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Google Faces July 2 Deadline To Settle EU Antitrust Claims — Or Else
European Commission (EC) antitrust chief Joaquin Almunia is engaged in what amounts to a poker game with Google — or if you like a “game of chicken.” In a highly public and slightly uncharacteristic move the EC offered to not bring a formal antitrust complaint against the company if it voluntarily addresses four issues or areas of “concern.”
The question is whether Almunia is truly trying to avoid the time, expense and waste of litigation or whether he’s partly bluffing and worried about the strength of his potential case against Google. I think the answer is: a bit of both.
The Four “Concerns”
To recap, the four concerns are the following:
- The lack of easy portability of search campaigns to Google competitors (i.e., Microsoft)
- Exclusivity of Google-publisher advertising relationships surrounding AdSense
- Use of third party content (i.e., reviews) on Google’s “own” sites (e.g., Places or Hotel Finder)
- Concern over presentation of Google’s vertical content on the SERP (aka “search neutrality”)
An article appearing in the UK-based Guardian points out that Google has until July 2 to settle with the EC or face litigation and “potentially huge fines,” which can amount to up to 10 percent of a company’s annual global revenue. In this case that could be nearly $4 billion. The article also catalogs all the other investigations and legal issues surrounding Google in the US and Europe.
Article Assumes The EC Will Prevail
Interestingly the Guardian assumes that the EC will prevail:
If Almunia prevails – as he is expected to, one way or another – then Google will have to change its search results, and perhaps even give rivals in some fields star billing. That will be galling for the company as it tries to extend its hegemony across shopping, travel, and news. Yet it may be the only practical way out.
However I’m not so sure that Almunia will.
Google will likely offer to settle in some areas but not in others. For example, the AdSense exclusivity and campaign portability issues will likely be settled without much trouble. In addition, Google’s recent rollout of Zagat’s reviews makes most of the “content appropriation” claims moot in a way. That’s an issue that will also probably be “settled.”
The major problem — and the thrust of most of the third party antitrust complaints against Google — is the “search neutrality” question. This is the stumbling block and will need to be litigated in all probability. We’ve written extensively why “search neutrality” is a kind of fallacy. But it’s also the case that Yahoo and Bing engage in similar practices. This latter fact makes the EC’s case much more difficult, were it to litigate.
One Product Or Many?
Google sees its search results as a single unified product that includes content from Google’s other services (Google+, YouTube, Local, Hotel Finder, Shopping, etc.). That product is evolving — “answers not links,” remember? Yet where Google sees one product Europe sees multiple products. It’s a major philosophical difference.
If you take the position, as Europe does, that these Google “verticals” are distinct from its main search results then you can logically conclude that by giving them favorable positioning in your dominant search engine you’re competing unfairly.
I don’t imagine that Google will be willing to bury its own vertical content — or alternatively “give rivals . . . star billing” — without a major fight and a court order. And while there’s considerable animus against Google in the regulatory and judicial corridors of Europe, it’s not clear that Almunia has a “slam dunk” case against the company.
Search Neutrality And “Star Billing”
As one unpacks the “search neutrality” argument and examines its practical implications it begins to collapse. Beyond this, which of Google’s “rivals” is entitled to star billing: the incumbent travel search site or the new travel startup?
Laws in Europe and the US are different. For example, the “free speech” defense Google might use in the US doesn’t as readily extend to Europe. However I’m not sure that Almunia and the EC can be expected to succeed in getting the concessions they’re asking for. They might succeed in getting fines levied but it will be much harder to get courts to order Google to give up control over its own SERP.
In the US, I’m now of the view that the FTC and attorneys general will face daunting legal odds if they formally sue Google on antitrust grounds. Yes, Google is extremely powerful and no longer the benevolent force in the universe it once seemed to be. But the law may not be on the side of those would woud rein it in.