Google Competition Plan ‘Not Good Enough’

EU Official: Google Competition Plan ‘Not Good Enough’
Google has not done enough to address concerns it is unfairly stifling competition, an EU official has said. Google stands accused of using its 90% market share of internet search in Europe to promote its own services. The company has offered to change the way it displays some results to address the worries.

But European Commission competition chief Joaquin Almunia said Google must rethink its response and “present better proposals”. “I concluded that proposals that Google sent to us months ago are not enough to overcome our concerns,” Mr Almunia said on Wednesday.

In response, Google spokesman Al Verney said the search giant remained committed to settling the case, and that its offer “clearly addresses” the four areas of concern highlighted by the EU.

Those areas of concern, first highlighted in 2010, were:

How Google favours its own services in its search results
How it displays content from other websites
How it manages adverts appearing next to search results
How its actions affect marketers’ ability to buy adverts through rival networks

On advertising, competitors have complained that it is too difficult to place ads on Google’s Ad service using third-party software.

Both sides of the dispute have said they are eager to reach a settlement, but if necessary, the commission could formally file a case – leaving Google open to the prospect of being fined 10% of its annual revenue.

Google submitted in April its proposal to solve the problem. It agreed to display links to rivals close to where it displayed its own services on its results page. It also offered to more clearly label results from YouTube, Google Maps and its other sites.

But lobby groups from other companies, including Microsoft, disputed the effectiveness of the changes. “It is clear that mere labelling is not any kind of solution to the competition concerns that have been identified. Google should implement the same ranking policy to all websites,” Microsoft said in April.

Google had also been subject to an earlier US Federal Trade Commission probe into competition issues – which ruled there were no concerns. After receiving Google’s proposals in April, the EU submitted the offer to the complainants – Google’s rivals – for their consideration.

Until recently it had seemed that European competition authorities would follow their American counterparts in deciding there were no serious concerns for Google to address.  But now after studying the small print of the search company’s proposed remedies, EU officials are clearly taking a much tougher line.  They seem to have some sympathy towards the view – vigorously expressed by Google’s opponents – that the search giant’s plans to give greater prominence to links to rivals’ sites were essentially cosmetic, and would not lead to significant changes in the flow of internet traffic.

The EU has in effect thrown the ball back into Google’s court, demanding that it volunteers more meaningful concessions, backed with a still-distant threat of a legal battle and severe penalties if it fails to do so.

The interested third parties include Microsoft, Expedia and Trip Advisor – who form part of Fairsearch, a group of businesses looking to increase competition in the search industry.

A study of UK web users commissioned by the group, conducted by a pair of US academics, suggested that, even under the new proposals, Google-owned services enjoyed “better placement, richer graphics and better visuals” than competitors. It said that as many as one in five of the 1,888 people studied clicked on Google’s commercial web services, compared to one in 200 clicking on its rivals.

Another group, the Microsoft-backed Initiative for a Competitive Online Marketplace (Icomp), called for a “tight deadline” for Google’s revised offer. “It is reassuring that the commission has recognised, as had been argued by many, that Google’s offer of proposed remedies was inadequate,” said Icomp’s legal counsel David Wood. “Frankly, Google’s offer made rather surprising reading and clearly fell far short of meeting the key requirement.”