Saturday, 19 April 2008

Ironically, Search is Now a Shield Against Competition and Innovation

Stories used to abound of small companies finding new markets via search. The Birmingham based chocolate shop selling to Bostonians is one that springs to mind.

But Google's decision to follow Yahoo in allowing rivals to bid on brand names will limit competition and innovation from start-ups and other cash-constrained companies.

Unless brand owners win the daily and hourly battle to stay on top of the key word auctions, they risk leaking customers to rivals. That process suits anyone earning super-normal profits in any given market segment, particularly big brand owners and their agents and introducers of business. Any of these players could not only afford to stay at the top of the bidders' list for their own brand names, but could also choke off competition by winning the auction for their rivals' key words and re-direct the traffic to their own sites. To stay on the whiter side of what is legally a grey area, all the winning bidder on a rival's trade mark really ought to avoid is their rival's trade marks appearing in the search result that in fact promotes the winning bidder's own products or services.

Competition authorities and legal advisers should pay close attention to who bids on the search terms related to market segments where dominance is of particular concern. But it seems unlikely that the authorities, challenger brands or the search engines themselves will have the resources to focus on this battleground, or respond to every complaint. Indeed, the cost of responding to requests to prevent bidding on brand names is possibly the reason that the search engines have dropped their previous restrictions in this area.
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