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Searching for change

Eleven ruffled online retailers have come together to send a letter to the leading European antitrust official about Google.

EU Davids take on Goliath Google

They are imploring him to intercede on their behalf, and that of many other online businesses, to press Google to modify its business practice. Existing search engine practices are to the detriment of smaller rivals. As Google’s prey, they are taking it upon themselves to fight back as hard as they can.

 

What Online Retailers Want

 

In the letter, businesses asked Joaquín Almunia, the European Union competition commissioner, to negotiate harshly with Google. It underlined the fact that the kind of concessions they want Google to make would help to ensure smaller European competitors are protected. Affected retailers are growing weary of waiting on a conclusion to the antitrust inquiry regarding Google, now in its 3rd year in Europe.

The vast majority – 80% - of online searches in Europe are conducted via Google. Google not only controls search results, they also are in control of much of the data, email accounts and YouTube accounts customers use, as you can see here. The inquiry is focused on the concern that Google uses biased algorithm standards that mean its own services always rank higher than those of competitors. This is what threatens small businesses whose services unfortunately compete with Google’s interests.

The concerned retailers expressed that they are concerned that an effective present and future solution may not be reached from the lengthy discussions. They see Google’s practices as ones that negatively impact the search engine user’s experience, as well as the livelihood of the very competitors affected by these algorithms.

 

An Ongoing Battle

 

In order to avoid a court battle, Google has made proposals of changes it would be willing to make and appears to be working with the European Commission to find a solution. However, this is finally after almost three years of the inquiry. Now it is up to Mr Almunia to decide if that is good enough or to come back with formal objections, like the group of online retailers want him to do.  They see acceptance of Google’s proposals as akin to Google punishing itself.

 

Movement Amongst European Online Retailers

 

This inquiry was initially the result of complaints by one of the letter writing companies Foundem, a British shopping site; Ciao, a price comparison site based in Germany, and Ejustice.fr, a legal advice site based in France. The process has dragged on since February 2010. Concerned retailers have sent this latest letter to spur on the commissioner in his to-date cautious dealings with Google.

The letter suggests that the commission list objections to the solutions proposed by Google to resolve the conflict.  That would escalate the process to the stage of negotiations. Combined with the threat of financial consequences and litigation, the online retailers that drafted the letter feel that subsequent negotiations would be more fruitful than the inquiry has been to date.  If a satisfactory compromise is not agreed upon, Google faces serious consequences. Fines as high as $5 billion or 10 per cent of the search engine giant’s revenue in 2012 could be imposed on them.

 

Future-thinking

 

Despite not having seen the proposals from Google, the group of online retailers also referred to the search engine’s past behaviour making it unlikely that Google would actually offer commitments that would be effective and future-thinking, unless infringement charges were filed. They also pointed out that delays in the inquiry were capitalized on by Google, making it even more anti-competitive.

The letter was signed by companies from Britain, France, Germany and the United States, in addition to several German associations. The fact that the on-going inquiry could end like one in the United States did earlier in 2012, by Google essentially punishing itself, is what worries them most. The results of this inquiry will set standards which will be hard to break and make it much more difficult for small businesses to compete in an increasingly global and unfair marketplace.

This truly is a case of Davids versus Goliath! Only a major intervention from Mr Almunia, a referee who may or may not want to play the role, can make this fight a fair one.
 

Posted by:

Frank
Conley

27 March 2013

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