Glenn Fogel Welcomes More Regulatory Scrutiny of OpenAI and Google | The Brussels Beat

You know, it's interesting because I just asked a couple days ago at a leadership offsite that we're doing, and we do it at a university in Switzerland, and the professor asked me about think back what are some of the challenges that you have faced. And I mentioned that I was 17 years old and I had a severe stroke, completely paralyzed on the right side. But that wasn't really the bad part, though it was not good. The bad part was completely wiped out all of my language skills. So I couldn't speak, I couldn't read. I mean what formerly had been obvious to any normal human being, and then all of a sudden it was gone and I couldn't communicate at all. And from that, this is a year before I was supposed to go to university. My parents had never been to university. I was going to be first generation to go off to higher learning, and then it was all gone. And it took a long time to come back. But fortunately, thank God, things came back and now I was able to be somewhat successful after what looked like could have been a very bad future. So, I recognize how much luck plays in one's life. Bad luck. I got sick. Who knows why? Stroke is random, but then I got better. Also, perhaps a lot of randomness there, too.

Well, I can only speak to ourselves. We haven't noticed any benefit, but I leave it up to the Commission and they look at this stuff and they'll come out with what they think the results are for us. I can just say no benefits yet that I notice.

Neutral. I would say it's neutral.

Neutral means that there's no change from anything that they've done that's impacted our business results. We have not seen anything. I've heard people talk about that, but we shake our heads and say, 'Well, not us.' So, we look forward, let the investigation be done by the official people who do that sort of investigation.

Well, actually the whole thing is a fascinating case study of how technology changes very rapidly, very fast, and regulators appropriately trying to come up with what are the ground rules to make sure that our society works in a fair way. And the problem is though the technology goes too quick for the people who are trying to come up with the rules to keep, so things change all the time. So coming up, I remember talking with some of the officials when the DMA was being looked at. I said, 'Have you guys been noticing what's going on in AI right now? If you think you have some issues right now to talk about, trying to just give a little bit of time.' And I have to say there are some, yeah, we hear, but we're dealing with what the way the world is today. And that's what came out with the DMA and some of the other rules, not being able to look forward and put together what potentially could be the new way the world works. And that's an unfortunate thing, but for ourselves, look, we recognize the need to have rules that apply to everybody fairly so that we can all have an equal opportunity to compete.

Well, we don't influence this market. We don't tell regulators to do anything. We don't tell them what to do. They decide what to do. We can give our advice, we can give our perspective, we can tell them what we see on the ground actually in the real world what we're actually experiencing, and then it's up to them to use all the information they get to try and come up with what's the right thing to do. I will say that things are changing so rapidly right now. It's very hard to know how things should be laid out in terms of a rulebook. Look, AI stuff is fantastic in terms of it's going to great benefits to everyone. I believe at the same time there can be consequences that are detrimental to some people and certainly there can be change in terms of economic benefits and detriments for ourselves. We're seeing it happen all the time. But what's interesting, so you mentioned Google a lot when Google is the biggest player, you know, the giant elephant in the room, but there are also other AI players too. I mean, it's interesting, and I don't have statistics for Europe right now. How many people go to ChatGPT to get their travel information? I don't know the numbers here. In the States, it's an awful lot. I know that. So, you have to put that in, too. And I'm certain, I believe that you may have someone from Google say, 'Hey, excuse me. There's that big player OpenAI that runs this thing called ChatGPT that has a billion, maybe a billion people visiting it monthly and it's worth, I don't know what's the last valuation, half a trillion US dollars, maybe something like that. How come they're not regulated like we are?' I could see some Google being a little bit like this doesn't seem to be equal opportunity at all. I myself wonder about that and it's not just you mentioned DMA but there's so many rules that come into play, DSA. I had an interesting conversation with somebody recently, they had mentioned an issue about hotel rankings and fairness and we discussing gee how does this work when you have a large language model and that comes out with results that are called non-deterministic, meaning just to be very high level they cannot explain why those hotels came up. But in the DSA, you're supposed to be able to say why you recommended these hotels. There's a bit of a conflict here. But don't forget, for some reason, OpenAI with its half trillion dollar valuation and its billion people around the world using it, I don't know how many in Europe, but it's certainly a heck of a lot more than we are. A heck of a lot, many times more than we have. Yet, for some reason, they're not under the DSA. They're not a gatekeeper. How could that be? How could that be? And then I can bring up with others too. Now, one, I don't know the answer by the way. I haven't gotten an answer to that one. But I could see potential thing is well, we're looking at it and we, you know, we're doing the process to come through it and all that and takes time. So that loops back to my beginning part about how it's hard. The regulators are trying to keep up, but things change so rapidly. Look, OpenAI, who heard of OpenAI four years ago, right? Practically nobody. And look where it is now. So that's my issue of it's a hard case for regulators to try and maintain what the playbook for regulation should be.

Well, the same way, the same way the regulator, they'll look at the evidence, the data, and they'll decide. Look, we believe in a fair playing field and we do not like someone to be able to self-preference their own versus others and certainly regulators have been looking at that very closely and we'll see, this is a new thing, the AI overview, and we'll see whether they decide or not it is or it isn't. I can't give an opinion because I'm not doing the investigation. One of the things we like to do is like to use data to make our decisions. I don't have any data in front of me on this to make a decision, but I'm glad that regulators are appropriately looking at it carefully and they'll come back and say whether it is or isn't.

You're an avid user and I bet you feel that what's being told to you is authoritatively truthful, right? You have a sense to discern. But you know, you ask it a question, it gives you an answer. I'll bet you kind of feel like, yeah, that's the right answer, right? But maybe it is, maybe it isn't. And certainly the problem could be, and this is one of the things I understand it, if I'm a small hotelier and somebody puts into a ChatGPT or Gemini or whatever and they ask for hotels and place and the small hotel isn't showing up now and they're thinking why aren't I showing up anymore. And the question is well, you know the way these LLMs work, the way the model works, it's giving more, there's more probability a larger hotel that is more in the test set of data is going to show up more often and that's a problem for the small hotelier and such because when the person looks at it and they hear these large hotels coming out, the customer feels that's the place because I was just saying you feel it's authoritative, you feel it's truthful, ah that must be the answer. One of the things that I do feel is unfortunate is that we have always felt as from the time we first started that we were the platform that enabled the small independent hotels in Europe. You know, we have over 2 million properties in Europe, over 2 million, and we gave them a way to be visible to consumers and that they'd have a chance to show all the wonderful things that they could offer to those travelers. And we didn't charge anything at all. And we put them on for free. And we did all the work, the translations, all the content. And we said, 'If we get to put somebody in your hotel, please pay us a commission.' A wonderful, wonderful system, a wonderful way because the small hotel doesn't have a big loyalty plan like the big giant international chains have. And the international chains have the incredible marketing machines they have. Very hard for the small hotel to compete in the past. But with us, with that platform that we came out with more than two decades ago, almost three decades ago almost, and enable that small hotelier to have that chance, that was wonderful. My concern now is with these large language models, I mean go in, put in like I need a hotel in Sicily, how many hotels do you think are going to show up? They're going to offer you three. I have done it as well. Yeah. Exactly. So I feel that's a problem I believe.

Well, one thing we do is have a conversation like you and I are having right now to make sure that everyone's aware of this situation. I mean, putting sunlight on an issue, a problem is the best way to try and bring up with, well, what should we do about it? Because we can't do this alone at all. We need help from all the players in the travel industry to understand how do we create a world that enables the small hoteliers to have that opportunity like we have been doing for a long time. We don't want that to disappear. I, you know, my from my sense is it's going to take some time but I like the fact that the regulators and all the players in the space do have conversations and are explaining how this is currently being used and trying to make sure we go forward with a method that is providing fairness to all.

So I think what's important is first so everybody understands this whole idea of parity and certainly under DMA we eliminated parity in July 2024. There is no parity. However, I think it's really important we understand what is parity, right? And this is what's really bizarre from the beginning for me. Okay. So, parity was an idea that we said to the hoteliers. I just talked to you a little bit about how we provide all these services for free. And we're saying to the hotelier, all we ask is that if we, with all the money we spent and all the marketing we did and everything we did, and we're able to get a customer into your hotel, please pay us a commission. That seems a reasonable thing. Here's the issue, though. One of the things we all liked was offering the customer a free cancellation. Seems reasonable enough to do. So what you would have though is we said well here's a little bit of problem because it's frictionless to change in terms of say I'll cancel and then rebook somewhere else. We'd say to the hotelier, we say look it's a good deal but we'd like one thing please, please if you have a low price please give us the low price too. Please give us the same low prices that you're giving anywhere else or on your own site because otherwise what would happen is we spend all that money so you're shown up, when we spend all that money for people to come to our site and they see all the beautiful pictures, all the work we did together and then they choose your hotel and we have a price, let's say you, because you set the price, we don't set the price, you set the price, and you set the price with us at 100 euros but you put 90 on your own site. Okay. What happened is they look at us, but you know, takes two seconds just to type in the name of the hotel and they go to the hotel. Oh, it's only 90 there. And then of course they cancel with us or don't book with us and they book with the hotel. We get no revenue. That model wouldn't work at all. It seems very fair to say, look, just please give us the same low price that you're giving on your own site. And that's a good deal for both of us and all that. That's what parity is. When people come out and they say, 'Oh, you're demanding that they can't lower their price.' That's bull. That's not the way it was. And it really bothers me when I read articles, people saying that Booking.com was demanding that the hotels don't lower their prices. That's not it at all. What we were asking is, please give us the low prices, too. That's what's good for the consumer. That drives the customer to get the best price. It makes sure they get the lowest price. Even let's say, let's say it wasn't and the hotel put the price down lower and the person booked with us the higher price and they go to the place and they find out they could have gotten it lower over at the hotel. They're going to feel they got cheated by us. Well, we didn't cheat anybody. The hotel gave us that higher price. See how unfair that is? So, I believe this whole thing was crazy from the beginning. However, clearly it's not allowed. It's no longer legal for us to ask for the same low price for the customers even though we do all that work. Whatever. That's the rule. We obey it. But then somebody comes, oh, you're doing something sneaky to try and get the same low price as a hotel gets. What's going on? I don't understand this.

Truly. And now it is. And now it is.

I believe that we would be much better off and the consumer would be much better off. Absolutely would have been better off if we were still allowed to ask the hotels to please give us the same low price you give anyone else or yourselves. But no, we can't do that. So, I believe we probably, I'll bet there's some people who they come to us, they look, and maybe then they go back to the hotel, maybe the hotel is offering a lower price. I'll bet that does happen. And that to me does not seem the right way things should be. But it is. It is what it is.

So let me make sure I understand what you said though, getting the price of the rooms from other sources. You mean instead of the hotel? So the hotel doesn't like it if they've offered a lower price somewhere else and we wanted to get the lowest price for the customer. The customer gets the best price they could get. They don't like the fact that we go somewhere else and get that price so the customer does well and they're saying that's not right. They don't put it like that. Well, but that's what it is, right? I think that's, I mean that sounds like what it is.

We are very open, transparent. We have an open door thing. We love, please come visit, look at our data, look at our numbers. Look at everything. Everything we're doing is meeting the obligations in the law because we are a law-abiding company. Absolutely. Doesn't mean it's best for society the way the law was written, but it is what it is and we obey it.

I'll give you an example. So it comes out and all of a sudden what a surprise. There are lawyers who decide they like to sue us for past what they allege were practices that should not be allowed when the DMA came out. Okay. Now, we absolutely will win in these cases, etc. But what's going on? I have to devote resources, time, money, hire lawyers, spend a lot of time and energy and effort on this. Instead of building better services and better products for Europe, instead of hiring engineers to compete globally, I'm hiring lawyers to defend against class action lawsuits. Okay? And here's the incredible thing. Who wins in this whole thing? At the end of the day, you know who wins in the end? I'll tell you who. The lawyers. They're the ones who win in the end. Doesn't good for society. And you know, you always need a lawyer, huh? Well, and the thing is this whole class action ridiculousness thing. It's a little bit of an export from the US. Class action lawsuits in the US have been around for a long time. There are a lot of very wealthy lawyers with the, and now we're seeing this popping up in Europe and I'm saying, 'Oh my god, this is horrible.' Because what it does is it slows down innovation. It makes it more costly to do business. It's everything wrong with what we need to do here to make sure that we can compete globally. Has anybody not noticed that we are falling behind? I mean actually people have. We read the Draghi report and there's so many people saying it but just saying it won't make it happen. We need to take concrete action and one of the actions would be let's be very careful of allowing class action lawsuits that have no merit but taking time and resources away from things that would actually be productive for society.

Well, what we're trying to do to compete globally is come back with what I've always talked about, the connected trip, which really would be a way to make travel easier. Look, we all travel and we're all frustrated. Many times it takes forever to put things together and you're not sure if one thing's going to be okay and you try and say, 'Well, do I have to book it now and then right away or can I get the other stuff?' Getting it all together would be so much better, which is what we're trying to do. And we'll provide opportunities for our partners, our supplier friends to be able to market in a better way that they can then reach out to customers that will be good for their businesses. And that requires a lot of technology, a lot of effort. That'll be really, really wonderful. But another example, if you recall, just going back with history, not ancient history, but history, we want to make this easier way to do travel. We wanted to bring in an air ticket selling company called Etraveli and we had no travel business in the air area at all. We didn't do air tickets at all. So we had a commercial relation with them and it was working just very small, just beginning to work. Wouldn't it be good if we acquired that company and then we could work much tighter together and give a better connected trip for the travelers, be good for everybody. And we were not allowed to buy it and the competition authorities said oh that's not good. I mean think about this, we have no air business at all but they felt it would be anti-competitive. How could that be? And they said, I believe the argument was to do with network effects and what I had to deal with is they said it would improve your hotel business. Yeah. Well, yeah, it would make travel better. I'll give you that a little tiny bit, a little bit better. Okay. A little bit better. And they said, well, you have the dominant position in hotels, which...

is another thing. I'm like, how could that be? How could you say we have a dominant? And this is what gave they assigned that we are the dominant player in hotels. I said, 'Have you noticed the statistics that the biggest channel for hotels is direct by far?' This is from the hotel industry says this. The hotel industry says more than 50% of bookings go to them direct. They say maybe 30% their numbers maybe 30% or so go to online travel players like us among others. So we have some portion of that 30% which let's say what the heck let's give ourselves half. So we have about 15% of all the bookings and just throwing it out there. That's a dominant position. Are I said let's do the simple forget the math. Let's go this. I go to anybody on the street. Do you feel that you only have one way to go to Google go to go get your hotel and they'll say well I go to Google a lot. Right? You know Google's not even counted in this idea of how you find a hotel. Is that not crazy? I mean the whole thing is to me is just mind-boggling. But we live with it.

we make our business.

It's so it's so strange because our whole business is predicated we our basis is doing the business for the small player. You know, I talked about last week we did our earnings announcements with the public wall street types and we talked about how do you know we only get a low double digit of our business comes from the big international chains. I think the quote we said low double digit that's like low teens percentage go to the top 10 international chains. That means almost 90% of our business is with the smaller independent players. That's who we are supporting. I assure you, Marriott, Hilton, Intercontinental, all the big guys, they would not need us. They don't need us. They use us when they, you know, feel that we can be helpful some places, but we provide a real service to the small players. So, I disagree. I disagree completely with anybody who says the other way. Now your point about we like to grow, we like to build. Yes, that's the idea of a market capitalist society is try to increase the services you provide which then will result in more customers which will then grow the company. I mean the whole idea of Adam Smith 1776 Scottish economist wealth of nations invisible hand you know that's how we look at what this society has built because look how much better off our civilization is because that marketplace I tell you it works it works very well look at all the new great stuff we have. But the idea that we somehow are trying to crush the little guy we wouldn't exist if there weren't small hotels.

Oh, no. What does it cost time, energy, effort, spend, you know, legal department and outside lawyer and all that? Well, when absolutely. I'm very confident of that. I know what the facts are. You know, one of the interesting about class action lawsuits in general, a lot of times, and not speak to this case, I'm just say in general, a lot of times the lawyers, they're not there actually to win the case. They just want you to settle and pay over money because then they get a nice chunk of that. And all the plaintiffs, the class that they're supposedly working for, they get a tiny little bit. I mean, I've gotten these notices in the states where you are part of a class action. And I'm like, okay, what do I do? You know, if you want to opt out, click here. And I don't click here, whatever. And then I get like later on, like a year or two or three years later, I'll get a letter saying, the case was settled and here is your $1.50, literally things like that, or here's your $3. But the lawyers, they made millions. They made millions.

Yes. So, I believe in law, but there's sometimes when people have perverted law to try for their own profit to do what is not, not what is just, but what is good for them.

Well, they're meaningful and impactful in a sense takes a lot distraction and such. And you cannot you have to take everything very seriously. Yeah, these things I mean they're asking for incredible amounts of money, huge huge amounts of money and it will take time and energy and I'm confident of our position but you never know how things will go. But I do know I know what's I know what the right thing is but that doesn't mean necessarily that the right thing will be the end result. In Spain, where I was actually on Monday talking to the head of the competition authority, they imposed a fine many millions.