Google and the market of search engines

Abstract

Search engine's multisided business model exploits indirect network externalities arisingbetween users, advertisers, and web sites shown in organic results. The platform'salgorithm simultaneously generates both organic results and relevant ads, highly appreciatedby consumers as measured by their click-through-rate. The paper analysesthe nature of this peculiar market, based on multiple and asymmetric transactionscoordinated by the platform, able to turn the traditional negative externality, imposedby ads to consumers in traditional media, into a weak but positive one. It discusses therecent Google's European Antitrust case, where the popular search engine is chargedfor abusing its dominant position by deliberately downgrading vertical (specialized)engine's websites at the benefit of its own competing services, and keep publisher'svaluable contents without their permission for its Google News service. Google hasrecently submitted specific commitments to close the case, in particular to show rivalsearch engine links in a specific result's page, and to allow opting-out choices forpublishers of their contents in Google News. By submitting commitments, Googlefirmly holds the principle of continuous innovation of its search engine result's rankingcriteria, to not regulate as requested by search neutrality advocates.