(Wall Street Journal)
Google’s smaller rivals see a lifeline in the European Union’s decision to fine the company €2.4 billion ($2.7 billion) and order the Google to remake its shopping service. Companies like British comparison shopping website Foundem.co.uk blame lost business on Google and cheered the EU’s ruling which followed more than seven years of investigations.
Foundem in 2009 lodged the first formal complaint to the EU about Google’s behaviour. In December it temporarily closed due to plunging traffic. Other smaller sites have consolidated after losing hundreds of employees.
The EU decision said Google manipulates its search results to favour its own services and penalises rivals. Competitors including Foundem and Kelkoo.com, which rely on traffic from Google, say the manipulation caused catastrophic web-traffic losses.
Analysis by the EU found that Google’s actions, some starting in 2004, led to what the EU said was a 45-fold traffic increase for Google in the UK and a 35-fold increase in Germany, while certain rivals saw sudden drops in traffic of 85% in the UK and up to 92% in Germany. Google promotes its comparison-shopping service in a box above broader search results, a practice the EU said was self-serving.
Google General Counsel Kent Walker said in a blog post that its research shows people prefer links that bring them directly to the products they’re looking for instead of having to repeat searches on another comparison-shopping website. Google has also previously said some of the algorithm changes that may have hurt competitors were introduced to target spam and websites with unoriginal content.
The EU has given Google 90 days to end any discriminatory conduct and explain how it would implement the decision, or face additional penalties of up to 5% of average daily global revenue. Competitors say they are confident changes to Google’s behaviour will help shore up business. “At the point where the commission’s interventions restore a level playing field, we are intending to relaunch our service,” said Foundem Chief Executive Shivaun Raff.
Ms. Raff has previously faced criticism that she benefited financially from the Google antitrust case. She was previously paid as a special adviser to the anti-Google lobby group, Icomp, which until recently had strong links to Microsoft. Both Foundem and Microsoft are no longer members of Icomp. Microsoft last year ceased active involvement in the fight against Google in Brussels after an agreement with the search giant to end their regulatory disputes.
Google’s Mr Walker questioned his company’s liability for rivals’ fates. While some sites have shrunk over the examined period, “many sites…have grown in this period—including platforms like Amazon and eBay”, he said in the blog post.
For several months after Foundem’s 2009 complaint, it was alone in alleging anticompetitive conduct by Google, Ms. Raff said. Dozens of companies have since complained to the EU, both formally and informally.
At a meeting in December 2014 with newly installed EU antitrust commissioner Margrethe Vestager, Olivier Sichel, CEO of French comparison-shopping company LeGuide Group, presented data showing a drop of roughly 90% in visibility of unpaid search results in France since 2011 for eight rival comparison shopping sites.
“The company I run, LeGuide.com, may have taken wrong directions as regards consumers’ expectations, and thus be penalised by Google, but how can you explain all our competitors suffered from the same demotion?”
The EU said the sudden reduction in traffic to the rival websites it cited couldn’t be explained by other factors. The EU said it based its decision on documents from Google and other market players, as well as on real-world data of Google search results, traffic data and market surveys. It remains unclear how Google will implement the order and whether a redesign will return traffic, and business, to its rivals.
Google could opt to scrap its shopping ads in Europe. More likely, analysts said, Google will propose rebuilding the service. EU regulators may require Google to retool the system to let results from competing comparison-shopping sites be mixed with its own and be as easy to click through as Google-hosted ads. (Wall Street Journal)