Commissioner’s Competition Carrot for Google

May 20, 2012

The SCL Twitter feed for Monday 23 May included the following ‘EU Commissioner offers Google chance for speedy resolution of competition investigation and related issues’, followed by an appropriate link. Such was my childish pleasure in beating the likes of the BBC and the FT to the tweet punch that I took a headline and assumed it was accurate. Here, it seemed, was the EU offering a helping hand to a co-operative Google – the pressure was off on anti-trust and there were just a few loose ends to tidy up. I had scanned the Reuters report to which I had linked and watched a few minutes of Commissioner Almunia’s statement and it seemed to reflect a soft approach from the EU Commission.

But I had not then read the Commissioner’s statement in full. Once I did, I began to think that what he is offering Google is a hammer wrapped in orange paper. It may look like a carrot but it won’t feel like one when it hits.

The greatest insight into the import of Commissioner Almunia’s statement may well be in a press release from some of those who made the original complaint about Google’s dominance. They sound very pleased. David Wood, Counsel for ICOMP, said ‘In principle, news that Google has been instructed to propose remedies is welcome. This implies that the Commission has found that Google’s behaviour constituted an abuse of its dominant position in the online search market.’ I am not sure that Mr Wood’s conclusion is entirely sound but I do think that Commissioner Almunia’s four ‘concerns’ and his reference to the ‘lengthy proceedings’ that will follow should Google fail to allay those concerns amount more to threat than promise.

Here are those concerns:

‘First, in its general search results on the web, Google displays links to its own vertical search services. Vertical search services are specialised search engines which focus on specific topics, such as for example restaurants, news or products. Alongside its general search service, Google also operates several vertical search services of this kind in competition with other players.
In its general search results, Google displays links to its own vertical search services differently than it does for links to competitors. We are concerned that this may result in preferential treatment compared to those of competing services, which may be hurt as a consequence.
Our second concern relates to the way Google copies content from competing vertical search services and uses it in its own offerings. Google may be copying original material from the websites of its competitors such as user reviews and using that material on its own sites without their prior authorisation. In this way they are appropriating the benefits of the investments of competitors. We are worried that this could reduce competitors’ incentives to invest in the creation of original content for the benefit of internet users. This practice may impact for instance travel sites or sites providing restaurant guides.
Our third concern relates to agreements between Google and partners on the websites of which Google delivers search advertisements. Search advertisements are advertisements that are displayed alongside search results when a user types a query in a website’s search box. The agreements result in de facto exclusivity requiring them to obtain all or most of their requirements of search advertisements from Google, thus shutting out competing providers of search advertising intermediation services. This potentially impacts advertising services purchased for example by online stores, online magazines or broadcasters.
Our fourth concern relates to restrictions that Google puts to the portability of online search advertising campaigns from its platform AdWords to the platforms of competitors. AdWords is Google’s auction-based advertising platform on which advertisers can bid for the placement of search ads on search result pages provided by Google. We are concerned that Google imposes contractual restrictions on software developers which prevent them from offering tools that allow the seamless transfer of search advertising campaigns across AdWords and other platforms for search advertising.’

If, says the Commissioner, these concerns are addressed within ‘weeks’, at least with ‘first proposals of remedies’, then there will be no need for a full-scale investigation and the process can be short-circuited.

I cannot see that these concerns will be easily addressed. Google has a headache here and it will be well aware that, where the Commission does pursue formal proceedings, it rarely concludes that, having carefully considered the responses to its Statement of objections, there was really no cause for concern after all. That’s ‘rarely’ as in never. So, unless something changes pretty quickly, we seem to be looking at a long hard road that will end in very substantial fines.

If I am wrong and Google really was reaching out in the hope that the EU Commissioner would offer a helping hand, I bet Google is currently counting its fingers.

You can read the Commissioner’s statement in full {here:} and judge the tone for yourself.