Tag Archives: antitrust

Google Responds to EU’s Antitrust Case

From ICOMP’s Blog:

Google in Denial

Today’s blog post from Google is, unfortunately, simply another attempt to divert attention away from the devastating impact their self-preferencing has had on the online market, making many of the same old arguments we have seen before.

Commissioner Vestager has been clear that in her view Google’s systematic self preferencing of its own comparison shopping service, along with its demotion of rivals, is in breach of European antitrust rules. But, in spite of the detailed work and analysis of the Commission and others over many years, Google still refuses to acknowledge the impact of its anti-competitive conduct.

If Google truly believes “in the interest of promoting user choice and open competition”, and in the strengths of its arguments, we would urge them to make their case in front of the Commission and complainants at an oral hearing.

The decision is in Google’s hands, but holding a hearing could provide a unique opportunity for Google to present its full defence and for complainants and other interested third parties to offer their perspectives. We have long believed that transparency and a meaningful debate is in everyone’s best interest, and an oral hearing is an important step in ensuring that such a debate takes place.

We look forward to supporting the Commission in taking the case forward and helping to find robust and workable long-term solutions to remedy the harms caused by Google’s anti-competitive practices. ICOMP’s members, who represent a wide range of interests in the digital sphere, will be keen to ensure that effective remedies are speedily reached.

See the whole story on Politico here

**DMLA is a member of ICOMP

Europe to accuse Google of illegally abusing its dominance

Financial Times
By Alex Barker, Christian Oliver and Anne-Sylvaine
April 14, 2015, 2:01pm ET

Google will on Wednesday be accused by Brussels of illegally abusing its dominance of search in Europe, a step that ultimately could force it to fundamentally change its business model and pay hefty fines.

Margrethe Vestager, the EU’s competition commissioner, is to say that the US group will soon be served with a formal charge sheet alleging that it breached antitrust rules by diverting traffic from rivals in order to favour its in-house services, according to two people familiar with the case.

Serving Google with a so-called statement of objections will be the opening salvo in one of the defining antitrust cases of the internet era. It could prove as epic as the decade-long battle with Microsoft that ultimately cost the company more than €2bn in fines.

The commission’s move comes after a torrid a five-year investigation that Google came close to settling without charges last year. The draft deal collapsed after fierce objections were raised by ministers in France and Germany, and by some of the continent’s most powerful telecoms and media groups.

The EU’s antitrust case comes against the backdrop of a growing European backlash against Silicon Valley and the economic disruption of the digital age. Once lauded for their innovative spirit, big US tech groups have come under mounting criticism in Europe over their market dominance and the way they handle personal data, especially in the wake of the US internet surveillance scandal.

A decision on charges is to be taken by the college of 28 EU commissioners on Wednesday. Some commissioners are concerned that Ms Vestager has, according to one source, restructured and narrowed the case she inherited from her predecessor Joaquín Almunia. As well as search issues, the investigation has looked at allegations that Google illegally scrapes content from rivals, locks in some publishers into using Google search ads, and makes it hard for advertisers to move campaigns to rival search engines.

Although Google has faced antitrust questions on three continents for several years, the EU move is the first time the company has been accused of formal wrongdoing. It will be given 10 weeks to respond to the allegations and will have the opportunity to call a hearing to make its defence.

Ultimately, the commission has the power to levy fines of up to 10 per cent of Google’s global turnover and can impose far-reaching curbs on its business practices. Almost 20 complainants against Google want the search engine to abide by strict rules that ensure its formula treats its own services — providing results for travel, shopping, and maps — no differently from rivals. Spokespeople for Google and the commission declined to comment.

If the charges are proven, it could take at least a year and probably significantly longer for the commission to make a final decision. Google would probably challenge any ruling that goes against it through the European courts, opening a legal war that could run for years.

The commission’s long attempt to settle the case with Google under Ms Vestager’s predecessor Mr Almunia made it one of the most fraught and politically charged antitrust cases to be dealt with by Brussels.

Google supporters feel the commission’s volte-face on a settlement reflected politics rather than an independent assessment. No EU antitrust case has ever been extended to three settlement offers, or been revived after complainants were formally warned that their case is about to be rejected.

On top of the pressure from Brussels, this week Google is also under scrutiny in France where lawmakers are considering an initiative that would force it to hand over its secret formula for ranking websites.

Revealing our algorithms — our intellectual property — would lead to the gaming of our results, which would be a bad experience for users
– Google

The French senate is likely to adopt a bill this week which would allow the country’s national telecoms regulator to monitor search engines’ algorithms, with sweeping powers to ensure its results are fair and non-discriminatory. The French initiative will become law only if it is adopted by the senate and the lower house of parliament and will also require government backing.

Critics complain that Google’s algorithm can be skewed to hurt rivals and want it published to ensure accountability. Google argues such transparency would make its search engine a target of spam and hand rivals its business secrets for free.

A spokesperson for Google in France said: “We’re transparent about what ranks well on Google, including when we make changes, but by definition, not everyone can come top. Revealing our algorithms — our intellectual property — would lead to the gaming of our results, which would be a bad experience for users.”

The amendment, proposed by centre-right lawmakers and attached to a broader economic reform bill assembled by economy minister Emmanuel Macron, has yet to secure the government backing needed to survive the legislative process and pass in the National Assembly.

But Catherine Morin-Desailly, chair of the Senate’s culture, education and communication committee, told the Financial Times that discussions with the government were encouraging.

“The government is well aware of the issues,” Ms Morin-Desailly said. “It’s a question of ensuring fairness. Too many businesses view search engines as bottlenecks. The net is tightening around [Google].”

If approved, the proposal would give Arcep, France’s telecoms regulator, oversight of any search engine that has sufficient power to “structure the functioning of the digital economy”. Google would be required to provide links to at least three rival search engines on its homepage, and disclose to users the “general principles of ranking”.

Additional reporting by Richard Waters in San Francisco

EU May Revise Google’s Antitrust Settlement

European Union antitrust regulators are preparing to step up their investigations into Google Inc. on several fronts, including revisiting a proposed settlement over its search-engine practices that has met with unprecedented opposition.

The European Commission is likely to revise some terms of the proposed settlement with Google that were announced in February.  See Wall Street Article here.

EU May Revise Google’s Antitrust Settlement, Says Source

By Tom Fairless  from the Wall Street Journal

European Union antitrust regulators are preparing to step up their investigations into Google Inc. on several fronts, including revisiting a proposed settlement over its search-engine practices that has met with unprecedented opposition.

The European Commission is likely to revise some terms of the proposed settlement with Google that were announced in February.

BRUSSELS—European Union antitrust regulators are preparing to step up their investigations into Google Inc. on several fronts, including revisiting a proposed settlement over its search-engine practices that has met with unprecedented opposition.

The European Commission is likely to revise some terms of the proposed settlement announced in February, aimed at dealing with concerns that the company abuses its dominance of online searches in Europe, a person with knowledge of the situation said Tuesday.

A firm decision on whether to revise Google’s proposed commitments will be made in September, the person said.

The admission marks something of an about-face for EU competition chief Joaquín Almunia, who had previously insisted that the commitments agreed by Google were sufficient to meet the EU’s competition concerns.

A final decision on the case may now be taken by Mr. Almunia’s successor after he leaves office in November, the person said.

The European Commission is also deepening a second line of investigation into Google’s business practices relating to its Android operating system for mobile phones. The Commission recently sent out fresh requests for information from handset makers and other interested parties on their dealings with Android, a year after sending out a first batch of questionnaires, the person said.

The Android inquiry isn’t yet a formal investigation, but it is likely to become one, the person said.

The decision to deepen the investigation follows intense opposition to the Commission’s proposed search settlement with Google, both from top European politicians and the companies it was supposed to help. Some of the companies that lodged complaints against Google have said they would prefer no deal to the one negotiated by Mr. Almunia.

The Commission has decided that some concerns raised by complainants in response to letters explaining the EU’s settlement decision may be valid, the person said.

The concerns relate to the possible preferential treatment of Google’s services beyond their visibility on the search page, and the design of an auction mechanism aimed at allowing rivals to bid for better placement on the page. Some new complaints may also be integrated into the case that weren’t previously linked to it, the person said.

A spokesman for Google referred to previous comments that the company has made “significant changes to address the Commission’s concerns, greatly increasing the visibility of rival services and addressing other specific issues.”

 

“I Discipline Google”

In response to Mathias Döpfner’s letter in the Frankfurter Allgemeine Zeitung (http://blog.pacaoffice.org/?p=1904), Joaquin Almunia, Vice-President of the European Commission and Commissioner responsible for competition, retorts some of the allegations as the Google anti-trust investigation continues to heat up.

“It is not true that the European Commission lets Google continue its abusive business practices. Under the Commission’s pressure, Google has made concessions, which – should they become legally binding – will significantly hit the corporation’s monopolistic practice.”

By Joaquín Almunia

Dear Mr Döpfner,

In your open letter to Eric Schmidt, Google’s CEO, published on April 16 in the , you made some comments directed explicitly at the European Commission and myself. Basically, you accuse the Commission of not acting against Google’s abuse of its dominant position in the online search market. I do not agree with you and in the following, I will explain why.

Let me first remind you of the facts. In November 2010, the Commission decided, upon my suggestion, to initiate an anti-trust investigation against Google. After thorough examination, especially after having analyzed a great number of formal complaints, I expressed serious concerns with regard to several of Google’s business practices. One of them is Google’s prominent display of its own specialized (or “vertical”) online search services within its normal search results without the user being informed about this kind of privileged display. It is indeed true that such methods may serve to unlawfully redirect Internet traffic towards Google’s services and are capable of discriminating against services of competitors, which might be equally or even more relevant to the user.

In the interest of all users, the Commission questioned Google’s methods and asked the company’s executives to propose concrete solutions in order to prevent malpractice. After long and difficult negotiations, Google finally granted us substantial concessions. In a few months, the Commission has to decide if these propositions become legally binding or not. In case the Commission accepts Google’s proposal, effective competition will be restored and users can make qualified decisions when they use the company’s search engine.

Accepting the proposals would in fact result in three major changes. Firstly, users would be informed about which links exactly are marketed by Google and are not generated by the normal search. Secondly, a distinct separation between Google’s specialized services and the standard search results on Google’s website would be introduced. Thirdly, Google would, when presenting its own services, present the specialized services of three competitors in a way that makes them clearly visible for the user. These competing links would additionally be presented in a comparable visual format.

In your open letter you describe these concessions as if ‘a new window for advertisements was installed at the top of the search result list’, which allows Googles to make some ‘additional income’. This interpretation is completely wrong. The proposed measures provide for that the links of three competitors are presented whenever Google is marketing its own services. If merchants don’t have to pay for being displayed (e.g. restaurants in Google Local), then competitors wouldn’t have to pay for that either. The three competitors would simply be chosen on the basis of their ranking in the ‘normal’ search results. In other cases, Google asks merchants for fees in order to be displayed in the specialized services, e.g. the price-comparing service Google Shopping. According to the proposed measures, Google would in these cases be forced to give up a significant part of the space they’re currently using to market their own services. This means that whenever Google decides to offer a – as you would call it – ‘new window for advertisement’, they would be forced to share the space with their competitors and allocate a comparable space to them.

Since Google would normally be generating income by charging merchants for that space, competitors would now have to pay likewise to be displayed in that space, according to Google’s proposal. To be picked, Google’s competitors would have to bid against each other at an auction to which only providers of specialized services are admitted. Instead of selling the space to their customers, Google would have to offer it to competitors. This would therefore not generate any ‘additional income’ for Google.

Furthermore, you purport that users won’t always find the result ‘that’s the most important and best, but the most profitable for Google’. The proposed measures achieve exactly the opposite result. Whenever Google is marketing their own specialized services and is displaying them in an accentuated manner – as it is the case today – the proposal would oblige Google to display the links of three competitors clearly visible and in a comparable visual format. This would give users a real option of choosing between different alternatives. Today, the privileged commercialization of its own products by Google has as the consequence that consumers don’t necessarily perceive the competitors’ products, since they are not part of the best search results and not listed at those spots that costumers look at the most. The proposals would therefore give competitors a direct possibility of attracting online traffic and hence protecting incentives to innovation in specialized search. It would then be up to the users to decide which service he prefers.

On a general basis, there seems to be a fundamental misunderstanding that I am pleased to clear up. Article 102 of the contract forbids the misuse of dominant market positions. What is forbidden is the misuse – but not the simple existence – of a dominant market position. The Commission is not allowed to require from a company that it gives in to any requirement by his competitors only because the company has a dominant market position. It is our role to fight against misuse of market power in the interest of consumers, but not in the interest of the competitors. The discretionary power by the Commission in this field is not unlimited. If we require from a company that it changes its behavior, we do so on the basis of an investigation and well-founded concerns regarding competition law that have to comply with strict legal standard and are always subject to the control by the European Courts.

The Commission has analyzed all the claims that it has received. It is important to stress that when there are situations that can be considered as questionable from an antitrust point of view, the Commission cannot request remedial actions that go beyond the necessary steps to resolve the concerns. We cannot dictate Google how it has to design its website. If we would request that Google presents its own specialized services in the exact same way as the services of competitors, this would mean that depending on the algorithm, Google services would not even appear on their own page. This would represent a restriction by an antitrust authority that has never been seen before.

It is not our role to keep Google from introducing innovation and trying to meet the needs of customers by developing and offering new services. This would not be in the user’s best interest. Our role is to ensure that Google does not prevent competitors to do the same. In other words, the role of competition policy in this case is to prevent that Google’s competitors are being restricted from effectively participating in the competition because of the preference that Google gives to its own services. The reason for this is that less competition can negatively affect consumer choices and incentives for innovation by competitors. I would like to reiterate that once alternatives are being presented to users, competition should take place based on the quality of the different services available, and it is then up to the users to click on the option that they prefer. The appearance of competitors’ links in a similar visual format would give Google’s competitors a real opportunity to direct these users to their services.

Furthermore, you claim that “Google could elude any commitments” by simply redirecting users from an Internet address towards an app. I absolutely disagree with that, too. The proposals we have obtained from Google contain all the measures necessary to prevent this from happening. The obligations would not only apply to queries at Internet addresses but also for Google’s Android apps. Moreover, if the Commission decides to declare the proposals legally binding for Google, an independent trustee will ensure that Google duly implements its obligations. As you know, companies that do not comply with the Commission’s anti-trust decisions risk high monetary penalties. In the past few years, non-compliance with two of the Commission’s anti-trust decisions has cost Microsoft fines three times higher than those for the abuse of its dominant market position itself. By the way, one of those decisions was based on commitments the Commission has made legally binding.

In conclusion, please allow me to comment on the particular concerns expressed by news media. I can perfectly understand that the utilization of press articles by European editors within Google News gives rise to concerns. From an anti-trust perspective, the problem consists in Google’s ability to use its market power in the general online search for obtaining content created by others and for integrating this into its specialized search services, including Google News. This is why the commitments we have obtained would allow press editors to prevent Google from showing their content fully or partially in Google News, without such a prohibition having negative effects on their website’s ranking within Google’s general search results. However, copyright issues surfacing in this context need solutions that lie beyond the scope of competition law. The same holds true for questions regarding the protection of personal data. In both cases, rules sanctioning the abuse of a dominant market position cannot substitute appropriate guidelines or regulation measures. Finally, I would like to add that compliance with anti-trust rules is a necessary prerequisite but by far not the only instrument to ensure the well-being of Europe’s digital sector.

Regarding issues that do indeed fall in the realm of competition law, the European Commission will keep a watchful eye on Google’s business conduct. The complainants in the current case will soon get the possibility of laying out their points of view on Google’s settlement proposal as well as to our arguments why we consider these proposals sufficient for addressing our concerns regarding parts of Google’s business conduct in the online search and online advertising market. If the European Commission accepts the proposal at the end of this process, they will become legally binding for Google. It would mean that important aspects of Google’s activities would be effectively regulated for the coming years. Unrelated to the current proceedings, Google’s very high market share and its role as a de-facto gate keeper of the Internet will also mean that the European Commission will continue to keep a close eye on Google’s business practices. This oversight is crucial in a fast moving market, in which problems can arise in a short period of time. And in fact we are already in the process of investigating concerns regarding the Android operating system, even though this investigation is still in a preliminary phase.

There is no question that Google’s market dominance poses a number of challenges for our economy and our society. These challenges span from the way the Android ecosystem functions to the collection and use of enormous amounts of personal data to the usage of third-party content, to the respect for intellectual property, and to tax tactics, to name a few. All of these issues deserve to be looked at with the same intensity by the authorities, and each one of the issues should be addressed with the right political tools. The current competition case against Google is only a part of the puzzle. But it is a part which could solve the specific competition concerns as quickly as possible.

Kind regards,

Joaquìn Almunia

Alex Springer Afraid of Google?

The New York Times reported, “A trans-Atlantic war of words — and profits — over the future of the Internet heated up on Wednesday when the head of Germany’s largest publisher, Alex Springer,  admitted that ‘we are afraid of Google’ and suggested that European authorities were colluding with the American Internet giant to develop a ‘business model that in less honorable circles would be called extortion.’” 

Döpfner penned the piece in response to an article by Google Executive Chairman Eric Schmidt, who defended Google’s practices and pointed to “heavy-handed regulation” in some places. Döpfner wrote, “We are afraid of Google… I must say this so clearly and honestly since scarcely one of my colleagues dares to do this publicly. And as the biggest of the small fry, we must perhaps be the first to speak plainly in this debate.”

In the piece, he commented on the European Commission’s antitrust investigation into the company. The New York Times reported, “Attacking what Mr. Schmidt had characterized as Google’s willingness to forge a compromise with the European Commission over a four-year-old complaint about its practices, Mr. Döpfner starkly declared, ‘This is not a compromise.’” In the letter, he asked, “Will European politicians fold or wake up? Institutions in Brussels have never been as important as they are now.”

Google did not respond to a request for comment. For the full article, please see http://www.faz.net/aktuell/feuilleton/debatten/mathias-doepfner-s-open-letter-to-eric-schmidt-12900860.html

EU Google investigation: Adequate answers still not found. BEUC files complaint asserting consumer interest

The European Consumer Organisation has stepped up its involvement in the European Commission’s antitrust investigation into how Google Inc. puts its preferred services atop search results while demoting rivals, particularly in price comparison searches. Currently an ‘interested party’, essentially having observer status, BEUC has today applied to be a formal complainant.

The European Commission has recently signalled its willingness to settle on the basis of Google’s suggested remedies, but BEUC believes consumer concerns have not been suitably addressed.

Commenting, Monique Goyens, Director General of The European Consumer Organisation said:

“Adequate answers have not been found to the problem of Google stacking its search results as suits itself. Users are given the impression their searches are neutrally decided and this problem is exacerbated in price comparison searches. That is why we are becoming formally involved in this process. European consumers deserve a better outcome, the remedies currently proposed by Google do not meet users’ legitimate expectations.”

“The placement of three rival services beside Google’s preferred results is not yet merit-based and so they are not neutral. Such stacking will lead to broader problems for the market further down the line. This kind of online real estate does not come cheap, so affording Google too much discretion to decide who is a ‘rival service’ is weighted in favour of those with the greatest commercial clout. “

“Clearly the issue requires further examination. EU antitrust rules are there to protect fairness within the European Single Market. It is critical that a solution recognises a ‘non-discrimination principle’ and does its utmost to allow users to get back to searching, not being led.”

Google’s Almunia Deal Said to Be Criticized by EU Officials

It seems that several of the members of the European Commission are opposed to the EU’s decision to strike a deal with Google which would resolve their three-year-old dispute.  Two news articles have appeared today that show some strife within the Commission.  You can read the Bloomberg article here and the Reuters one here.

Is Google close to settling EU antitrust probe?

Googlelogo

Pursuant to an article today in Reuters, they suggest that the EU Commission and Google have reached an agreement to settle a 3 year European antitrust probe that allays concerns over blocking rivals from internet search results and avoids a potential fine of $5 billion dollars. A decision is expected in the next few days…READ THE ARTICLE HERE