September 19, 2013
J2 Global Communications is known for a wide range of services, including online fax, email marketing, and cloud storage. But the tactics surrounding their dominance over the online fax segment, particularly, is beginning to raise eyebrows. Their monopoly over the industry also has the potential to affect Google’s reputation, due to Google’s apparent complicity with J2’s practices.
An Overview of Online Fax
The online fax industry is quickly growing in popularity as a way to send faxes to any number in the world, without using a fax machine. There are several distinct benefits to using online fax services, including saving money on paper, ink, and long-distance faxing fees.
Online fax services will likely replace traditional telephone-based faxing quickly. As such, it’s an attractive industry for new players and startups.
J2 Global’s Monopoly Over the Online Faxing Industry
J2 owns multiple online fax businesses and websites, and as a result, J2 is able to manipulate Google’s search results to the point that nearly every search result for queries similar to “online fax” is owned by J2. This sort of dominance not only makes it extremely difficult for new competitors to gain market share, but also strengthens J2’s control over the industry.
J2 has acquired many of these websites after aggressive litigation. Because it owns a controversial patent over all faxes using email, J2 is able to aggressively suppress new competitors from entering the market. Because J2 has a sizeable legal team and funding, it’s able to sue competitors for patent infringement. After litigation expenses have taken their toll on J2’s less affluent competitors, J2 often acquires these companies, adding to its giant leverage over the industry.
This gives J2 the ability to essentially set their own prices and fees for faxing services; prices are adjusted slightly across each of their properties to give the illusion of an open and competitive marketplace.
A search for “online faxing” on Google results in a range of businesses. Among the results are sites like RapidFax.com, MetroFax.com, MyFax.com, eFax.com, Fax.com and SmartFax.com. All six of these popular faxing sites are owned by J2 Global.
Integrated Global Concepts Inc., a competitor of J2, filed a complaint against J2 in 2007, accusing J2 of “enforcing fraudulently obtained patents to unlawfully create and maintain a monopoly by intimidation against j2’s competitors” and utilizing their wealth and legal acumen to “crush competition, raise their costs of operation, eliminate them as competitors in the relevant markets entirely, and substantially raise the cost of fax to e-mail services to customers.”
The case was eventually dismissed, but legal proceedings have been continually filed between the two companies since then, with the most recent in July 2013.
The Role of Google
So where does Google come in? According to Google’s “double serving policy,” multiple paid search results may not appear within the same search results page if they are owned by the same corporate entity. This, however, doesn’t appear to apply to J2. Paid search results for online fax-related queries return multiple listings from J2’s properties.
Is Google knowingly allowing this? Google has been notified of the policy violation, but has taken no action to correct or address it. Continued complicity in this practice could hurt Google’s reputation if it gains public attention.
As Google continues its mission to improve search results, it’s their responsibility to enforce the rules fairly for everyone. In the end, the real victim is the consumer who purchases online fax services while the market, and pricing, is controlled without fair competition.
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