Will Users Be Losers in “EU versus Google”?

Oct 17, 2013 Mario Mariniello

Is Google’s dominance of online search coming to an end? That is a question worth asking as the European Commission continues to investigate antitrust allegations regarding search bias in Google’s online business model.

BRUSSELS – Is Google’s dominance of online search coming to an end? That is a question worth asking, as the European Commission investigates antitrust allegations regarding Google’s online-search business model.

Type “Restaurant Florence” into Google’s search field, and a list of restaurants that you might want to visit during your next trip to Italy will appear. The top suggestions are Google’s own. Farther down the page, links to so-called “vertical search” sites – such as TripAdvisor, Fodor’s, ViaMichelin, and Lonely Planet – appear.

But users often do not see these links. With Google’s links capturing most of the site’s search traffic, concerns have been raised that Google manipulates its search algorithm to suppress the results of its competitors, while unfairly promoting its own services – a practice known as “search bias.” The European Commission has other concerns, too – namely, that Google might be using third-party content without authorization and entering into agreements to prevent its advertising partners from displaying ads on rival search engines.

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Michael Weber Nov 8, 2013

Dear Mr Mariniello thank you for looking into this important issue, which touches the daily life of most people. I am one of the complainants in the Google antitrust case. Some of our positions may not have been immediately comprehensible in this incredibly complex and multi-faceted case, so please let me elaborate. "Google’s competitors (...) claim that the only way to avoid abuse is to prevent Google from using its algorithm to rank search results. If they get their way, it could mean the death of Google’s business model." Google's "algorithm"(s) can remain their secret for now, and stay in use. What needs to stop is the (presumably manual) demotion of select competing sites and the automatized pre-installed gadgets that show Google's own products in a top position and visibly enhanced. please Google "Map Brussels" and take a second to look at the gigantic map pane Google installs at the top of the page, pushing the actual algorithmic search results down. "Reservations about the use of third-party content could easily be addressed through carefully designed rules that would allow, say, content providers to opt out of Google’s results." Content providers do not want to totally opt-out whole websites. That's already possible, and would cost them too much traffic. They want control over how Google re-uses their content, on a granular, page by page basis. "Google controls roughly 90% of Europe’s search-engine market. Though other search engines exist, almost everyone surfs the Internet via Google. While this has attracted the antitrust authorities’ attention, it also highlights how much users value Google’s service. (...) After all, users can access other vertical-search engines if they so choose. The fact that they often do not indicates that users find Google’s search engine more appealing." The default browser and device settings, as well as Google site search on most major portals, direct a large number of the 90%+ surfers to Google's horizontal (=general) search, rather than them actually all consciously making a choice and typing www.google.com every time they search or just enter a term in the browser address bar. Vertical (=specialised) search sites over the years of displacement by Google have dropped to much less brand recognition than almighty Google, which means consumers rarely think of them, if Google hasn't already whisked their search away through an exclusionary default preset in a browser or device. "But this debate misses a crucial point: the purpose of antitrust law is to protect consumers, not competitors. Google’s undue penalization of a particular vertical-search site matters only if the demotion of the site’s links harms end users." A very important consumer right according to the consumer organisation BEUC (and common sense) is that of choice. If competitors are demoted, and Google products or paid ads promoted, consumers loose choice, as everyone tends to quickly click what comes to sight first. "It (the second proposal) also refined the auction mechanism to select rival links for display directly adjacent to Google’s." Selling ads in a price driving system only misleadingly termed "auction" is Google's business model, and not a remedy. Paid ads or "rival links" mean consumers have to pay higher prices so the merchants are able to recoup the Google ad cost, because many of their margins are already too narrow for survival. "Antitrust intervention is warranted if there are serious concerns to address. But unnecessarily invasive intervention could undermine the product that Google provides and deprive users of what they want: easy access to information." Imagine there were a worldwide TV-Network with 95% market share in Europe and 80% in the Americas and many other markets, branching out into radio, newspapers. Or an airline of that magnitude, also taking control of airports, railways, travel agencies and so on. How would that be for consumers, quality and prices (direct or indirect)? Toning down or ending Google's self promotion and generally weakening its dominance, will give users better, more diverse results, and make Google work harder for real consumer benefit again, rather than funnelling users in and circulating people in their ecosystem with shady tactics, will allow competing sites to survive and to be more successful outside of the Google ecosystem, also provide more choice and competition, again a plus for consumers. Michael Weber
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David Lawsky Nov 8, 2013

Mr. Mariniello makes the important point that competition law exists to protect consumers, not competitors. The European coalition of consumers groups, BEUC, has taken a clear stand that remedies must be imposed on Google to correct its abuses. We commend your readers to the views, http://bit.ly/1f5B54G and http://bit.ly/1f5Bu7b . He also says that Google’s competitors “claim that the only way to avoid abuse is to prevent Google from using its algorithm to rank search results. If they get their way, it could mean the death of Google’s business model.” Our view at FairSearch Europe, is nearly the opposite. A coalition of 15 companies, we share Commissioner Almunia’s concerns that Google is abusing its dominant position in the EU market place where it holds an overall European market share in search of over 90% (see http://gs.statcounter.com/#search_engine-eu-monthly-201209-201309). We are particularly concerned that Google itself spurns the use of its algorithms to rank search results for its own businesses and services through what it calls “universal search”. In “universal search” Google blends listings from its own vertical search engines among the general search results it gathers from crawling web pages. We believe instead that Google should apply its algorithm to rank search results from its own businesses in the same way that it does for competing services. It is helpful to have conversations around this case and we’re glad that Bruegel is addressing it. We look forward to further conversations on this issue, of concern to consumers and to businesses around Europe. Reply to David Lawsky
- Mario Mariniello Nov 8, 2013
  
  Dear Mr Lawsky, dear Mr Weber Many thanks for commenting my article: it is really helpful to hear the views of parties involved in the case. You explain your views in a very clear way and I do not think there is further need for me to reply in detail. I leave it up to the readers to make up their mind on the issues at stake and on the instances brought up by the different players. Just I would like to take the occasion to make a general comment and address what seems to be a common misunderstanding about the role of antitrust. In the last two sentences of his comment, Mr Weber suggests that weakening Google’s dominance would benefit consumers. However, weakening a company’s dominance cannot be the purpose of antitrust enforcement. Antitrust enforcement should only target a misuse of that dominance, not the dominance in itself. That is very important, because antitrust intervention could otherwise distort the incentives of any company in the future to achieve same dominance levels through pro-competitive behaviour, such as investing in the development of innovative and efficient technologies. In other words: in order to warrant antitrust intervention against Google, there must be evidence that Google misused its market power, not just that Google holds that power. Best regards Mario Mariniello
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Carol Maczinsky Nov 8, 2013

Antitrust in the EU follows from the ordoliberal toolbox to uphold competition and create market efficiency (which also benefits consumers). Unlike in the US the European competition policy is not framed as consumer policy. "While this has attracted the antitrust authorities’ attention, it also highlights how much users value Google’s service." That is irrelevant from a legal point of view. "If Google’s search practices really do harm consumers, Almunia risks agreeing to a settlement that does not solve the problem. If consumers are not suffering, Google’s proposed remedies are unnecessary." That is not true. Antitrust in Europe is derived from the competition law requirements, not the effect on consumers. Consumers can't complain at DG competition, competitors can.
- Mario Mariniello Nov 8, 2013
  
  Dear Ms Maczinsky Thanks a lot for taking the time to comment my article. The quick answer to your statement can be found on the European Commission's website: http://ec.europa.eu/competition/consumers/what_en.html More generally, let me point out that your statement is not correct. The EU case law and jurisprudence is very straightforward: "competition law consists of rules that are intended to protect the process of competition in order to maximize consumer welfare" and "Numerous statements to the effect that Article 102 is actually concerned with the protection of competition rather than the protection of competitors can be found. Many of these come from the Commission [...] but they can also be found in judgments of the EU Courts" (Whish&Bailey, 2012). Best regards Mario Mariniello
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Will Users Be Losers in “EU versus Google”?

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