Why should Google and Facebook escape?

“Obama smacks down internet ‘fast lanes’”, read Reuters News Service on the recent remark…

“Obama smacks down internet ‘fast lanes’”, read Reuters News Service on the recent remark by the US President on net neutrality. Since the controversial term “net neutrality” (NN) was coined by Prof Tim Wu of Columbia Law School in 2003, much of the debate on NN revolved around the potential consequences of network owners (i.e. telcos or internet service providers—ISPs) exercising additional control over the data traffic in their networks.

In May, the FCC chairman Tom Wheeler proposed that ISPs (also telcos) should be prohibited from blocking any internet content but allowed them to make “commercially reasonable” deals with content providers to ensure smooth and fast traffic. However, after millions of comments to this proposal, President Obama’s recent remarks restore faith on the internet content providers that ISPs should not make commercial arrangements with content providers to provide “fast” lanes to certain types of content and traffic to preserve NN.

Currently, the obvious villains in the show are the telcos and the ISPs as they provide the last-mile bandwidth to carry the content and applications to the end-users. However, shouldn’t the NN rules be applicable to content providers themselves?

Google, with all its sophisticated page ranking algorithm, handles almost two-thirds of search queries in the world, running into billions every month! However, Google changes its algorithm 500-600 times every year, with occasional major ones such as Google Panda and Penguin that affects search results in significant ways. It was reported in the WSJ that after a major update in Google ranking algorithm in 2012, many small businesses who used to top the list for specific search terms and hence invested in infrastructure to handle millions of click-through queries suddenly found their websites lost out and relegated to the last of search pages. Earlier this year, ranking of the travel website Expedia in Google’s travel-related search results dropped by 25% and its stocks stumbled possibly due to a skirmish between the two firms relating to anchoring of web links!

As Google moves away from a pure search engine to a full-fledged content provider through its recent acquisitions of DropCam (home monitoring), Songza (music streaming), Directr (mobile video), Revolv (home automation), it is anybody’s guess how Google’s algorithms can be tweaked to give these vertically integrated content a preferred spot in the search results. The use of a proprietary algorithm in the presence of vertical integration can possibly provide a “fast” lane for certain preferred websites to show higher up in the ranking index, while relegating others to the “slower” lane (last of the search pages).

There is another case in point. The vertically integrated Google Adwords business service ranks advertisements related to search queries based on a sophisticated second price Vickrey auction that earns billions of dollars in revenue for Google. The ranking of the advertisement is based on the amount the advertiser bids for any click-through. The ones who “pay” will show up in the “top” while the others lose out. Is this not a “fast” lane approach by Google to selectively promote certain advertisements based on the amount paid?

The same argument holds good for Facebook that also runs proprietary algorithms to show digital content to its users. In a recent article in the Guardian, Felix Salmon indicated that Facebook can make or break media companies, thanks to its propriety algorithm for selecting content. Facebook is also strongly wooing content publishers to use its own Facebook mobile app, thus using a variant of the “fast” lane technique to expose digital content to its users. The others who don’t use Facebook mobile app but use their own apps are lost and cannot reach Facebook users as much as their counterparts, who agree to Facebook, do.

While the current focus is on telcos and ISPs, the danger lies in regulators not applying NN principles to content and search companies themselves. While in most countries there is competition in the telco/ISP market and with mobile number portability in place, it is easier for the user to switch operators if their preferred content is on the “slow” lane. However, can we ever escape Google and Facebook? The underlying problem is severe and unnoticed. It is time that this dimension is looked into by the academics, policy-makers and regulators so that the large content giants do not violate NN principles.

(Coauthored by Rohit Prasad, professor, Management Development Institute)

The author is professor, International Institute of Information Technology, Bangalore. Views are personal

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First published on: 24-11-2014 at 00:09 IST