San Francisco State University

Antitrust accusations and Google: HBS and Columbia study fuels debate

Google has come in for some criticism from a Columbia law professor who once worked for the tech giant as an unpaid fellow.

In a new study coauthored with Harvard Business School (HBS) professor, Michael Luca, Columbia’s Tim Wu believes he has found evidence that Google’s fondness for displaying its own content is weakening the service it provides consumers. The findings have clear implications to the antitrust (competition law) allegations that have been leveled at the influential firm.

In the study, half of 2,690 participants were shown a typical Google results page, featuring much of its own content, in answer to queries about local businesses. The other half - by virtue of an internet plug-in - were treated to organic results picked out as the most relevant by Google’s algorithm. The result? Those with the merit-based results were found to be 45% more likely to click on one. 

The study was funded by Yelp, a Google competitor, but Wu, author of The Master Switch: The Rise and Fall of Information Empires said he agreed to the assignment because he believed it to be a “righteous cause” and that his and Luca’s findings run counter to the principles of a company he says he still admires.

The Columbia and HBS paper, presented at the University of Oxford’s Antitrust Enforcement Symposium threatens to put a dent in Google’s defense against accusations from European regulators that the company violates antitrust law (it’s not the only big tech firm under scrutiny from European regulators – Amazon has also been put under the spotlight). The defense revolves around Google’s argument that showing its own answers at the top of a results page improves the consumer’s experience.     

“It’s a legal exercise of monopoly if it hurts competitors while helping consumers, but if it hurts consumers while also hurting competitors, then there is no justification for the conduct,” Wu told Bloomberg.

Although there was no official reply forthcoming from Google, the paper has been questioned for its assumption that more clicks equates to better search results.

Six degrees of innovation at Cambridge Judge

A catchy concept aimed at identifying how companies can match up technology and market demand in their innovation strategies has been released by Cambridge Judge Business School.

‘Six Degrees of Innovation’ is the result of interviews with senior executives from international companies representing the energy, banking, retail, transportation, education and healthcare sectors and showcases criteria believed to be behind successful business innovation.

One or more of these six degrees, or patterns of interaction between the use of technology and market demand, are said to be present when a business undergoes transformative change. They include tailoring products to individuals’ needs and promoting sustainability in helping to manage the cost of resources and cut down on waste.

The Cambridge Judge study, commissioned by AT&T, was led by the school’s research director, Stelios Kavadias:

“We believe this concept breaks new ground in identifying how and why innovation occurs.”

Are energy efficiency projects cost efficient?

Investing in energy efficiency for the home may not be delivering the savings promised, and their benefits might actually be outweighed by the costs, according to researchers from the University of Chicago and UC Berkeley’s Haas School of Business.

In an analysis involving 30,000 Michigan homes, upgrades designed to reduce energy consumption- such as wall insulation and weatherstripping – were found to cost twice as much as they would ultimately save in energy costs over the product’s lifetime. 

The study’s focus fell on the largest residential energy efficiency program in the US, the Federal Weatherization Assistance Program (WAP). However, those who were given upgrades to a cost of US$5,000 stood to save just US$2,400 in consumption savings. Indeed, the average return was found to be a rather depressing -9.5%, annually.

Lead author and economics professor at the University of Chicago, Michael Greenstone, said that the findings ought to make policymakers take a closer look at the cost effectiveness of their projects. 

“It is critical that we field test energy efficiency programs to determine which investments offer the greatest potential,” Greenstone said in a press release for UC Berkeley’s Haas School.

The study was produced in conjunction with Catherine Wolfram, director of the Energy Institute at UC Berkeley’s Haas School and research associate, Meredith Fowlie – who emphasized the limitations of models designed to predict the savings that can come by reducing energy consumption – in the study, actual savings were calculated to be less than half of the amount anticipated by the WAP.   

“Our data-driven analysis that measures the actual returns on energy efficiency investments shows how these projections can be quite flawed,” Fowlie said.

The study forms part of an energy efficiency initiative between UC Berkeley, MIT and the University of Chicago called E2e.