During the Congressional hearings this week, Congressman David Cicilline, a member of the House Democratic Leadership as Chair of the Democratic Policy and Communications Committee, questioned representatives from Apple, Amazon, Facebook and Google. Cicilline focused on competitive markets.
Adam Cohen, Google’s director of economic policy, tried to convince members of Congress that there is still competition in the search industry, but Cicilline pointed to a 2004 “guiding principal” stated by co-founder Larry Page to get people to search on the engine and then lead them to the website for more information.
Apparently, Cicilline, or someone working with him, did some homework, because Rand Fishkin, founder of Moz, caught the attention of Congress.
Cicilline pointed to a study on desktop search by Fishkin, which reveals that a majority of traffic to Google no longer goes out to the broader web, such as brand websites, but rather stays on Google products. This confirmed another study that suggests Google now keeps a majority of search traffic within its ecosystem.
Cohen wasn’t familiar with either of the studies that Cicilline urged him to review.
“If innovators and entrepreneurs don’t have traffic to their websites because the Google search is rigged in favor of Google’s own services by keeping them inside Google’s walled garden then the internet as we know it ceases to be an engine of economic opportunity,” Cicilline said.
Cicilline also questioned Nathan Sutton, associate general counsel, litigation and regulation at Amazon, on the way the company’s algorithms work and whether or not the marketplace favors or prioritizes its own products in search results.
Sutton, in response to concerns that Amazon sells its own products that compete with third-party sellers, said the marketplace relies on these companies to provide a broad selection and range of prices. Cicilline said this is a very different situation from a national brand like CVS that has its own brand and sells other brands, because Amazon is “a trillion-dollar company that runs an online platform with real time data and millions of purchases … that can manipulate algorithms. … “
“The algorithms are optimized to predict what customers want to buy regardless of the seller,” Sutton said, adding that the focus is to help the seller succeed.
What Congress didn't know at the time is that Amazon has a program that allows the marketplace to buy the rights to brands for a fixed price on 60 days’ notice, reports The Wall Street Journal. The contract, seen by the WSJ, is part of a push by Amazon to obtain exclusive brands for the platform.
"It is the first selling program that allows Amazon to obtain direct control over independent brands that sell on its website, according to merchants familiar with Amazon programs," reports the WSJ, which says sellers are invited to the program, but can choose to opt out.