Google Works With Hotels To Hurt Travel Competition (wsj.com) 129
An anonymous reader shares a WSJ report: More than 100 million Americans are expected to travel during the holidays, and many will search for lodging online. But travelers may unknowingly pay more and fail to see all of their options because some major hotels have ganged up with Google to undercut competition (The link may be paywalled). Online travel agencies like Expedia, Priceline and Travelocity have replaced brick-and-mortar agents by offering consumers more choice and convenience at a lower price. These OTAs purchase inventory from wholesalers and then market rooms at a discount to consumers in addition to flights, rental cars and travel packages. Many also have agreements with companies like American Express, Costco and Delta to market their inventory. OTA websites let travelers sift through hotel offers based on price, brand, location, amenities and guest rating, among other search filters. OTAs earn a roughly 20 percent commission from hotels for each reservation they book, which covers their cost of marketing, inventory acquisition, customer support and payment processing. As hotels get squeezed by Airbnb and home rental sites, they have begun complaining that OTAs are eating into their profits. Several major hotels are now trying to use Google as a counterweight, while Google is exploiting its search dominance to steer consumers to its travel service. Some 60% of travelers begin trip-planning on Google.
oh, i see (Score:2, Informative)
But travelers may unknowingly pay more and fail to see all of their options because some major hotels have text.
Someday Slashdot will develop a publishing system that let's you edit articles in draft mode ...
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Re:oh, i see (Score:4, Funny)
"Literally the worst. I hate hotels that have text - they hide all sorts of extra fees in there."
I agree texts are the worst. If you don't pay attention, you'll get eaten by a grue.
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Literally the worst. I hate hotels that have text - they hide all sorts of extra fees in there. 0/10 would not recommend textual hotels.
Exactly! Text is the worst.
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Re: oh, i see (Score:1)
Or one that shows the first post, not just the responses to it.
Then stop using wholesalers (Score:1)
If hotels stopped selling to wholesalers then they wouldn't have this problem. Google isn't at fault here, the hotels are for undercutting their own business.
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it's the same thing as ticket scalpers with concert tickets. selling to wholesalers you get paid right away and transfer inventory risk to someone else
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If hotels stopped selling to wholesalers then they wouldn't have this problem.
But they would have a different problem. If they aren't listed by the OTAs, then they are invisible to many potential customers. 80% of something is better than 100% of nothing.
They are paying 20% of their gross to outsource their marketing, which is likely cheaper than the cost of doing their own publicity and promotions.
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If hotels stopped selling to wholesalers then they wouldn't have this problem.
But they would have a different problem. If they aren't listed by the OTAs, then they are invisible to many potential customers. 80% of something is better than 100% of nothing.
They are paying 20% of their gross to outsource their marketing, which is likely cheaper than the cost of doing their own publicity and promotions.
Which is why they have nothing to complain about. They are paying 20% for marketing, which isn't some egregious amount. If Google was being accused of dropping a hotel chain from their service if they also advertised with another search engine, or for having their own direct to consumer sales, that would be anti-competitive. But currently they are just charging for marketing.
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No different than the airlines industry. Southwest Airlines doesn't allow for any of these wholesale deals. They've been doing just fine, with plenty of booked flights, cheaper airfare, and none of the bullshit hidden fees to try to make up the slack of lost revenue that they're no longer losing.
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Seriously, I'd prefer to visit and purchase directly through the hotels themselves rather than a 3rd party, but the prices are no better.
Re: Then stop using wholesalers (Score:1)
Except that these days they rarely are cheaper. I generally end up on SWA only if the times are better.
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Except that these days they rarely are cheaper. I generally end up on SWA only if the times are better.
Degending on your itinerary, if you factor in the cost of checked baggage (2 bags/person free on SWA) and other fees on other airlines, SWA often comes in less expensive than the alternatives. Plus SWA employees treat you like a valued customer rather than an annoyance.
OTA not always the best deal (Score:5, Informative)
Re:OTA not always the best deal (Score:4, Interesting)
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Better yet, call or show up at the hotel and offer cash.
Do not just show up. That is garbage advice. Once you are there, they've got you. Call first.
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Moral flexibility? What requires moral flexibility here? The hotel is in the business of letting people stay in its rooms for payment, so a clerk isn't being subversive by renting out a room.
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Paying cash doesn't cut the fees out of the equation, it just lowers the fees. Most businesses that deal with cash have to pay their bank a cash processing fee, but from my understanding it's around 0.003% which is less than the fees for debit ($0.21 + 0.05%) and credit cards (1.4%-3.5%). Someone who deals with this professionally is welcome to correct my numbers if I got them wrong.
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That's potential fees. But it doesn't include costs to handle cash.
For example, if a business does a lot of cash business, ins
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Which is why offering cashback at the counter is becoming so popular. The business already has the infrastructure for processing card payments, and they get to reduce their banking costs. Win-win.
Downside : streetside ATMs are starting to suffer. Slowly decreasing numbers of them.
Re:OTA not always the best deal (Score:5, Insightful)
Cash works for places that rent rooms by the hour... not so much when you are traveling for other situations. Can you imagine not booking a room in Vegas during a major conference? Can you imagine driving 13 hours to the shore (pick any shore you care to visit) and then explaining to your family that you're going to have to sleep in the car? I think this is dangerous advice.
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Nah-- worst that will happen at the shore (or Vegas), is that you'll have to go a bit inland from the shore or off the Vegas Strip. Room's just a place to sleep. Honestly, nothing wrong with places that "rent by the hour" as long as they're relatively clean and inexpensive.
The exception might be places like Big Sur where there's huge tourist demand, poor road access, and relatively few hotels. But this tends to be rare. Even at Big Sur, I didn't have problem finding lodging on the periphery of the "natu
Re: OTA not always the best deal (Score:3)
> Room's just a place to sleep.
If you're an extrovert, maybe.
If you're an introvert, your room is your refuge. Your clean place to shit. The place you go to recharge *your* batteries. So... it matters quite a bit.
Having a room that's literally adjacent to your primary intended activity means you can go there for 5-15 minutes whenever you feel like it (or to grab a 25c can of Diet Pepsi that you bought at a grocery store from the room's refrigerator, instead of getting ass-raped and paying resort-level pr
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Better yet, call or show up at the hotel and offer cash. Works nicely for independent places -- they'll still need an ID and/or card for security, but they're willing to negotiate if you cut some of their costs (swipe, consolidator fees) out of the equation by paying cash.
If you arrive very late, offer to leave very early and to clean up after yourself so housekeeping doesn't notice the room was occupied, you can often pay a minimal fee directly to the front desk agent.
At least, that's what Jack Reacher does and everything in those books is clearly the truth.
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Re:OTA not always the best deal (Score:4, Interesting)
Don't forget better cancelation policy and more likely to be upgraded as perks for booking through the hotel itself.
Re:OTA not always the best deal (Score:4, Interesting)
A number of the big chains give you pretty big penalties for not being a member of their rewards club. For example, free WiFi for all members of the rewards scheme, even if you've never stayed with them before. A few I've stayed in offer access to a lounge with complimentary snacks and coffee (and, less often, beer) for members of the loyalty club, again with no requirement to actually stay there regularly. I have a small collection of hotel loyalty cards that I never use (I've never been asked to present one, I just log in and book with my account and it's automatically associated) because you always get a better deal if you're a member. I don't really understand why - most of them need your name, address, and credit card number when you book, so it's not like also giving them a single-use email address makes it easier for them to track me.
Smaller hotels will often give you a better rate if you email / call and ask. I've had pretty good luck just saying 'we're only able to pay this much for accommodation, can you come close?' Most of the time, they will (and will also do useful things like give a flat rate per night, rather than a cheap rate some nights, and charge and a more expensive one others, which makes the expenses people happier).
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The rewards club isn't so they can 'track' you, it is so they can entice you to stay there over competitors (customer loyalty). 'One more stay and you get a free night' kind of thing. The inital 'benefits' are just to get you into the program. No different than frequent flyer programs.
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In contrast, with United's MileagePlus I get basically nothing for simply being a member, but when I got silver status I got free economy plus (read: more legroom) seats at check in and free checked bags
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Through a credit card I have mid-tier status in a lot of loyalty programs. I've been upgraded to nicer rooms on basically every stay, late departure is never a problem, etc. That was not the case with base status before-- sure I got upgraded sometimes, but not to the same extent.
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If one books through a third-party/reseller/OTA, the hotel pays a hefty commission - typically on the order of 20% - to the OTA. If I pay $100 through Expedia or Booking.com, the hotel only gets $80. If I book direct with the hotel for the Special Members-Only Price of $90, the hotel gets to keep all $90. In addition, they get my contact inf
Re: OTA not always the best deal (Score:1)
I never stay at a hotel expensive enough to charge for wifi.
The middle end ones (courtyard Marriott, Hilton garden, etc) all give free WiFi. They don't start charging until you move up to a real Marriot or Hilton.
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Same with buying tickets directly from the airlines. I'll use Kayak as a guide and then buy the ticket straight from southwest or delta. I always get a better fare class and a lot of times i'll get a better seat on delta for the same price.
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Southwest doesn't list on Kayak.
When you make a reservation from Kayak, it usually sends you to the airline's own website.
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The big advantage of buying direct from the airline is what happens if you need to change the flight. You deal with the airline directly instead of some (probably incompetent) third party.
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However I think the big issue, is that Google, especially recently, has lost the business compartmentalization that most big business have. Google as a search engine, should be the OTA best friend (also the Hotel Company) Googles own services which may be in competition should be treated as fairly on a Google search as the others.
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I've found that hotels are reluctant to match the prices of the OTAs. Multiple times I have arrived at a hotel and showed them the OTA price and asked them to match it. This should be a no brainer since they don't have to pay commission but for some reason, they don't want to do it. I end up just booking on the OTA site to get the best price.
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If the hotel didn't charge a 20% premium to the price over and above what all the online resellers are charging, I'd consider it.
But right now they complain that they pay the OTA too much, then flat out refuse to price match that OTA. Tough luck. If you want me to book directly with you, you'd make it cheaper than the OTA, not more expensive.
I can't remember the last time I found a hotel willing to price match their own room from an online seller. And honestly, I don't care who I buy through, I just don't w
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I often get better pricing booking directly through the hotel company website. I just did that an hour ago and got a better price that way than what Expedia was offering.
This.
Don't forget that Expedia and Priceline (there are only really two companies, most brands belong to them) charge the hotels commission for booking and in order to list them, make them sign an agreement not to advertise a lower price on their own web site. So a hotel is quite often happy to meet what you get online if you email or call them because you're going to pay that amount anyway but the hotel doesn't have to pay the commission. You'll also be further up the list for overbooking upgrades, bett
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And I've found that calling the hotel direct and bypassing a chain website gets even more savings. A hotel manager will kick in an extra discount if bookings are low whereas a company website always uses their standard rate table.
be careful what you ask for (Score:5, Insightful)
The whole premise was that hotels wanted help to move their excess inventory of rooms. Now that there's an ecosystem around collecting and marketing that inventory, the hotels have decided they want to claw back more control (and profit) from the process. I'm not sure I see the issue here. Why not just stop selling rooms at a discount to these 3rd parties and become better at selling the capacity themselves?
shrug
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So your advice is a more elaborate version of "git gud"
Not Exactly (Score:2)
1. The OTAs are selling unused rooms at a discount.
2. They are getting them because the hotels are selling them nights at a discount.
So what are the hotels complaining about, exactly? If they don't want OTAs to sell these rooms, they should stop doing step 2. Of course, then they wouldn't be getting *any* money for these rooms, as they are *unsold rooms*
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If they don't sell rooms to the OTAs then their hotel will never be seen by anyone using an OTA (which is a LOT of people). If they DO sell to the OTA then people using the OTA will see the hotel as an option, but only for the rooms bought by the OTA.
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Because many people use the OTAs. If a hotel doesn't sell any rooms to the OTAs then those people never even see the hotel as an option. 'Getting better at selling capacity themselves' is exactly what they are doing now.
Re:be careful what you ask for (Score:5, Insightful)
I'm not quite sure what this article is saying (Score:1)
I have found the Google prices the same as the travel site prices the same as the hotel's website every time I've searched (within a few percent one way or the other).
Google doesn't hide the other sites either, they let you book through them if you desire (it even shows you all of their prices in the results).
And of course people start with Google's flight and hotel search, it is significantly better than any of the other sites (includes Southwest flights, smarter warnings and notifications about when a sli
Don't be evil? (Score:1)
I guess "Don't be evil [wikipedia.org]" is now completely by the wayside.
Oh, yeah, I guess it is [time.com], at least for Alphabet.
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How did you read into this that Google was being evil? Because hotels were offering Google lower prices to compete with online travel agencies? That is good for the hotels, the consumers, and Google.
How is that evil?
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If I search for 'hotels in NYC' then I expect to see a list of hotels in NYC, not Expedia or Travelocity. Not sure what problem you are trying to invent.
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I guess I should write longer comments.
Google is exploiting its search dominance to steer consumers to its travel service.
This is the problem. Having one's own travel service, and driving search customers to it, rather than treating all travel services equally in search query results and letting the customer decide which to use, without preference or bias.
This is a common business tactic of monopolies -- using dominance in one field to dominate another. Remember the flap about Microsoft using its dominance in PC operating systems to attempt to dominate the web browser market? It's that
Cash talks, BS walks (Score:2)
Many private hotels and motels will accept less than their published rates, and lower than the Travelocity/Expedia/Hotels.com rates if you're willing to pay cash. You might still need to put a deposit or give a card as security against damage.
You win, the hotel wins (no fees from the room resellers, no swipe fees).
That's how I've booked hotels in areas that are "hot" like beach towns -- pick up the phone and negotiate.
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Many private hotels and motels will accept less than their published rates, and lower than the Travelocity/Expedia/Hotels.com rates if you're willing to pay cash.
Had this experience recently. I found a hotel on TripAdviser but had a question about parking. I phoned the hotel for clarification, and after answering this they offered me 10% under the published rate if I booked directly with them!
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I usually try to stay in independent motels (the kind that have the "vacancy" sign lol) or bed-and-breakfasts. Many of those places don't even have electronic keys, let alone an e-booking system.
We went to a conference in DC a few months ago. Conference hotel was around $200. We paid under $100 for a B&B with a bathroom in the hall, but in a very nice/walkable part of town.
If you can't beat them, join them may be of help.. (Score:2)
As hotels get squeezed by Airbnb and home rental sites, they have begun complaining that OTAs are eating into their profits.
Let me ask:
In America, is eating into a competitor's profits a crime?
Profit margins and middle men (Score:2)
In America, is eating into a competitor's profits a crime?
Companies will certainly try to make it one. See car dealerships vs Tesla if you need an example. Car dealerships in many states have managed to make themselves a mandatory middle man (with attendant markups) even though there is no discernible benefit to either the customers or manufacturers. When Tesla wanted to sell direct they managed to make doing so literally a crime though lobbying their cronies in the state legislature.
MSRP means nothing (Score:2)
I would rather play dealers against each other and get a good deal than paying MSRP every single time, because that is what you are doing when buying from Tesla. Don't like the price, tough shit.
If you think you are getting a better deal by having a middle man involved you are dumber than a rock. You aren't playing them off against each other because it doesn't matter which one you go with you still are paying a substantial markup on the cost of the vehicle. The MSRP has ZERO relationship to the actual cost of the vehicle. Remember what the S in MSRP stands for. ("Suggested") It's an arbitrarily chosen markup dealers like to pretend has some importance.
If you buy through a dealer you are simpl
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It is when you inhabit a privileged position in the market. If we don't have such rules, then the markets fail and nobody wins
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In this case it often is. The crime is tax evasion. Hotels frequently need to pay a tax on rooms rented, and adhere to various safety regulations that Airbnb ignores. They've been ruled an illegal business in a couple of places because of this.
Where's Russia in this? (Score:1)
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Larry Page is from Russia? I had better head over to Wikipedia and change his page to correct the misconception that he was born in East Lansing, MI.
Sergey Brin was about 6 years old when the family left Russia, after the family had been badly treated by Russian authorities, so I doubt that he has any loyalty to Russia.
F'in PARKING? (Score:4, Interesting)
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I guess if I really wanted to raise a stink I should have pulled aside the other person and stood there waiting as our group got bigger, but I was there for vacation with my family.
You have to save proof of every offer that you care about, period. This is true whether you're talking about a hotel discount, a pizza special, or a trade in minecraft. :)
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What is 'those sites'? An OTA, or direct with the hotel? If it is an OTA, then you need to take the issue to the OTA, not the hotel. The hotel is not just going to honor some third parties claim.
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I don't know where you get the 'they can promise anything they want' thing from. The point is, the ONLY people you have any reasonable complaint against is whoever made you the offer and you PAID. If the hotel made the offer and you paid the hotel, then it is entirely reasonable to complain to the hotel and expect satisfaction. However, if an OTA made the offer and you paid the OTA, it is kind of asinine to expect the hotel to deal with that complaint.
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You are not making any sense. The ONLY party that 'sold' you anything was the OTA. Nobody else is responsible for 'granting' you a damn thing.
The request of your post is equally stupid. You completely skip over the most likely cause of an issue, a mistake, and leap directly to 'it must be fraud' and 'they dont care about providiing service'. WTF? By your own admission, you haven't even contacted the OTA to attempt to straighten it out, so how exactly do you make that ridiculous leap?
We use OTAs frequen
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You complain to the OTA and let them deal with the hotel.
To the hotel you are just some dude complaining over a few dollars. The OTA is a contract worth millions.
If the OTA does not resolve the issue for you, then you contact your credit card company and dispute the charge.
Either you get what you were promised, or they don't get paid. That is the "value add" of the middlemen (the OTA and the CC company) -they have more leverage than you do when it comes to resolving problems.
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You should have taken this up with the OTA site. They sold you the room. If they didn't deliver, they should refund.
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Well if you 'like dealing with the hotel', why did you not BOOK with the hotel and eliminate the whole damn problem? Too cheap?
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I guess you live in a world where there is no such thing as a mistake or error. Out here in the real world those things happen, and those of us who live here know how to deal with them. You don't.
Upon encountering this situation, a sane person would realize that there are three parties involved, and any of them could have made a mistake, and the logical place to start would be with who you made the purchase from.
Suppose I show up at your house and say I paid some guy $100 and he said I could stay there.
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Not a fair article to Google (Score:4, Insightful)
Maybe the searchers trust Google to have what they need, Plain and simple. I do and can enter gibberish and expect Google to produce. An example a movie I've see once and no clue of it's name, input: movie beach ball monster - results, top (first) hit was it: "Dark Star", which youtube had available (I didn't say it was a good movie).
Would the other search engines done as well? I've no clue, I have only used Google cause it's working for me.
Just another day with the need for another story.
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I don't see how this hurts competition? (Score:5, Insightful)
Is it just my imagination or are they confusing "hurts competition" with "lowers retailer margin"?
They're creating a race to the bottom [wikipedia.org], and then complaining about their falling margins. That's going to be the result when you play that game. I suppose you might look at it as "bad for competition" if you're a vendor looking for better margins, and ultimately it may end up driving some vendors out of the market and lowering competition, but in a free market economy a Race to the Bottom will usually fix itself. Sometimes it crashes the market a bit hard and it takes awhile to rebound, but when it does, the remaining vendors are usually more careful to avoid a repeat occurrence.
And as for their handing out blocks of inventory for resale, that's just another angle they're trying to exploit to squeeze a little more out of their inventory. Iin the case of hotels, those few vacant rooms every day, they're just playing the "half of something is better than all of nothing" game, and the resellers getting their margin is usually okay as long as they're not selling at a loss. If they're stupid and dumping larger than necessary blocks of rooms to the resellers, which is then resulting in a drop in traditional direct sales, that's their own fault for overdoing it. It's no different than using sales to attract customers, and making the mistake of making too many, too frequent, or too heavily discounted sales. Don't DO that, the customers will take advantage of it and the outcome is your own fault. If you don't know how to play that game, you shouldn't be playing it at all, not complaining when you lose.
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Surprised? (Score:2)
What? An advertising corporation (Google) abusing its monopoly? Who'd a thunk it? So are we not to trust Google's search results anymore?
I gave up when I heard that they took a big chunk of cash from BP during the Gulf of Mexico oil disaster to promote pro BP results and hide negative coverage of the spill and the so called cleanup as much as possible.
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"By The Editorial Board" (Score:2)
That isn't a report, it's an editorial.
It's Rupert Murdoch being pissy at Google...