As you may know, Google has been in the middle of an EU antitrust investigation into its search business for three years. Google has submitted proposals for a settlement multiple times, only to keep being told to go back to the drawing board.
The EU finally appears to be satisfied with the search giant’s latest concessions, but the biggest complainants over Google’s business practices – its competitors – still are not satisfied. As a matter of fact, they think what the EU has deemed sufficient to resolve concerns is actually worse than if Google does nothing at all. Go figure.
Google no doubt thinks it’s already going way too far, and these concessions do in fact go a great deal further than the settlement it made in the U.S. with the Federal Trade Commission early last year. By offering these concessions, however, Google will avoid paying a potential fine of $5 billion.
Google had already agreed to give content providers an opt-out from the use of their content in Google’s vertical search services without being penalized in web results, to remove exclusivity requirements related to ads, and to remove restrictions on the ability for search ad campaigns to be run on competing platforms.
Google has also proposed to give links to rival sites “much more real estate and visibility,” including logos with more prominent links and dynamic text providing more info about their sites. None of this went far enough for the likes of the FairSearch Coalition, which is made up of Google competitors including: Microsoft, TripAdvisor, Hotwire, Expedia, Foundem, Nokia, Oracle, The Find and others.
Likewise, the EU has, until now, been convinced that Google could do more. Now, the EU says it has obtained “an improved commitments proposal” from Google, which guarantees that whenever the search engine promotes its own vertical search services (products, hotels, restaurants, etc.), the services of THREE rivals “selected through an objective method” will also be displayed in “a way that is clearly visible to users and comparable to the way in which Google displays its own services.” The EU shared a couple of before/after examples to demonstrate:
As you can see, “alternatives” are clearly highlighted, and in some cases even include logos. Look at the Yelp listing on the second example. This puts Yelp and the other sites that appear next to it at a much greater advantage in search results than they currently have. It seems almost certain that this will drive more traffic to these sites.
EU Competition chief Joaquin Almunia said, “My mission is to protect competition to the benefit of consumers, not competitors,” but it seems like this does a lot more to help competitors than anyone else. Consumers searching on Google are searching on Google because they want Google results. Not Yelp results. If they wanted Yelp results, why wouldn’t they just go to Yelp?
So why do competitors think the settlement is worse than doing nothing?
“FairSearch Europe needs to examine this proposal in detail, but our concern is that the proposed commitments lock in discrimination and raise rivals’ costs instead of solving the problem of Google’s anti-competitive practices,” says FairSearch Europe Legal Counsel Thomas Vinje. “Google now holds a 95 percent market share of search across the European Union and gives preferential treatment to its own services, which damages competition and gives consumers less choice. The Google proposal requires rivals to pay Google for placement similar to that of Google’s own material, undercutting the ability of other to compete and provide consumer choice. This will be done through an auction mechanism that requires participating companies to hand the vast majority of their profits to Google.”
Actually, that statement is a little misleading. According to the EU, in instances where Google doesn’t charge for inclusion in its specialized search service, rivals will not be charged to participate in the “rival links”. The three displayed rivals will be chosen from “a pool of eligible specialized search competitors using Google’s normal web search algorithm.”
In instances where Google does charge for inclusion, the three rivals will be chosen from a pool of eligible competitors based on the auction mechanism. In other words, rivals aren’t simply going to get free advertising where people are already paying to advertise. Wouldn’t that in fact give Google rivals an unfair advantage over other businesses anyway?
Almunia said, “I believe that the new proposal obtained from Google after long and difficult talks can now address the Commission’s concerns. Without preventing Google from improving its own services, it provides users with real choice between competing services presented in a comparable way; it is then up to them to choose the best alternative. This way, both Google and its rivals will be able and encouraged to innovate and improve their offerings. Turning this proposal into a legally binding obligation for Google would ensure that competitive conditions are both restored quickly and maintained over the next years.”
Google’s commitments are to be supervised by an independent monitoring trustee for five years.
It’s not over yet though. FairSearch is expressing disdain for the announcement coming without a market test. It says market tests have been pivotal in the advancement of Google’s proposals thus far. The EU, however, noted in its announcement that it will be informing complainants of the reasons it believes Google’s offer is sound. The complainants will then have a chance to make their views known before it makes a final decision on whether or not the commitments are legally binding.
The question remains: should Google really even have to go as far as it has agreed to go? Can Google truly stifle competition when all users have to do to use a competing service is enter a different URL in their browser or pull up a different app on their mobile phone? Some would say Google’s concessions already go too far. But clearly Google’s opponents don’t think they go far enough.
Images via EU