Just Because DuckDuckGo Lost Doesn’t Mean Google’s Auctions Are Rigged

By: Daniel Castro and Ashley Johnson

To address complaints from European antitrust regulators, Google gives Android users in the EU the option of selecting one of several search engines as the default on new mobile devices. Every quarter, Google allows competing search engines to bid for placement on this list. The search engine DuckDuckGo criticized Google after it failed to win a place in most countries in the most recent search preference menu auction, calling the process “rigged” for forcing it to compete against “profit-maximizing companies.”

Google introduced the search preference menu to its Android platform following a July 2018 European Commission decision that fined Google €4.34 billion for breaching EU antitrust rules and ordered it to stop requiring device makers to preinstall the Google Search app, Chrome browser app, and Google Play Store. The preference menu requires Android users in the EU to select which search engine to set as their default option when they’re setting up their phone or tablet. It displays a maximum of four search engines, including Google, with the other three determined by a quarterly auction on a per-country basis. The three highest bidders in each EU country appear in the search preference menu in that country.

According to DuckDuckGo, Google’s auction method for determining which search engines appear in the preference menu is a “pay-to-play” system that prices some search engines, like itself, out of the market. DuckDuckGo also claims this method incentivizes bad behavior by search engines. Because DuckDuckGo doesn’t “maximize [its] profits by exploiting [its] users,” it makes less money than its competitors.

There are several flaws in DuckDuckGo’s arguments. First, being “pay-to-play” does not inherently mean a system is flawed. Price dictates many things. If DuckDuckGo couldn’t afford to pay its office rent or employees’ salaries, it wouldn’t argue that, because it had been priced out of the market, it shouldn’t have to pay those expenses. If DuckDuckGo wants to be able to compete with other search engines, it needs to earn enough revenue to cover costs, either through advertising or by charging for its service.

Second, DuckDuckGo’s comment that it doesn’t exploit its users for profit implies that other search engines do exploit their users. Providing targeted advertising to users to pay for providing a free, useful service is a legitimate business model, not exploitation. Moreover, all of the rival search engines that won out over DuckDuckGo adhere to the strict privacy regulations in the GDPR, which EU policymakers often refer to as a global gold standard on data privacy, so if there were a legitimate complaint about privacy, EU regulators would surely be addressing it. DuckDuckGo even lost out in many countries’ auctions to another privacy-oriented search engine, PrivacyWall.

Beyond the fact that the only reason Google has to hold these auctions is because of the European Commission’s misguided ruling, there’s nothing keeping Android users from using DuckDuckGo even if it isn’t one of the four search preference options presented to them when they initially set up their phone or tablet. Indeed, most apps are not installed by default, so DuckDuckGo is in the same situation as millions of other app developers. If DuckDuckGo doesn’t want to pay to be listed in the menu, Android users can still manually download and use their app, or any other search app they want, and make DuckDuckGo’s engine their new default. Additionally, the company can pay for advertising, either online or offline, to convince consumers that they should use its search engine instead of Google’s.

The problem that DuckDuckGo faces is that most users prefer the Google search engine. The reason is clear: According to DuckDuckGo’s own research, the biggest factor for users in deciding which search engine to use is the quality of the search results. For example, 47 percent of German users would switch to a search engine with better search results, whereas only 29 percent would switch to one that does not collect any data about its users. Only a small fraction of users would choose an alternative to Google when presented with options. In the UK, for example, 87 percent would select Google out of four choices, and 6 percent would choose DuckDuckGo.

This low-selection rate is one of the main reasons that it may not be worth it to DuckDuckGo to pay for placement in the search menu auction. Indeed, this problem shows the value of targeted ads: Most users are not interested in DuckDuckGo, but some are. If DuckDuckGo wants to serve those customers, its best option is to pay for targeted ads for that small audience, rather than try to advertise to everyone. (But of course, it doesn’t want to look hypocritical, so it doesn’t do that.)

Google’s auction method was designed to allow search engines to determine the value they place on appearing in the Android search preference menu. If DuckDuckGo places a high value on appearing on the menu, it needs to come up with the funds to compete with other search engines that also value this. If it doesn’t want to pay, it can’t compete. Users could still choose its search engine, but DuckDuckGo shouldn’t get the added convenience of appearing on the preference menu for free.

This article first appeared as an Innovation Files post on itif.org.