Tuesday, 22 May 2012 14:39

Google Must Repsond to EU Antitrust Concerns Or Face Full Hearing

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GoogleWe already knew that Google was on the RADAR in the EU for possible AntiTurst issues (they were reported by both Microsoft AND Apple). The complaints seem to stem from a couple of items and while valid complaints are interesting in their timing. When the complaints were filed Google was still waiting to get the green light to buy Motorola Mobility for $12.5 Billion (yes with a B). Motorola was also embroiled in a patent dispute with Microsoft and Apple over a few devices (Microsoft just won a ban on imports of all Motorola devices that infringe on this patent). With Google coming in as the new owners it seems that both Apple and Microsoft wanted to put something into the EU Commission’s mind about the Google.

Well now Google has been given and ultimatum to clean up its act or face a full formal investigation (which can take years and cost a lot of money). Joaquin Almunia has decided that Google must make some changes to resolve their behavior or they will be subjected to a full hearing. In particular Almunia wants Google to address the following concerns:

Our investigation has led us to identify four concerns where Google business practices may be considered as abuses of dominance.

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.

As you can see there are some serious concerns as it relates to search and the way that Google implements them in their site. The Vice President of the European Commission responsible for Competition Policy feels that Google is promoting its own product over competitors (which is normal), but that they are abusing their market dominance to do this in such a way as to harm the competition.

This is pretty much a text book case of Antitrust. Google does not feel this way. But have said that they are “happy to discuss any concerns they might have”. Meanwhile Google feels that the investigation is not up to date with how much the market has changed and that they are getting bad rap (It is rough to be Google). One statement was “Competition on the web has increased dramatically in the last two years since the commission started looking at this and the competitive pressures Google faces are tremendous.”

We highly doubt that this will fly after all it did not with Intel or Microsoft, both of whom showed they had changed their business practices and still got hit with massive fines. If Google wants to avoid the full hearing then they had better come up with some sort of workable compromise soon, otherwise they will always have the tag “convicted monopolist” attached to their end of comments about them… again just like Microsoft and Intel. Being found guilty here could also have an impact on the investigation Google is under in the US as we have found out with both Intel and Microsoft in the past.

Google must respond to this with remedies in the next few weeks or all bets are off and the ball will start rolling.

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Read 2264 times Last modified on Tuesday, 22 May 2012 14:47

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