Local Search Quality: A Rebuttal of Kim and Luca (2019)

Abstract

A recent paper, Kim and Luca (2019), claims that Google has used a scheme of tying its “review product” to its search engine as a strategy to enter the “reviews market”, despite having a lower-quality product than existing alternatives. Kim and Luca conclude based on an online experiment that, “the evidence suggests that Google’s decision to exclude competitor reviews may have helped them gain traction in this complementary market despite consumers’ preference for an easily implementable alternative”. In this paper we review Kim and Luca’s claims. The suggestion that Google simply took a unilateral strategic decision to exclude Yelp is factually incorrect (since Google responded to a cease-and-desist notice from Yelp itself), and the experimental setup put forward to test users’ preferences for Kim and Luca’s alternative is fundamentally flawed. The additional results and robustness checks that Kim and Luca provide do not lend further support to the paper’s central claim. If anything, they serve to raise questions regarding the reliability of the experimental setup as a whole.

Keywords: Google, Kim, Luca, Focus on the User, FOTUL, Search, Local Search, Yelp, Antitrust, Competition

JEL Classification: L4