Google Victories in Antitrust Investigations

Google has been in the news a lot lately and it hasn’t always been for reasons the company would like. Antitrust investigations and the potential for a major shake-up in the power balance of the competing search engines was cause for a lot of attention to be paid to the investigations in both Europe and previously the United States. There is a wealth of information to be found all over the news media covering a variety of topics that were impacted, including patent law, but this summary will focus primarily on the rulings as they pertain to search.

US Ruling Favorable for Google

In the United States the ruling, which was handed down just over a year ago was less complicated and much more favorable for Google than the recent EU ruling. In the end, the Federal Trade Commission, the government agency that regulates anti-completive business practices, essentially sided with Google and will not force them to make any major changes to their current practices.

FTC Chairman Jon Leibowitz commented that “Although some evidence suggested that Google was trying to eliminate competition, Google’s primary reason for changing the look and feel of its search results to highlight its own products was to improve the user experience.” With this decision Google will have to make no mandatory changes, but in order to placate the courts has offered to make a few voluntary changes. Here are the changes as stated in the official Google response:

  • More choice for websites: Websites can already opt out of Google Search, and they can now remove content (for example reviews) from specialized search results pages, such as local, travel and shopping;
  • More ad campaign control: Advertisers can already export their ad campaigns from Google AdWords. They will now be able to mix and copy ad campaign data within third-party services that use our AdWords API.

Adjustments Required for the EU

The European Union was not as lenient with the search giant, but it appears as though the 3 year long antitrust investigation has finally come to a conclusion with Google coming to a settlement with the European Commission.

The crux of the issue was that competitors were complaining that Google was unfairly promoting its own search services, copying competitors’ travel and restaurant reviews, and has made agreements with other websites and software developers that prevent competition from advancing.

To settle the new 5 year agreement Google will now give competitors “significant prominence and valuable screen space” on their search results pages. This more visible location will come at a cost, however, with competitors having to bid at least 3 euro cents to appear. Here is a graphic detailing how the new SERP would look:

Image of Google SERP with Google Shopping Alternatives

Google SERP with Google Shopping Alternative

In this example the alternatives to Google shopping appear in a prominent position, as promised, and have been shaded with light green to draw extra attention to this space.

Changes to Search Engine Landscape are Unlikely

Although the European Commission got a small concession from Google this deal is not expected to have any major impact on Google’s dominant market position in Europe, which is much stronger at 90% than it is in the American market where it claims approximately two thirds of search traffic. Google’s algorithm, probably its most important asset, will remain private, the company will not have to pay any fines, and it has also not been officially found guilty of any wrong doing. This settlement has angered many of Google’s rivals and, despite Google’s claims that they will “be making significant changes to the way Google operates in Europe” no major shift in the search landscape is expected.

Google is not completely off the hook since its competitors still have the option of taking the EU Commission to court over the agreement and several EU member countries are looking into other smaller violations. But these are relatively small issues compared to the conclusion of the 3 year antitrust investigation and, for now, consider this settlement a win for Google and the status quo.

Update: Google’s Antitrust Headache Continues

While there seems to be nothing more than ongoing political grandstanding in the EU, the case in India could be more worrisome for the global search giant according to reports in techcrunch , search engine land , and zd net .

What makes the India case particularly worrisome for Google is that a settlement is not allowed in this instance, under Indian law. Fines can be as high as “10 percent of a company’s global revenue, calculated over a three-year average period — just shy of $50 billion.” A 5 billion dollar fine would obviously hit Google hard in a financial way, but would also be an additional road block in their Asian development. Already weak in China due to established competitors and a notoriously rocky relationship with the Chinese Government, India presents a major opportunity to grow its user base. Being forced to make structural changes in the form of “smaller companies” that are restricted in their ability to exchange information and work together in addition to a fine and the negative publicity that comes with a decision against Google would be a significant set back.

Although the investigation by the Competition Commission of India has been ongoing for two years there are no clear indications as to which way they will decide. This will be an important space to watch for those interested in the Asian search market.

Tweet about this on TwitterShare on Google+Pin on PinterestShare on StumbleUponShare on RedditShare on LinkedInShare on Facebook

, , , , ,

One comment on “Google Victories in Antitrust Investigations
  1. Chris says:

    Great article Mike, keep em coming.

Leave a Reply

Your email address will not be published. Required fields are marked *

*