More Fines Incoming? Google’s Solution to Its EU Antitrust Woes Is ‘Meaningless,’ Rivals Claim
Google may be in yet more trouble with European antitrust officials over the way it promotes its own comparison-shopping services in relation to rivals. Companies whose complaints led to a record fine for Google say the firm still isn’t complying with competition rules, and their renewed objections could lead to more severe fines for the U.S. giant if the European Commission agrees.
In June 2017, the company got hit with a $2.7 billion fine for systematically boosting the prominence of its own comparison-shopping services when users searched for products — Google holds more than 90% of the search market across most of the EU, so antitrust law says it cannot use this position to stifle competition.
The fine was a European record, at least until the European Commission’s competition directorate hit Google with a $5 billion fine over antitrust abuses in the smartphone market in July 2018. The department is also probing Google’s behavior in the search advertising market, which may result in, you guessed it, more fines.
But back to the comparison-shopping case. The $2.7 billion fine wasn’t the end of it; the Commission also ordered Google to stop the abuses, or face further fines of up to 5% of its average daily worldwide revenues — backdated, for good measure, to the date when the non-compliance started.
Google’s solution for compliance was to introduce an auction mechanism for places in the image-laden results carousel that tops product searches. While the boxes in the carousel were once all filled with results from Google’s own comparison-shopping service, the company said in September last year that it would let rivals bid for them. Google itself also bids for spots in its own carousel.
On Thursday, a range of comparison-shopping services wrote to Commission competition chief Margrethe Vestager to complain that Google’s compliance mechanism did not, in fact, comply with the Commission’s June 2017 ruling.
“It has now been more than a year since Google introduced its auction-based ‘remedy’, and the harm to competition, consumers and innovation caused by Google’s illegal conduct has continued unabated. We therefore respectfully urge you to commence non-compliance proceedings against Google,” said the companies, herded by Foundem, the lead complainant in the original case. “The harsh reality is that a pay-for-placement auction is fundamentally incompatible with the concept of comparison shopping (or, indeed, any other form of vertical search).”
The complainants argue that Google is generally able to outbid its rivals, and that its payments for spots in its own carousel are “just meaningless internal accounting, paid from one Google pocket into another.” As a result, they said, few rivals try or manage to successfully bid against Google.
As emerged last month in a Sky News investigation, this lack of competition led Google to ask advertising agencies to create comparison shopping sites, so that they would bid for slots in the carousel — it also offered them substantial incentives that, once the tactic was exposed, it slashed.
“Where these ad agencies used to feed their merchants’ ad inventories into Google Shopping, they now feed these same ad inventories directly into Google’s [comparison shopping service] auction instead,” the complainants said in their Thursday letter to the Commission. “Crucially, Google is not doing this because it is confused about the many important differences between an ad agency and a comparison shopping service; it is doing it to circumvent the Commission’s prohibition decision, by simply recreating Google Shopping under a different name and then continuing to illegally favor it in exactly the same way as before.”
Google had not responded to a request for comment at the time of writing. The European Commission, however, said it had received the letter and was “looking carefully at it.”
“Our decision from June last year required Google to put an end to its illegal practices in an effective manner, by giving equal treatment to rival comparison shopping services and its own service,” said a Commission spokesperson. “There is more than one way to do this. It is Google’s sole responsibility to change its conduct in order to comply with this obligation.”
“We have not yet taken a position on whether Google has complied with our decision. And since we haven’t done so, this obviously remains an open question. We are closely and actively monitoring. We are in a close exchange with those most directly affected by the practices in question.”