrible politics, you may find tens of millions of like-minded travelers in your mentions, but that does not directly translate into the sort of fame and success these vile men so desperately desire. It seems the inverse is true - the more people hear what they have to say, the less interested they become.

Regulations

Often when we talk about regulations around these parts it is not an enjoyable time. However! This week, the Biden administration has gone on the offensive with an unusually savvy policy announcement:

Today and in the coming months, the Biden-Harris Administration will take wide-ranging action to crack down on these unfair practices and save Americans time and money. Key actions include:

• Making it easier to cancel subscriptions and memberships…

• Ending airline runarounds by requiring automatic cash refunds…

• Allowing you to submit health claims online…

• Cracking down on customer service “doom loops…”

• Ensuring accountability for companies that provide bad service…

• Taking on the limitations and shortcomings of customer service chatbots…

• Helping streamline parent communication with schools…

I mean! If they were to accomplish even one or two of these initiatives, it would dramatically improve the lives of millions of people on a daily basis. They’re targeting many of the things we talk about regularly - fake reviews, hostile customer service, excessive paperwork, predatory refund policies, chatbots, and more.

It may prove a smart move a few months before an election, because it forces Republicans to come out for many of the most annoying aspects of life in America, much as they did when they fought to delay the multiple junk fee fee bans Biden has tried to enact. Despite industry groups and corporate vultures fiercely defending their ability to rip us off, one can hope that soon many of these actions will come to pass. It does not have to be this way, and even if it’s decades late, a government that works harder to protect consumers would be a welcome new reality.

Elsewhere, candidate Harris came out this week promising to enact a federal ban on price gouging by grocery and food companies. Maybe change is possible?

Short Cons

Bloomberg - “Almost every day — or usually, every night — an ATM is blown up somewhere in Germany. Europe’s biggest economy has become the prime target for sophisticated smash-and-grab operations by organized criminal groups.”

IJ.org - “For years, police have seized cash at the busy [FedEx] processing center and the Marion County prosecutor has filed civil forfeiture actions on behalf of the State of Indiana to keep the seized money. This places people like Henry and Minh in the position of having to prove their innocence in a court hundreds or thousands of miles from home.”

Alligator - “In his 17-month stint as UF president, Ben Sasse more than tripled his office’s spending, directing millions in university funds into secretive consulting contracts and high-paying positions for his GOP allies.”

The Conversation - “The U.S. has been tracking car-related road deaths since 1899. As a country, we hit the threshold of 1 million cumulative deaths in 1953, 2 million in 1975 and 3 million in 1998.”

ProPublica - “But the way Rise Community Market has struggled in Cairo illustrates how these [food desert] programs fall short. Because what happens after a store opens is just as important — and despite the up-front financial investments, that hasn’t been solved at all.”

Reuters - “U.S. based short-seller Hindenburg Research alleged on Saturday that the head of India's market regulator, Madhabi Puri Buch, previously held investments in offshore funds also used by the Adani Group.”

WSJ - “Meta Platforms is running ads on Facebook and Instagram that steer users to online marketplaces for illegal drugs, months after The Wall Street Journal first reported that the social-media giant was facing a federal investigation over the practice.”

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