In the wide-open Web, choice and competition are said to be merely ?one click away,? to use Google?s favorite phrase. But in practice, the power of digital distribution channels, default product settings and traditional human behavior often matters most.
In a Senate hearing last month about Google, Jeremy Stoppelman, the chief executive of Yelp, pointed to that reality in his testimony. ?If competition really were just ?one click away,? as Google suggests,? he said, ?why have they invested so heavily to be the default choice on Web browsers and mobile phones?? ?Clearly,? he added, ?they are not taking any chances.?
Indeed, Google made a big bet early in its history: In 2002, it reached a deal with AOL, guaranteeing a payment of $50 million to come from advertising revenue if AOL made Google its automatic first-choice search engine ? the one shown to users by default. Today, Google pays an estimated $100 million a year to Mozilla, coming from shared ad revenue, to be the default search engine on Mozilla?s popular Firefox Web browser in the US and other countries. Google has many such arrangements with Web sites.
Most economists agree that Google?s default deals aren?t anti-competitive. Rivals like Bing, the general search engine from Microsoft, and partial competitors like Yelp, an online review and listing service for local businesses, have their own Web sites and other paths of distribution. Choice, in theory, is one click away. But most people, of course, never make that single click. Defaults win.
The role of defaults in steering decisions is by no means confined to the online world. For behavioral economists, psychologists and marketers, defaults are part of a rich field of study that explores ?decision architecture? ? how a choice is presented or framed. The field has been popularised by the 2008 book ?Nudge,? by Richard H Thaler, an economist at the University of Chicago and a frequent contributor to the Sunday Business section, and Cass R. Sunstein, a Harvard Law School professor who is now on leave and is working for the Obama administration. Nudges are default choices.
In decision-making, examples of the default preference abound: Workers are far more likely to save in retirement plans if enrollment is the automatic option. And the percentage of pregnant women tested for HIV in some African nations has surged since the test became a regular prenatal procedure and women had to opt out if they didn?t want it.