EC Orders Google to Come Up With Better Proposals to End Antitrust Probe
Google’s proposals for settling an EU antitrust investigation of its Web search and online search ad services “are not enough to overcome our concerns,” said European Competition Commissioner Joaquín Almunia at a press briefing Wednesday. Asked for an update on the status of the probe, Almunia said that after the EC “market test” of Google’s commitments, which ended June 27, he concluded that the search giant’s offer wasn’t good enough, and he asked Google President Eric Schmidt to sweeten his proposal. The letter to Schmidt isn’t public, Almunia’s office told us. “Our proposal to the European Commission clearly addresses their four areas of concern,” a Google spokesperson said. “We continue to work with the Commission to settle this case,” he said.
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
One complaint is that Google gives favorable treatment within its search results to links to its own specialized Web services such as Google Shopping, compared to links of rival services, the EC said in an April 25 memo (http://bit.ly/12Kmkzj). In response, the company committed, for five years, to label promoted links to its own specialized services to allow users to differentiate them from natural search results; clearly separate the promoted links from other results by clear graphical features such as a frame; and show links to three rivals’ specialized services close to its own services, in a place clearly visible to users (http://bit.ly/11n1X8p).
FairSearch Europe, however, released a survey Wednesday showing that the settlement proposal fails to address the EC concern. The proposal attracts the “vast majority” of searchers to the company’s products and discourages them from visiting rivals, a survey commissioned by the trade group found. Google “benefits from better placement, richer graphics and better visuals than it permits competitors,” said the study by University of San Francisco School of Law Professor David Franklyn and University of Illinois Law and Medicine Professor David Hyman.
To test the likely impact of Google’s proposals on Internet users and shoppers, the academics did a June 18-22 online survey of around 1,900 people in the U.K. that measures the likelihood that consumers would click on any of the proposed “three rival links,” they wrote in a July 1 report. If consumers aren’t likely to click on the proposed three competitors’ links, then Google’s commitment “would not be likely to draw consumers to rivals and therefore would not be likely to increase competition in these areas,” they said.
The survey also gauged whether respondents recognized and understood Google’s proposed label and disclosure, the report said. If they didn’t, then they wouldn’t be likely to exercise a meaningful choice between Google’s services and those of its competitors, it said.
The survey found that the three rival links “had no significant impact on consumer behavior,” the academics wrote. A “trivial” number of respondents clicked on the rival links when presented in the format Google proposed, leading to the conclusion that that commitment wouldn’t draw consumer attention to other websites and boost competition, they said. They also discovered that many respondents were confused or misled by the label and disclosure Google proposed to differentiate its own search results and services from those of rivals. Consumers already show a “high level of ignorance” about the nature and source of search results, and the survey found evidence that the proposed label and disclosure would just make the confusion worse, they said.
Survey results included: (1) Google search dominates all other sources for getting information on products, flights and locations. Respondents were more likely to start with Google than with any other source. (2) There was no material clickthrough on any of the proposed rival links. (3) Google Shopping commands a high degree of attention because of its location and visually rich display. Page layout and design is more important than search results’ labels in determining clickthrough rates for the shopping service.
Other results were that: (4) The popularity and visibility of the rival link’s trade name or trademark matters in determining click prevalence. Controlling for position, the more famous brands attract the higher click rates. (5) Google’s proposed disclosure statement doesn’t effectively communicate necessary information such as whether the region in question is paid or unpaid, and the location and significance of the rival links.
FairSearch Europe wants the EC to reject Google’s proposed commitments entirely because they hamper competition, said spokesman Thomas Vinje. “They are worse than nothing,” he said. The study provides hard evidence for what seems obvious, he said. If Google gives itself prime placement and rich graphics on the search landing page, while relegating rivals to small links, then its own products will prevail, he said. FairSearch Europe members include Microsoft, Expedia, Oracle and Nokia.