MONOPOLY MATTERS

What an Ongoing Lawsuit Says About Google’s Power in Online Travel

On July 16, Google representative Adam Cohen argued to the House antitrust subcommittee that the tech giant was an afterthought when people start planning for travel. “When [people] are searching for places to travel, hotels and airlines, they start with dedicated specialist competitors,” Cohen said.

Actually, they don’t.  A full sixty percent of all travel searches today begin on Google and the corporation’s dominance – and its profits from this business – are growing fast.

A class-action lawsuit filed by a class of online purchasers of hotel rooms in mid-2018 reveals much of what Cohen was seeking to hide. Though not specifically about Google, the case’s details highlight Google’s role as an increasingly important intermediary for most online travel today.

The lawsuit accuses five major hotels, InterContinental Hotels Group (IHG), Hyatt, Hilton, Marriott and Wyndham of colluding with each other to manipulate how Google presents searches for hotels.  Specifically, the suit charges that these hotels agreed not to bid on “branded keyword advertising” or advertisements that appear when one searches on Google for a specific hotel chain. Allegedly because of this collusion, Google will list, for example, Hyatt’s Phoenix hotels at the top of the page, and bury other hotels you might want to stay in.

The Google search results for a “branded keyword search” like “hyatt phoenix” would, thanks to collusion among hotel chains alleged by an ongoing lawsuit, return the most prominent results for Hyatts, and not competing brands. Arrows point to the paid advertising spots that hotels and travel agencies would compete to advertise on.

Why would the hotels feel compelled to enter into such a conspiracy?  Because Google has become so dominant in how people make their travel plans that the hotels will go to extraordinary lengths to optimize Google search results. The role of other online travel services, like Hotels.com or Expedia, is fading. By now, three in four people who plan travel online use Google travel tools.

It’s actually sweeter than that for Google. Not only does the tech giant receive ad revenue, but when you book through Google, they get a commission as well. The result, says George Schaal, executive editor of travel industry website Skift, is that Google gets paid at every stage of the booking process.

Google is increasingly leveraging its dominance in online travel search tofavor its own travel planning and booking tools over those offered by the hotels and Online Travel Agencies (OTAs). Google’s favoring of its own travel tools also steers consumers away from direct bookings on hotel websites. Direct bookings are crucial for hotels to capture as much revenue as possible. In short, in addition to all its other lines of business, Google has become an online travel agency of its own.

Why does this matter?

In addition to the dangers posed by this further concentration of wealth, power, information, and control in the hands of one of the most powerful corporations in human history, Google’s search bias in travel appears also to mean less choice and higher prices for you and your family. One way this happens is when Google prevents users from becoming aware of lower-cost options listed on travel industry competitors such as the OTAs. According to Jeannie Evans, a lead attorney on the hotels’ case, less comparative information means that prices on hotel rooms would go up for consumers.

A judge ruled in March that there is “certainly sufficient evidence” to allow the class action to go forward.