The accusations just won't go away. It's been several years since the 28 countries that make up the European Union (EU) -- at the behest of a host of Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) rivals -- filed a lawsuit alleging anti-competitive behavior. The problem? Several companies noted that Alphabet's own sites were given precedence in its search results, regardless of what a user typed into the search bar.
The EU situation appeared to be settled earlier this year following a proposed settlement, until yet more industry competitors supplied the EU's anti-competition folks with a detailed response to what would have been, at least for them, a less-than-suitable solution. With so many legal irons in the fire over its search results, it would seem as though Alphabet would take special precautions to ensure it didn't rile even more feathers. Turns out Alphabet, at least according to some recent complaints from a couple of outspoken CEOs, hasn't learned its lesson.
Oops, sorry about that
Jeremy Stoppelman, CEO of business review site Yelp (NYSE:YELP), along with Stephen Kaufer at online travel behemoth TripAdvisor (NASDAQ:TRIP), noticed an Alphabet search-related anomaly recently. Despite entering very specific search requests that included Yelp and TripAdvisor in the query, Alphabet's own results took front and center stage ahead of its competitors, according to a report in Re/code. Google said the situation is the result of a bug it's working quickly to fix.
The problem with Alphabet's results were specific to navigational searches via a mobile device. Navigational searches are queries that include either a website or even the URL of the desired user destination that should, ostensibly, return results that match the actual search request.
Alas, according to Stoppelman and Kaufer, Alphabet is back to its old tricks of pushing its own results in lieu of competitors'. Alphabet denies any wrongdoing, stating that Yelp's and TripAdvisor's concerns were all part of a glitch that arose from a "recent code push, which we're working quickly to fix." Well, that settles that, right?
Given Alphabet's history of complaints -- both legal and otherwise -- surrounding its search algorithms, its coding accident claim didn't appease either Yelp or TripAdvisor. After hearing Alphabet's reason for the search result snafu, Stoppelman, according to Re/code, responded, "Far from a glitch, this is a pattern of behavior by Google." Kaufer was even less politically correct, tweeting on Nov. 22 "Gimme a break, @google. Search for "tripadvisor hilton" puts the tripadvisor link so far down you can't see it."
About the only good thing to come out of Alphabet's most recent efforts to allegedly "manipulate" search results is that it has fixed the supposed glitch, and now navigational searches utilizing TripAdvisor and Yelp as key words come back with those two companies at the forefront. Not surprisingly, based on Stoppelman's and Kaufer's earlier statements, the recent update hardly accounts for what they believe is a pattern of anti-competitive behavior from Alphabet.
It should be noted that both Yelp and TripAdvisor are part of the EU group accusing Alphabet of doing exactly what its recent coding glitch caused: giving its own search results the utmost priority, and pushing its competitors down the list.
The accusations put forth by Yelp and TripAdvisor, along with the ongoing investigation by the EU, certainly haven't affected Alphabet's financial results. At $18.7 billion in sales last quarter, $16.8 billion of which was from advertising, Alphabet continues to grow at a double-digit pace quarter-in and quarter-out. Intriguingly, the 35% year-over-year jump in paid clicks on Google-owed sites in Q3 -- glitch or no glitch -- certainly played a key role in its stellar financial results.
Alphabet certainly isn't in fear of taking a significant hit from the Yelps or TripAdvisors of the world, but so much attention from the EU should be respected. Still, it appears Alphabet isn't overly concerned with its legal proceedings or its competition, otherwise it would almost certainly have taken a closer look at the results of its "code push" before rolling it out.
Hopefully for Alphabet shareholders, the negative feedback and courtroom drama comes to nothing, but that will require Alphabet to actually take the matter seriously, which it hasn't seemed to do -- yet.