A few months ago, the European Commission – the administrative arm of the European Union – decided that Google was using monopolistic practices in its online shopping service and imposed a fine of almost $3 billion for “antitrust” activities.
Even before the decision and record fine was announced, Google had been talking to the EC and urging it to reconsider based on a variety of factors.
Its main argument was that Google Shopping was far from being a dominant force in online retail. The company produced data that apparently showed Amazon as being the first service online shoppers turned to, with Google much further down the list of considerations.
Another thing it may have wanted to add was that Google is not a retailer as such, like Amazon is – it’s a search engine, which charges advertisers for being on the search results pages.
The shops which advertise with Google will of course expect that their ad will be returned in the results as a priority over shops that do not pay.
In fact, whereas Google Shopping originally started as a free service, called Froogle, in which any shop could get their products listed, the company decided to monetise the service a few years ago and free shop product listings are rarely if ever returned – that’s if they’re indexed at all.
This seems like a reasonable commercial position for Google, but the EC did not see it that way.
While the EC acknowledged that Google had created a type of service that had never existed before, it said that it was being unfair about it now that’s so powerful.
The EC commissioner in charge of competition policy, Margrethe Vestager, said: “Google has come up with many innovative products and services that have made a difference to our lives.
“That’s a good thing. But Google’s strategy for its comparison shopping service wasn’t just about attracting customers by making its product better than those of its rivals.
“Instead, Google abused its market dominance as a search engine by promoting its own comparison shopping service in its search results, and demoting those of competitors.
“What Google has done is illegal under EU antitrust rules. It denied other companies the chance to compete on the merits and to innovate. And most importantly, it denied European consumers a genuine choice of services and the full benefits of innovation.”
The EC gave Google 90 days to pay up.
In response, Google hired many of the top lawyers in Europe and the latest news is that it has given the EU details of how it will resolve the impasse, according to a report on TechCrunch.com.
An EC spokesperson told TechCrunch: “The Commission decision requires Google to stop its illegal conduct within 90 days of the decision and refrain from any measure that has the same or an equivalent object or effect. In particular, the Commission decision sets out the principle that Google has to give equal treatment to rival comparison shopping services and its own service.”
How “equal treatment” is defined would be an interesting question to hear an answer to. It seems everyone is equal in the sense that they all have the right to pay Google money to list their shop and products in the company’s shopping search.
Once they’ve paid and become a customer, they are also equal in a basic sense to other paying customers, although obviously there’s a wide variation of the amount of money companies spend on advertising with Google.
But it’s not clear if the EC was to delete the dividing line separating the shops which pay Google to become the company’s customers from the shops which do not pay to be on Google Shopping.
The EC’S main complaint seems to be based on the suggestion that in Google’s organic search – not directly in Google Shopping – Google tends to favour its own comparison shopping service.
But Google is a private company and it can manage its search engine the way it likes. If it wants to only return its own shopping service in its own search engine, it seems only right for it to do so.
However, the fact is, Google is utterly dominant in search. More than 70 per cent of people online use Google for their search. It’s probably more than 70 per cent, but anyway, it’s huge and dwarfs all other search engines.
So, perhaps the EC is trying to persuade the company to use its power more responsibly, in the absence of other search engines starting to take market share away from Google.
If there were at least two or three search engines, each with 20 to 30 per cent market share, then maybe the EC would not have made an issue of each one favouring its own shopping comparison service.