Consumer Watchdog Says Google Shopping Costs Consumers, Complains To FTC

perfume-google-shopping-product-listing-adsConsumer Watchdog has lodged a new complaint about Google’s “search monopoly” with the US Federal Trade Commission (FTC), this time saying Google Shopping results don’t pass the sniff test. The group calls the way the search engine displays its Product Listing ads “deceptive and unfair”, adding that Google Shopping’s paid listings are price gouging consumers.

In addition to competing shopping engines being shut out of top listings, consumers are “actually being harmed because the featured results from Google Shopping more often than not return higher prices than can be found elsewhere,” wrote John M. Simpson, Consumer Watchdog’s Privacy Project Director, in a letter to the Commission. The group’s evidence is based on a test in which it conducted just 14 product searches on Google and competing Comparison Shopping Engines.

For eight out of the 14, Consumer Watchdog said it found lower prices listed on other Comparison Shopping Engines (CSE), and claimed consumers “could pay as much as 67 percent more than” if they’d used another CSE. Conversely, in nearly half of the searches consumers would have found lower prices on Google Shopping. The study doesn’t clarify whether the lowest priced product in Google Shopping was selected as a comparison, just that “one of the products pictured in the Google Shopping results box” was chosen.

When Google converted Google Shopping to a wholly paid platform last year, it made a huge impact in the world of Comparison Shopping Engines. Just as Google monopolizes search results with its own products such as maps in Universal Search — pushing out competitors such as MapQuest — so too Google Shopping deliberately pushes out competing shopping engines say critics like Consumer Watchdog. While the FTC has previously dismissed such claims, the EU has conducted a three-year investigation into these issues and is currently in antitrust settlement talks with the company.

The Financial Times also conducted a small study in which it was able to find lower prices for products after clicking through to the full list of results on Google Shopping. Both studies appear to claim that Google favors retailer listings with higher prices because those retailers are getting higher margins and thus are willing to bid higher for Product Listing Ad placement: “The higher the price that merchants can recover, the more they are likely to bid to appear in the PLAs – and the higher the profits for Google.”

When it comes to driving traffic to retailer sites, Google Shopping’s product listing ads have been outperforming other CSEs by wide margins, according to reports from CPC Strategy. Kenshoo’s Cyber Monday data shows retailers invested heavily in Google Product Listing Ads (PLAs). Retailers spent 257 percent more year-over-year. In return, retailers saw a 217 percent year-over-year increase in conversions, and a 219 percent lift in revenue year-over-year from PLAs.

It should be noted that after criticizing Google’s move to paid shopping listings, Microsoft has also begun incorporating paid listings into its product search results.

In response to these studies, Ni Ahene, co-founder of CPC Strategy, which manages paid campaigns across the CSE spectrum, says, “The question that should be asked is, ‘Does Google (or any other comparison shopping engine for that matter) have a responsibility to display the lowest price on the top of SERPs for consumers, and if they choose not to default sort order by lowest price will consumers start doing their retail searches on websites that better expose this functionality?’
“Price is one of the more important factors consumers consider when making purchases online but it’s by no means the only variable. Other factors like seller reliability and shipping times all play a role in where a consumer ultimately ends up consummating their purchase. At the end of the day if Google develops a reputation of driving traffic to websites that provide a poor overall customer experience due to price ‘gouging’ or other factors, we see consumers shifting their search activities to retail search websites that do a better job matching products and sellers to query intent.”