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Google Says It Will Treat Its Shopping Site Rivals Equally—Via Auction

September 18, 2017

Google has offered to display rival comparison shopping sites via an auction, as it aims to stave off further EU antitrust fines, four people familiar with the matter said.

Google (GOOGL) is under pressure to come up with a big initiative to level the playing field in comparison shopping, but its proposal was roundly criticized by competitors as inadequate, the sources said.

EU enforcers see the antitrust case as a benchmark for investigations into other areas dominated by the U.S. search giant such as travel and online mapping.

Google has already been fined a record 2.4 billion euros ($2.9 bln) by the European Commission for favoring its own service, and could face millions of euros in fresh fines if it fails to treat rivals and its own service equally.

In its proposal submitted to the European Commission on Aug. 29, the company said it would allow competitors to bid for any spot in its shopping section known as Product Listing Ads, the sources said.

Since then, Google, whose parent is Alphabet, has sought feedback from four to five competitors, which was overwhelmingly negative, the sources said.

The adverse reaction could undermine the U.S. company’s efforts to win over EU antitrust regulators.

Three years ago, the world’s most popular internet search engine made a similar offer in an attempt to settle a long-running investigation by the Commission and stave off a fine. That was ultimately rejected following criticism from rivals and discord within the EU executive.

Under that proposal, Google would reserve the first two places for its own ads. The new offer would also see Google set a floor price with its own bids minus operating costs.

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The offer does not address the issues set out by EU competition regulators, the sources said.

“This is worse than the commitments,” one of the people said, declining to be named because of the sensitivity of the matter.

The European Commission said the onus was on Google to comply with its cease and desist order.

“It is Google’s sole responsibility to ensure compliance with the Commission antitrust decision, and it is for Google to explain how it intends to do so,” spokesman Ricardo Cardoso said.

Google did not respond to a request for comment.

UK price comparison site Foundem, whose complaint triggered the EU investigation in 2010, dismissed the auction proposal.

“Unless Google is volunteering to break up its general-and specialized-search businesses, the inclusion of Google’s comparison shopping competitors into a new or existing pay-for-placement auction would simply create an additional anti-competitive barrier,” the company said.

Google has until Sept. 28 to stop its anti-competitive practices or its parent company Alphabet could be fined up to 5% of its average daily worldwide turnover or around $12 million a day, based on Alphabet’s 2016 turnover of $90.3 billion.