In a game of word association on the closing day of EyeforTravel’s European Travel Distribution Summit (TDS) last week the phrase ‘Google mobile update’ provoked the response of ‘scary’ from John Boughton, director of mobile strategy at TUI Travel.
NB: This is an analysis by Pamela Whitby, editor for EyeForTravel, with additional reporting by Sally White.
According to Boughton, a high proportion of TUI’s bookings are made online, many of which are driven by Google. Anything that changes this balance “needs to be taken very seriously”.
Google is certainly taking mobile seriously.
“And if you aren’t providing consumers with a good experience with your brand on mobile devices, you risk losing out”.
As has been widely reported, a recent change to Google's search algorithms began to factor in a website’s ‘mobile-friendliness’. This puts as many as 40% of Fortune 500 companies - never mind the smaller fry - at risk of being downgraded in Google rankings.
Yet, despite Google’s almost monopoly status, and its steady moves to expand its own hotels and flights products, Google likes to position moves such as this as providing a helping hand to both consumers and industry.
While there may be some truth in this, Google is also a business and has recognised that there is money in mobile. A report last autumn by analysts at US investment bank Evercore sheds light on just how interesting mobile is to the search giant’s travel objectives:
“The reason we believe Google to be stepping up its travel efforts now, after many years of trying with mixed success, is that the stakes are so much higher. In the past, an effort by Google in travel would undermine some of its best advertisers, making the commitment to the space possibly half-hearted, in our estimation. However, what’s changed is mobile.
“As mobile transactions threaten to make ‘marketplace’ experiences the first destination in travel search, such as those provided by the OTAs or TripAdvisor, we would argue that Google’s need to act has gone up by orders of magnitude.
“The point being that the services to the traveller around his or her profile are increasingly being shaped by the ability of a platform to bring more supplier information to one’s fingertips. Reviews, discounts / points travel, check-in conveniences, and itinerary all require deeper supplier integration, which we see Google increasingly doing.”
What Google wants, say Evercore analysts, is to retain the traveller from ‘search’ to ‘research’ to ‘book’. OTAs and metasearch companies will find it hard to compete when more than 50% of travel searches start with the Google search engine.
According to Josh Martin, Chief Researcher, Application Strategy Group at Strategy Analytics, Google Search is not the only thing travel brands should be worried about.
In fact the continued expansion of Google Now, which aims to bring you ‘information just at the right time’, circumvents the need for a number of travel apps.
“Google Now usurps a number of value propositions such as flight information, hotel booking details and destination highlights. In response travel companies must invest more heavily to differentiate by offering in-app hotel check-in, mobile boarding passes and more to make travel apps popular,” says Martin.
“And for large companies this is a never-ending arms race between their apps and Google”.
The search for harm
No doubt these moves will be scrutinised by the European Commission, which served a formal complaint, known as a Statement of Objections, to Google last month. The EU anti-trust regulator will investigate whether Google has been displaying its own shopping services more prominently than those of other e-commerce sites, allegedly damaging competition.
The regulator has also opened a separate investigation into whether Google has been thwarting competition in the mobile sector by pressurising companies to use its Android operating system. Google has ten weeks to respond.
Should Google be found guilty, the EU could impose fines as large as $6.4 billion—roughly 10% of its operating revenue. At that rate, this could become the biggest antitrust case of the internet age, more important than attempts to coral Microsoft and Intel.
In response to the complaint Amit Singhal, Senior Vice President, Google Search, defended his company in a blog post last month: “While Google may be the most used search engine, people can now find and access information in numerous different ways—and allegations of harm, for consumers and competitors, have proved to be wide of the mark”.
What Singhal refers to as ‘vociferous’ complainants in the process are companies such as publisher Axel Springer, reviews business Yelp and travel giants Expedia and TripAdvisor. All have alleged, though not recently, that Google promotes its own services within its search results.
Nobody in the travel industry, judging by conversations at TDS last week, wants to say much about this in public, perhaps for fear of offending the world’s largest search engine.
Perhaps the complainants have also recognised that they could also soon be in the EU firing line and have been more circumspect of late.
According to a report by the Guardian, a leaked document reveals the EU is considering the creation of a new regulator with the explicit remit to oversee internet firms such as Google and Facebook.
One commentator who isn’t afraid to speak out is Dorian Harris, owner of small travel website Skoosh and a prime instigator of the British investigation into rate parity.
“The FairSearch consortium [established back in 2010] was a farce as far as I'm concerned. At the same time as Expedia and Kayak were complaining that Google ‘may’ be tempted to abuse its access to flight data, they were doing exactly that with hotel prices,” he says.
Harris sees no problem with Google’s business model. “It has always been to provide the best search results and I don't see them doing anything to undermine that position in people's minds,” he says.
If anything he believes “it’s nothing short of audacious for Expedia to report Google for anti-competitive behaviour”.
Dr Milan Stankovic, president of Sépage, a startup in the semantic search space and winner of the Innovation Awards at EyeforTravel’s TDS Europe last week also sees Google as a “great company” and one that remains able to recognise the importance for continued innovation despite its scale.
What happens next…
Google, of course, is not taking the EU’s attack lying down. It has been feeding out the line that if it is found guilty, EU penalties could stifle the development of software for devices using Android.
Its competitors argue that regulators could level the playing field by allowing competitor sites to get more attention on the search engine.
Google also maintains that it is facing increased competition in search as well as from services ranging from Apple’s Siri to Bing, and in mobile from iOS, Facebook et al.
The Commission is thought likely to seek a decision to control the search engine with rules that force Google to allow competitors to be seen in the search results, a decision which could eat into Google’s revenue from ads and links. No one is sure as yet how Google might change its European services or Android system in response to EU demands.
Travel industry views on the matter vary and the only certainty is that the future is unpredictable. “It feels like something could happen,” says Boughton, “but it could rumble on for years and years”.
NB: This is an analysis by Pamela Whitby, editor of EyeForTravel, with additional reporting by Sally White. It appears here as part of Tnooz's sponsored content initiative.
NB2: Join EyeforTravel in Miami on June 2-3 for Online Marketing Strategies for Travel 2015: The Americas & Caribbean to hear more from Rob Torres Google MD of Travel and Josh Martin, chief researcher, Application Strategy Group at Strategy Analytics.
NB3:Google car image by Shutterstock