As the world’s most successful search engine, Google has played a major role in giving anyone with an internet connection easy access to the world’s sum of knowledge…or more importantly, that relevant bit of it the searcher wants to know. Including information on the best products, services and prices.
Knowledge is power, and in that sense Google can be regarded as one of the most empowering forces today across great swathes of the world for individuals of all sorts of backgrounds.
By virtue of this, it has become the world’s most powerful brand and the biggest advertising marketplace, both free and paid, attracting more than a quarter of global advertising spending, which runs in total at about $200bn a year.
So what does this mean for insurance? The rest of this article explores this theme and in particular, looks at how Google has gone from benefitting consumers and insurers by providing greater choice for the consumer and greater reach for the insurer to actually taking a bite of the cherry and entering the insurance market. The question is, by doing so, has Google crossed the line and is it exploiting its dominance by 1) taking market share in an unrelated field and 2) manipulating search results to do so? Or is it merely entering a new market where it sees the potential for disruption is ripe and creating healthy competition? Just in early April, it was announced that regulators in Europe are moving against Google for so called anti-competitive practices in Europe based on the above claims.
Google search – A win win for insurance competition and the consumer
Google is not only in great part behind the rise in consumer power. It also has democratized the world of business, lowering barriers to entry for businesses to start and grow in all sorts of markets which would previously have been difficult to break into. In some markets, it became possible to achieve great advertising reach solely through the organic search results with a just a decent website and no other marketing budget. Even in the competitive insurance markets where advertising spend is inevitably higher, the Google-enabled search ecosystem has allowed new entrants and smaller players a much wider reach and ability to compete than previous avenues for advertising. So a definite win for insurance competition.
For the consumer, Google’s search capability has provided much greater transparency of options and ease of switching for key general insurances. And this in turn, has led to insurers lowering prices. So a win for the consumer also.
There is no doubt that the world is a better place with, rather than without, Google. So we can give them quite a bit of slack around the unnerving amount of data collected about us to power the Google engine. A stash of usefully mine-able data insurers can only dream of. Consumers get Google for free, in return for their personal information allowing advertising targeting.
But the question is where to draw the line.
How far will Google go in the lucrative insurance market? And, how can we be sure that Google is not using its privileged access to consumer and competitor data to gain an unfair advantage over the competition? Let’s look at these aspects in more detail.
Will Google continue to expand its foray into Insurance?
Recently, we have seen Google enter the motor insurance market, first in the UK in 2011 (widely thought to be an initial learning exercise) and earlier this year in the US, for the time-being as a distributor, Google Compare, rather than as an insurer. Indeed, initial indications are that there is no desire at Google to go beyond being a commission-based referrer for cases sold, using net promoter scores and a suitability measure to match customer to provider. Harris-Ferrante of Gartner, states the firm has been clear that its intentions are to leverage its core strengths as a data synthesizer and customer recommendation hub, saying “They don’t want to own the customer interaction.” You can read more about this in one of our earlier articles on “Google Insurance – ready to launch in the United States”.
However, intentions can change, as opportunities develop. Google already has the advantage of financial scale, a massive trusted brand and the richest collection in the world of consumer and other big data, alongside predictive modelling, all of which would lend itself to powering new insurance propositions. Google is well placed to be a serious challenge to the insurance world if it wished.
That’s before considering other areas Google touches which could be complementary to new insurance propositions. For instance, auto-driving cars, Google maps as satnav, Drivesafe for Google Glass. After motor insurance, the next logical step is property insurance. Co-incidentally, from 2013, Google has been making several acquisitions related to the internet of things: robotics, artificial intelligence and home automation. Elements of these could deliver risk management solutions bundled with property insurances.
Geographic moves are the other element for the insurance world to keep an eye on. In the lucrative financial services segment, it makes sense that Google should start in the UK via acquisition to learn in an already established digital insurance market place where Google has 88% share of search. The US, where it has 75% of search, was the obvious next stop with the massive insurance market there, established players to partner with and a less developed aggregator market.
If Google’s US insurance venture is successful, the opportunity to establish a similar offering in Asia could be financially very appealing.
With notable exceptions, in many parts of Asia, Google’s share of search is even stronger than in Europe, with dominance ranging from 65% to 99%, depending on country.
With much more scope for growth in the Asian motor insurance market than the US/Europe, there could be a lot more for Google to play for if they can establish a footing with a proven business model from the US.
Is Google using its position of dominance to exploit the insurance market?
When it comes to other markets, complaints have been made that Google abuses its position by giving its own services preference in search results. Margrethe Vestager, the EU competition commissioner seems to agree. She recently explained that dominance of a market is no problem. However, exploitation of that dominance to take market share in an unrelated field is anti-competitive.
Things were more clear-cut in 2004, when Google launched on the stock-market.
Google issued a letter with their IPO prospectus:
“Google users trust our systems to help them with important decisions: medical, financial and many others. Our search results are the best we know how to produce. They are unbiased and objective, and we do not accept payment for them or for inclusion or more frequent updating. We also display advertising, which we work hard to make relevant, and we label it clearly. This is similar to a well-run newspaper, where the advertisements are clear and the articles are not influenced by the advertisers’ payments. We believe it is important for everyone to have access to the best information and research, not only to the information people pay for you to see.”
The distinction between unpaid search results based on merit versus paid advertising was easy to make at the time. Conflict of interest on competition grounds wasn’t an issue. That was before Google had started introducing its own services in competition with its advertisers.
Since then, however, with Google’s data advantage, we’ve seen the arrival of Google Flights, Google Shopping, Google Offers, Google Checkout, and Google Places for local business listings.
This has provided examples of Google taking advantage of its power as decider of who sees what, at the expense of existing businesses in the market it enters, including its own advertisers.
In the words of Yelp CEO Jeremy Stoppelman from 2011, in evidence to the US Fair Trade Commission, “Google is no longer in the business of sending people to the best sources of information on the web. It now hopes to be a destination site itself for one vertical market after another, including news, shopping, travel, and now, local business reviews.” Now we can add insurance to the list.
Which would be fine, if Google’s own services had to compete in organic search by the same rules as everyone else. And if Google hadn’t been pulling through data from its advertisers / competitors to beef up its own offering.
If Google remains allowed to grant itself preferential search capabilities while having access for free to all paid and organic search data, the conflicts of interest are clear. The threat is not only to other insurance businesses, but to consumers too. Access to insurance on fair terms is of major importance to consumers too, with how data is used about them to deny or price access to insurance being a sensitive issue. So now the potential for abuse of power is a consumer issue as much as a competition one.
So far in the US, moves back towards the right side of the line have been voluntary. The US Congress and Federal Trade Commission (FTC) investigation (Sept 2011 to Jan 2013), ended with agreement from Google not to steal competitor content or threaten them with exclusion. On the subject of favouring its own content over other providers, the FTC backed Google, on the grounds that consumers actually benefit from such a spur to further efforts by competitors to compete. That case was easier to make in the context of the complaint from Yelp who was competing for advertising revenues from other businesses. So no direct impact on what consumers were paying out for.
However, in Europe, a broader investigation has rumbled on since 2010, becoming one of the EU’s highest profile on-going antitrust cases. On April 15th the European Commission sent a “statement of objections”, an indictment of sorts, to Google, accusing it of abusing its dominant position in the internet-search market. In Europe, Google handles more than 90% of web searches, making it the place to be for many advertisers. Whether it has harmed consumers by using its dominant platform to steer them away from rival services and towards its own, such as Google Shopping, is at the heart of the case.
Ms Vestager, the EU’s competition commissioner, wants the case to set broad principles of fairness that Google would have to adhere to. For now she has narrowed the scope of the case to the firm’s shopping service: if the outcome is that Google has to abide by certain principles over this matter, these could then be applied in others, such as Google Compare.
Other countries may also follow suit – India and Taiwan already have ongoing investigations into Google.
So, although the case has no direct repercussions for insurers at this point in time, it does highlight that changes may be on their way and Google may have some boundaries placed upon it to ensure that consumers continue to benefit and that it competes on a level playing field with other companies.
The line is certainly blurred
According to the news site www.theverge.com, Google’s arguments against anti-competitive behaviour will focus on arguing that its services (Google shopping specifically) are already open to competition and that the likes of other internet giants such as Amazon and eBay have not been harmed by Google’s own shopping service. Whilst for insurance, the same argument could hold true (there are already insurance aggregators operating online and it would be difficult to prove their businesses will be harmed by the entry of Google into the market), you cannot ignore that fact that if you type “insurance” into Google UK, the ad that stands out the most near the top of the page is for Google Compare.
If I am a UK consumer searching for insurance, the odds are pretty high that I will select Google Compare for a quote – can this be considered as steering people away from rival services towards its own? We feel the case is pretty strong.