How aggressively should a tech platform be allowed to compete before it becomes anticompetitive? In a summer overflowing with big issues for tech giants, from hate speech to election interference, competition might rank above them all. It was questions about competition that led the CEOs of Amazon, Apple, Facebook and Google to appear jointly before Congress for the first time last month. And the discussion that followed may have lasting consequences for multiple ongoing state and federal antitrust investigations, as well the new laws that Congress is expected to draft in response.
In recent weeks, the brunt of discussion about competition has centered around Apple. The company found itself in a new controversy over its App Store rules when the game developer Epic intentionally broke the rules to offer a new payment system that avoided Apple’s 30 percent cut. That prompted an immediate response from Apple, which booted Epic out of the App Store and threatened to terminate its developer account, which would break a large number of games that rely on Epic’s Unreal Engine. On Monday, a judge granted Epic a temporary restraining order against Apple preventing it from eliminating Epic’s account until the full matter can be heard.
The outlines of Epic’s complaint are familiar to anyone who has talked to a developer about the playing field for smaller companies in 2020. Apple has a monopoly on iOS; it uses that monopoly to extract rents from everyone who uses it; and those rents eliminate competitors and discourage innovation. The nuances matter, and Ben Thompson does a great job walking through them here. But the idea that Apple’s greed is warping the entire field of software development, which had a breakout moment in June with the Basecamp controversy and continued through the antitrust hearing, is rapidly becoming conventional wisdom.
But just because there’s widespread agreement a company’s business practices are unfair doesn’t mean they’ll change. Just ask Jeremy Stoppelman, the CEO of Yelp, whose company has waged an epic, lonely crusade against Google for most of its life. I sometimes joke that in place of a product roadmap, Yelp has a chief lobbyist. (He’s very good, for what it’s worth.) Yelp was founded in 2004, and benefited hugely from high placement in Google search ranking for years. But as Google became more interested in local search results, it began promoting its own listings above Yelp, strangling its growth to the point that Stoppelman now says it’s a “minor miracle” his company even exists.
Stoppelman joined my boss Nilay Patel and I on an episode of The Vergecast that dropped today, and I invite you to give it a listen. Over the course of an hour, Stoppelman told us about his company’s response to COVID-19, the bleak state of affairs for local business right now, and — most relevant for our purposes here — Yelp’s long struggle against the search giant.
I had never spoken to Stoppelman before, and I was excited to ask him a question I have long had about Yelp — why doesn’t it compete harder than it does? The product has been relatively stagnant for years, and even if you think Google has abused its market power — which I do — it isn’t as if local search is a solved problem. Yelp’s reviews are still generally better than Google’s, and the devastation COVID-19 has wrought on local businesses would seem to offer the company fresh room to innovate.
In light of all that, I found this exchange interesting. Here it is:
Casey Newton: We’re still sort of talking about Google as if it’s the only possible entry point to Yelp. And the thing that happened since your company was founded was the rise of mobile phones; the app stores exist, right? There’s a world in which the Yelp app is just so freaking good that everybody has to run out and download it and this is how they access all their local information. So even just to play devil’s advocate, what is the answer to, “Come on, Yelp, can you just actually compete a little bit harder?” You have other tools to get customers’ attention that are not antitrust cases.
Jeremy Stoppelman: Yeah, I would say that you could look at our traffic makeup. We still get a huge portion of our traffic from Google. So while I feel better about our market position, and we are more diversified traffic-wise and without the mobile app ecosystem emerging, we would be in a far worse position — who knows where we would be, frankly, if that didn’t exist. So I would call that a lifeline rather than, “Oh, you’re totally fine. Nothing to worry about. You’re a bunch of whiners, so stop complaining and get back to work.”
I think the other thing to remember is, think of the enormous resources a monopoly power has and can put against you. You look at mapping technology, not many people can afford to play in the mapping space period anymore. What happened to Navteq and some of these big maps players? Google entered the market, they gave away a free product essentially, although they now charge for it, and some of the independent mapping players fell over as a result. So these big monopolies bring in insane amounts of resources to fight.
So I would say it’s a minor miracle that we’re still standing. I’m very proud of the fact that we’ve competed successfully. But I think in my mind there was no question we would be a significantly bigger company with more resources to invest if Google had played fair and not tipped the scales in their favor to make sure that their content, their local results are always at the top and increasingly taking up more and more of the page. When it comes to local, if you do a local search on Google — especially mobile — it’s a chore to find organic results anymore.
Stoppelman’s view seems to be that no matter what Yelp does to differentiate itself, Google will always ensure that it comes out on top. His preferred solution, as articulated in the partially Yelp-funded site Focus On The User, is to give companies like his access to the answer boxes that now appear on Google search results alongside the traditional 10 blue links.
“This means creating an interoperable box and ranking Google’s content alongside other business listing pages across the web,” states Focus On The User, which Yelp built alongside its fellow aggrieved local search player, TripAdvisor. “An organic, merit-based process should pin the most relevant businesses from the web to the map. That box should provide a clear path to the source content, not a small link designed to generate a low [click-through rate].”
From a product standpoint, I can see how this approach could benefit Google users. And as an advocate for an open web, I would love to see Google sending more traffic outside its walls. As a legal argument, though, Yelp’s complaints have always struck me as a little weak. How much right should Yelp — or Congress — have to redesign Google? The current state of affairs does feel untenable. But many of the proposed situations seem weak.
It’s also worth pointing out that many small businesses themselves feel bullied by Yelp, which aggressively sells them advertising and other tools to enhance their profiles. Many businesses see Yelp as a tool that unfairly lets their worst customers slander them, and they have few alternatives if they feel they have been wrongly accused of bad service or worse. Tweet the word “Yelp” on Twitter, and the word “extortion” will often come back to you from some aggrieved merchant.
Still, from Apple to Google, it feels like a dam has broken this summer. Even if Congress or the courts choose to dismiss some of the individual complaints, the larger mood shows every sign of holding. The reason people keep speaking up about unfairness on the tech platforms is because they are, in a variety of ways, unfair. More developers are speaking up about it now every day. And for the first time in a long time, the regulators are seriously listening.