Europe’s Antitrust Chief Almunia Clears Google On Search Probe; Competitors Up In Arms

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Joachin Alumnia, the European Commission’s antitrust chief, has today finally given his final verdict on a decade-long antitrust investigation over its search practices against Google: the U.S.-based giant has been given all-clear and will now move forward on implementing remedies, after submitting proposals a third time around. But as soon as decision was made public, Google’s competitors weighed in with a response.

“This thing is a disgrace,” one tech company complainant told TechCrunch, pointing out that it will be hard for competitors to respond because the settlement won’t be made public before the deal is sealed. “So much for transparency.”

“A settlement without third party review is a massive failure. Complaints and others must see Google’s proposed commitments, not just the Commission’s analysis of why they will work. Hard data from market tests proved that the previous settlement would not work – we need time and opportunity to ensure full technical assessment of how effective the proposed remedies would be,” noted David Wood, ICOMP General Counsel. ICOMP is a lobbying group representing thousands of independent online businesses that has been especially vocal during the investigation process. Although it represents independent online companies, it is funded by Microsoft.

Almunia has a different opinion. “I believe Google’s proposals are capable of addressing the concerns. so we are moving forward on commitments,” he told an audience in Brussels today.

At issue were four types of business practices that raised concerns. The first two related to specialised search services around particular verticals like travel or hotels. In essence Google was displaying its own results in a more prominent manner than competitors. The other two complaints relate to online advertising and pressures that Google may have been placing on them to use Google ads.

Almunia said that while he could have taken either the negotiation or adversarial routes, he chose the former. “The purpose of enforcement should be allowed to let consumers benefit as soon as possible,” he said, and this would not have been possible with the protracted timeframe of an adversarial approach.

The solution is based on the third proposal from Google, after the previous two were rejected for not being strong enough. “This is why the latest round of negotiations was very intense. We have focused on how other search services can compete with Google,” Almunia said today.

Almunia stressed that this is not the end of the Google story. There is first the case of implementing this decision, but then there are also now ongoing investigations into other areas. The biggest one is a look at antitrust practices around the Android operating system, which is the largest smartphone platform in the world and controlled by Google.

Included in the solutions, now, when users in Europe search for, say, a hotel in a basic Google search, there will be three services displayed as alternatives alongside Google’s own. There are also provisions for how Google will handle mobile ads: one rival link will be displayed alongside Google’s own results. “This is a significant improvement over the previous proposal where rivals were only accessible after going through another screen,” Almunia said.

Competitors are still unhappy about the solutions, however. For starters, they claim that they will still be at a disadvantage because their results will always appear on the right of Google’s and studies have always shown that people opt first for results on the left side.

There is also the issue of “pay to play.” Those who want to advertise on Google’s page should pay, but in the commitments there are two different areas. If Google is offerings its own services and needs to display competitors alongside, they will not need to pay. But in cases where Google is displaying advertising results competitors will also need to pay to appear alongside those of other results.

Pointedly, there will be no more market tests from now on as there have been in previous iterations when Google and the EC were still negotiating. “This is a bad deal for consumers and for companies,” said a competitor. “If he thought he had a good deal, he would put it to a market test. Now the only hope is that other European Commissioners, who need to approve the deal, will stop Almunia.”

“Without a third party review, Almunia risks having the wool pulled over his eyes by Google. Having initially welcomed earlier proposals, effective market tests demonstrated their fatal flaws and the commission rightly rejected them. Why has Almunia chosen to ignore the expert advice of the market on this occasion?” asked Wood at ICOMP. “We do not believe Google has any intention of holding themselves to account on these proposals, and given the catastrophic effects on the online ecosystem that a proposal that doesn’t hit the mark will have, we would implore Commissioner Almunia to allow a full third party review of their submission as the very least the Commission can do in this landmark case.”

The representative from the tech company also is calling for more review.

“If Commissioner Almunia thought he got a good deal, he would get it vetted by experts and not only take Eric Schmidt’s word for it. But this deal will only be published after the deal is done. So the European Competition Commissioner should take some words of wisdom to heart that Eric Schmidt himself gave once to the world: ‘If you have something that you don’t want anyone to know, maybe you shouldn’t be doing it in the first place.'” There are some 12 companies involved in the case against Google and include large companies like Microsoft, Expedia and others.