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Federal antitrust regulators should keep an eye on Google’s travel practices.
That summarizes the sentiments of Barry Diller, the chairman and senior executive of Expedia Group and IAC/InterActiveCorp. Diller spoke Tuesday with CNBC’s Andrew Ross Sorkin at a talk at the Economic Club of New York — first reported by NBC News’s Claire Atkinson.
“Google and Facebook own basically the advertising business worldwide,” Diller said. “Google certainly has a monopoly [on search volumes and digital ad sales] in Western Europe.”
“Whenever you have that kind of control over the world that can’t go anyplace else to get their stuff to a consumer, inevitably all monopolies behave the same, and you have got to have regulation of what they do once they get to that stage,” Diller said.
What would Diller do? How would he regulate Google?
“I would stop them from going into businesses that compete with their own advertisers,” Diller said.
He added: “As for instance, Expedia Group spends $3.5 billion a year on Google advertising. And they, on the other side, where it used to be some of that traffic came free.”
In recent years, Google has downplayed travel companies’ organic results and emphasized its own offerings, such as Google Hotels and Google Flights.
“Now they say: ‘You have to pay for everything. And we’re going to compete with you directly in that travel business by offering travel services that will essentially disintermediate you.'”
“So, I say, I don’t think that’s right,” Diller said.
Losing Trust in Google
The call for federal watchdogs to step in is a reversal for Diller, who has previously spoken more neutrally about Google. In September 2016, Diller expressed confidence that technological innovation would allow companies such as Expedia to stay ahead of Google.
Diller has a storied history in online travel, as recounted in Skift’s Definitive Oral History of Online Travel, which noted “Diller’s IAC paired Hotel Reservations Network, which was renamed Hotels.com, with Expedia, and created a merchant-model hotel-booking powerhouse.”
Diller’s comments seem to conflict with the stance of his president and CEO at Expedia Group, Mark Okerstrom.
Okerstrom demurred on the need for regulation, which he thought would be less effective than market competition working its magic.
“These big tech platforms, Google, Facebook, Alibaba, Amazon, they have tremendous power,” Okerstrom said. “As we’ve recognized with our role in the travel industry, with great power comes great responsibility. I think that, provided that, these players are behaving in the ways that are benefiting their responsibility in society, we’ll be fine.”
Are Fines Needed?
Miller noted that the European Union has levied fines against Google because of some of its business practices, although not in travel.
“That’s basically kind of what the EC [European Commission] said recently,” Diller said.
The European Union has levied antitrust fines of $2.7 billion against Google for biasing its shopping services, and $5 billion for putting anti-competitive restrictions on Android device manufacturers and mobile operators.
But by raising the specter of fines, Diller ratcheted up the rhetorical pressure on Expedia Group’s long-time partner.
“So, of course, I’d do those things [referring to regulation],” Diller said. “You’re never going to get basic level playing field, but at least you’d get real bad practices essentially not happening.”
Here’s a video of the Diller interview, which starts at 21:30:
Will Talk Lead to Action?
Diller is Expedia Group’s senior executive and controlling shareholder. It’s unclear if his statements about Google will lead to action on Expedia’s part.
The following is the interview of Okerstrom at Skift Global Forum last month.
Google Says It Wants to Be a Good Partner
Also at Skift Global Forum 2018, Google officials said they want the company to be great partners for the travel industry, and they get a lot of questions about Google’s ultimate plan in travel.
“Our partners say it doesn’t seem like it’s completely holistic in what you are trying to do,” said Rob Torres, managing director of advertising and marketing, travel sector at Google, at Skift Global Forum on Thursday in New York City. “Where are you going, and what are you going to be when you grow up? We want to be the trusted place people go when they make decisions.”
Part of that is improving Google search for the benefit of consumers, they said.
“Hopefully that leads to more qualified and personalized leads for [our partners,]” Torres said. The reality is that it makes sense if you’re in Google at a vertical like travel and improve the experience for consumers. If we get more people booking and searching, I will be able to send you more leads.”
In September, Skift noted that many industry critics believe that Google is “rigged” and that it “clearly places its own travel businesses front and center in its search results to the detriment of competitors.”
The analysis quoted TripAdvisor CEO Steve Kaufer, who said: “We see Google preferencing its own content to the detriment of consumers in travel and local search.”
In March 2017, TripAdvisor chairman Greg Maffei said, “I think if you look at Google has extracted quite a lot of value out of the travel business through what it’s done through paid inclusion and effectively driving free out of the process.”
It will be interesting to see if Diller’s comments will translate into Expedia Group policy changes.
In a July interview with Skift, Cyril Ranque, president of Expedia Lodging Partner Services, said Google has the resources to outspend Expedia “quite significantly.”
In the year to June 2018, Expedia Group spent about $1.5 billion on technology, he acknowledged.
Ranque added that he was watching to Google’s product expansion to judge if it would remain a “fair playing field.”
It appears as though Diller has made up his mind.