Google has an 87 percent market share in the search business and the potential to mobilize more voters than the Democratic primaries, according to the latest Chicago Booth/Kellogg School Financial Trust Index Survey. By profiling its users, Google could identify those who are more keen to respond to its “call to action.”
On November 11, 2019, frequent users of Uber in Chicago received the following email:
“Last month, the city proposed implementing a $3 fee on most ridesharing trips in downtown Chicago. This would quadruple the taxes you currently pay on trips in downtown Chicago, making it the highest ridesharing tax in the country.
These ridesharing fees are supposed to help reduce street congestion in Chicago, yet ridesharing vehicles account for only a small portion of the vehicles in the city.
There is still time for the City to come up with a better approach. Tell the Mayor why you oppose paying more for your ridesharing trips in Chicago.”
Tech companies usually know their users in greater detail than traditional corporations do. Since they usually offer their services for free or, like Uber and Lyft, at very convenient prices, users are often thankful for the service and very hostile to the possibility of a price increase. Network externalities also make it very difficult to switch to a competitor in case of a price increase or deterioration in quality. Therefore, tech companies often attempt to mobilize users to defend favorable regulation and to lobby public officials. At the end of the email quoted above, Uber included a link to tweet a complaint to Chicago’s mayor. How do people respond to this kind of call to action?
The annual Chicago Booth/Kellogg School Financial Trust Index tested what Americans’ reactions would be in the case that a tech company—in this case, Google—asked them to lobby elected officials.
Google is by far the most dominant search engine in the United States. The company does not disclose its market share, nor does its main competitor, Microsoft’s Bing. Google doesn’t want regulators to know how dominant it is; Bing, on the other hand, is reluctant to tell its clients that very few people see their ads. According to the FTI survey, the actual market share of Google is 86.7 percent, while Bing’s is 4 percent.
To test Google’s “membership power,” we divided participants into two random groups and asked them two slightly different questions. Members of Group A were asked what they would do in the following situation: They receive an email in which Google explains the negative consequences of a proposed online advertising tax; they don’t have any previous opinion on this issue, and they are asked if they are willing to reach out to their representatives to speak up against the tax.
Group B members are told that they already disagree with the advertising tax proposal before receiving the same email from Google.
Are Group A and Group B very likely, somewhat likely, somewhat unlikely, or very unlikely to do to what Google asks them to do to protect the company’s business model?
Democratic voters are more likely to mobilize for Google than Republicans, as the following two figures show:
A possible interpretation of Group A and Group B’s different answers is the following: Group A’s reaction highlights the pure membership power of Google. A large share of these people (33 percent) is keen to mobilize on the basis of the information they received from Google. Participants in Group B were already hostile to the proposed tax; therefore, after Google emailed them asking for mobilization, they are more keen to reach out to their representatives than the members of Group A: 44 percent are “very likely” or “somewhat likely” to contact their representatives.
Potential implications of these results are significant: By profiling its users, Google could identify those who are more aligned with the company’s priorities and ask those users to support its PR and lobbying efforts. The efficacy of such a targeted “call to action,” the survey shows, would be much more relevant than a generic request for support.
In the United States, almost 250 million people use email. Let’s imagine that Google, with its Gmail service, has a 40 percent market share. In the fictional scenario that the survey tested, 55 million people would be ready to reach out to elected officials to support Google’s agenda. It is quite an impressive number: In 2016, the US Democratic primaries had a cumulative turnout of 57.6 million people.
Big Tech’s future profits depend on regulation at least as much as on innovation. It is no surprise that these companies are increasingly becoming political actors. The bigger they are, the greater their ability to influence elected officials and capture regulators.
About the Index:
The Financial Trust Index captures the level of trust that Americans have in institutions. The study was conducted via telephone by SSRS, an independent research company. Interviews were conducted during the period of December 17–26, 2019, among financial decision-makers. A total of 1,019 interviews were conducted, with a margin of error for total respondents of +/-3.57 percent at the 95 percent confidence level.
The Financial Trust Index was created in 2008 as a means to study the changes in trust in the financial industry and the impact of those changes on investors’ decisions. The index monitors the annual level of Americans’ trust in institutions and regularly evaluates how current events, policy, and government intervention may affect it. The initiative is sponsored jointly by the University of Chicago Booth School of Business and the Kellogg School of Management at Northwestern University and is administered by Social Science Research Solutions.
The Survey Lead Authors are Paola Sapienza and Luigi Zingales. Paola Sapienza holds the Donald C. Clark/HSBC Chair in Consumer Finance at the Kellogg School of Management at Northwestern University. Luigi Zingales is the Robert R. McCormack Distinguished Service Professor of Entrepreneurship and Finance at the University of Chicago Booth School of Business and one of the editors of this website.
The ProMarket blog is dedicated to discussing how competition tends to be subverted by special interests. The posts represent the opinions of their writers, not necessarily those of the University of Chicago, the Booth School of Business, or its faculty. For more information, please visit ProMarket Blog Policy.