Google keeps throwing googlies over its market dominance
If Google is found to be again gaming the system with its latest package of reforms, EU sanctions must be brought
In June last year, in an article for Comment is free, I drew attention to Google’s efforts to escape investigation by the European commission over alleged anti-competitive behaviour, by offering commitments to change its ways. At that time it looked like the case might be drawing to a close, but it took longer than expected. We now find ourselves in a position where the commissioner responsible seems ready to accept Google’s third set of commitments in a case that has now been running since at least 2010.
The commission has concluded that Google, with over 95% of the markets for online search and search advertising, is in a dominant position and that it may have abused that dominance. In particular, it has been penalising smaller competitors including UK companies, and pushing its own results to the top of the search page, even when they are not objectively the best answers to the user’s queries.
The fact that Google has been obliged to offer changes in how it presents search results is welcome. Less reassuring is the time it has taken and the way that Google has continued to make offers that fall far short of what is needed.
When I wrote last June, the first set of commitments had been published for industry comment in what is known as a “market test”. The reaction was so consistently hostile that even before the test period was concluded, the antitrust commissioner Joaquín Almunia realised that the proposed changes were inadequate, stating that “the proposals that Google sent to us months ago are not enough to overcome our concerns”.
A second round of commitments were submitted in October. Initially the commissioner indicated that they seemed to be an improvement, telling the European parliament that he had requested Google to “improve significantly its proposals” and that “the new proposal more appropriately addresses the need for any commitments to be able to cover future developments”. However, industry reaction was again swift and consistent. Many pointed out that the new commitments risked being even worse than the first package. As a result, the commission again concluded that in fact the commitments could not be accepted, and asked for an unprecedented third round.
The amended third set of proposals has now been submitted and, following a short delay, has been made public, not by the commission but by Google. Worryingly, in a recent statement, Almunia indicated that he thinks in principle they are acceptable (has anyone spotted a pattern here?) and could be approved without a proper “market test”. That would be a mistake. After all, we know that the commission’s initial reaction to both the first and second set of commitments was that they might fix the problem, yet it took only a very short time for knowledgeable third parties to show that conclusion was wrong.
I naturally do not criticise commission administrators for lacking the in-house technical expertise to assess such matters, but it would clearly be a serious error for them not to subject the latest commitments to rigorous testing by those who understand how these markets function.
The commissioner seems anxious to wrap this case up before the end of his term in October. But the search market is too important for the timetable to be dictated by any considerations of an individual’s legacy. Meanwhile, Google has every incentive to drag out these proceedings and to devise complicated proposals (the latest set run to more than 90 pages) full of exceptions and loopholes.
The commission and Google have also refused to share any evidence submitted by Google showing the impact of the changes, and if history is a guide we are right to be sceptical. The European market and its citizens demand a fair and transparent process.
If a proper examination of the latest package reveals that Google is once again trying to game the system, the commission should accept that it has been more than generous and should move swiftly to the normal procedure. That would result in a decision compelling Google to change its abusive practices, with the sanction of huge fines if it fails to do so.