Australia Institute report warns of search engines restricting online competition

Nearly two thirds of Australians want the Government to take more action on ensuring competition on search engines, according to new research conducted by the Australia Institute.

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.”