Companies plead with EU regulators for action on Google

November 18, 2020

They were the first to say something.

“At one of our first meetings with the European Commission, in the summer of 2009, they said to us, ‘Look, this is interesting, but if this is such a systemic problem, where is everybody?'” Shivaun Raff, co-founder and CEO of UK price comparison website Foundem, told DW.

Raff and her husband and co-founder Adam Raff were the Commission’s first complainants over alleged antitrust actions on the part of Google. Their case began a legal battle that has lasted over a decade and resulted in billions of euros in fines for the US tech giant.

Read more: Will Google go the way of Microsoft?

Now 11 years later, others have finally caught on. On November 12, 165 companies and industry bodies in Europe joined Foundem in penning a letter to EU antitrust regulators pleading for harder action against Google. They say the company is driving them out of business with unfair practices on the Google search results page, a function that is so widely used it is essentially the gateway to the internet.

“While we compete amongst ourselves for the best consumer experience, there is one common competitor that does not compete fairly — Google,” read the letter addressed to Commissioner for Competition Margrethe Vestager.

The Dane, who has a reputation for being tough on big tech, is due to present a proposal for new EU legislation targeting gatekeeper platforms like Google in early December. The legislation could take over a year to become law.

Running out of time

Many companies say they can’t hold out that long.

The letter takes issue with Google’s use of “OneBoxes,” those tidy sections at the top of the search results page that display the weather forecast or price comparisons on products, flights and hotels.

The boxes provide specialized search services to consumers within Google’s general search results pages directly; there is no way to avoid them, the authors argue. “We are now directly competing with such interfaces.”

“We face the imminent risk of being disintermediated by Google,” they further warned. “Many of us may not have the strength and resources to wait until such regulation really takes effect.”

A cure worse than the disease

“They really needed the Commission to act three years ago,” Raff told DW.

The year was 2017. The Commission ruled that Google had broken the law by promoting its own comparison shopping service in its search results while demoting those of competitors.

The EU governing body fined the company €2.4 billion ($2.8 billion) and ordered Google to provide “equal treatment” to European comparison shopping competitors. Otherwise, it would face a penalty of up to 5% of the daily global turnover of Google parent company Alphabet for each day it did not comply.

Google has appealed the decision. But in a bid to appease regulators, it began allowing competitors to bid for ad slots on its search results page. Over 800 comparison shopping services have since joined the Google Shopping ads program, according to Google figures.

But companies say they have little choice but to participate.

“In many ways, Google’s so-called remedy is actually exacerbating the anticompetitive impact of its behavior,” Raff told DW.

For one, it results in oversubscribed auctions that drive up the prices of ads. For another, the companies that win the bid are left handing money over to Google rather than investing in their own services.

The failure of the Commission to object to this continued practice and make use of financial penalties within its remit “is disastrous for competition and it’s terrible for consumers,” Raff said.

“It’s perpetuating a mechanism that, whenever you do a product search, Google is pushing you toward results from merchants that pay Google the most money.”

Competing is ‘mission impossible’

“This is not just about comparison shopping” Raff said. “It’s about travel search, local search, job search, property search,” a fact reflected in the signatures at the bottom of the letter.

“We work closely together with Google in many areas,” said Sebastian Dettmers, CEO for job search website Stepstone. “In its current form, however, we consider Google Jobs to be a product in its own right, which is preferentially advertised and displayed in Google’s general search results list.”

“A preferential listing of Google News Showcase … would severely impair competition for the online distribution of news content to the detriment of publishers who are not taking part in Google News Showcase,” Bernd Delventhal, head of communications at VG Media, a German organization in charge of royalties for publishers and private broadcasters, told DW.

“To stop [this unfair search advantage] by our own means we would have to initiate a competitor to Google’s general internet search engine to break its dominance, an undertaking in which even a global world-beater like Microsoft failed,” said the German Holiday Home Association in a statement sent to DW. “It’s a mission impossible.”

A vote for Google

“People expect Google to give them the most relevant, high quality search results that they can trust,” a Google spokesperson told DW. “They do not expect us to preference specific companies or commercial rivals over others, or to stop launching helpful services which create more choice and competition for Europeans.”

“The decision we took in June 2017 gives us a framework to look also at other specialized search services, such as Google Jobs and local search,” was a Commission spokesperson’s response.

The forthcoming EU legislation aims to better define digital services’ responsibilities and to challenge the economic power of large online platforms like Google, the spokesperson said. Part of this proposal would prohibit or require certain behaviors from “gatekeeping” platforms — regardless of whether there is evidence of actual harm in the marketplace.

Casting digital stones

Both Google and the Commission insist that oversight of the tech firm is ongoing and intense. This letter is just the latest step in a complicated and hostile tango in the name of fair business practices.

Oddly enough, many of the digital companies that signed the letter have been accused of practices similar to those of Google.

“These sites are bullies,” one vacation rental owner told UK consumer outlet Which?. “You have to do as you’re told or they will put you out of business. It’s a protection racket — and, ultimately, the customer pays more.”

A federal court in Australia recently reaffirmed its ruling that price comparison website Trivago, which signed the Google letter, did not make it clear enough that it listed accommodation providers that pay Trivago the most instead of the listings with the best value.

With ever greater scrutiny turned on the digital sphere, only time and legislation will tell who will come out on top, and who will be relegated to results page 4.

As for Foundem, they’ve suspended their business to focus on the battle with Google until the Commission “restores the level playing field required for all innovative services to thrive.”

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In 2009, a record fine was issued with the breaking of the €1 billion barrier. This time, it was the chipmaker Intel, fined €1.06 billion in what was part of a near-decade long dispute over cartel activity. The EU said that Intel had abused its market position by obliging clients such as Saturn and Media Markt to sell PCs made with Intel chips.

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