Almunia Says The EU Antitrust Ball Is In Google’s Court, While FairSearch Releases More Data Against Google’s Proposed Remedies

We are still waiting for the antitrust commissioner in Europe to make his next formal statement on negotiations with Google, after the search giant in April this year suggested remedies in the ongoing antitrust case against it over dominance in search. But for now, it sounds like the ball is in Google’s court, with Joachin Almunia, the VP for competition in the European Commission, today confirming that he has written to Google’s chairman, Eric Schmidt, to request changes to Google’s proposals after concluding Google’s proposals were not good enough.

“After the analysis of the results of the market test that concluded last month [June 27], I concluded that the proposals that Google sent to us months ago are not enough to overcome our concerns,” he noted today in a press briefing in Brussels. Subsequently, he said, “I wrote a letter to Mr Schmidt asking Google for more improvements.”

It looks like this is the second letter that Almunia has sent to Schmidt on this case. The first, sent in May 2012, was closer to the start of the investigation out outlined Almunia’s main reasons for bringing the case against Google in the first place.

Almunia is scheduled to make one last statement to the press before the summer break in August, and sources expect his office to make a more detailed announcement about the Google case before legislators break for the summer.

So far, competitors have been invited to respond, and today more of those responses are trickling out, courtesy of lobbying group FairSearch, a group of businesses that include Microsoft, Oracle, Expedia and others trying to get more leverage over Google in Europe, where it dominates the search market.

Summed up, Google’s proposed remedies propose the following changes to how it presents search results in Europe, over the next five years:

  • More labelling of links that promote Google’s own search services (such as Shopping) to show that these are promoted (ie paid) placements, to better distinguish them from natural search results.
  • More graphical separation of the above links (using things like frames).
  • Offering links to three “rival specialised search services close to its own services, in a place that is clearly visible to users.”
  • Clear way for websites to opt-out from Google’s specialised search services, “while ensuring that any opt-out does not unduly affect the ranking of those web sites in Google’s general web search results.”
  • Offer a way for specialised search sites (say, travel, mapping or restaurants) a way of tagging that cannot be indexed by Google (and then subsequently used to improve their own specialist search results).
  • Give a way for publishers to control what part of their content gets used in Google News.
  • No longer include any obligations (“written or unwritten”) for publishers to source online search ads from Google. (Implication here is that this becomes connected to how those sites then get indexed on Google’s main search and subsequently impacts those sites’ traffic.)
  • No longer impose obligations preventing advertisers from managing campaigns on competing ad platforms.

On the surface, these sound like reasonable proposals, but the devil is in the details. The complaints from competitors range from the fact that Google’s proposals apply to but not any of the country-specific domains that come up by default when you are in an individual country; to how clearly delineated things like graphical signage indicated “promoted links” will look. There is also the fact that, given there are significantly more than three competitors making complaints against Google’s dominance, how to balance that in a proposal that only allows for three rivals’ links to appear at any one time.

From a source close to the negotiations, we’ve also heard that there was some surprise within the EC at how little Google conceded in its first stab at making remedies. It’s perhaps a negotiating tactic that is more common in the U.S. — offer less than what you’re willing to actually give — but apparently the EC was expecting more.

It’s a can of worms, and in the talks I’ve had with different Google rivals involved, I’m actually not sure they all necessarily agree when it comes to making constructive suggestions for what they’d ideally like Google to do (“going away” not being a realistic option). On the other side, encroaching too far into what Google as a private company should have to do to make it easier for competition could also send out bad signals to other big companies who want to do business in Europe.

In the meantime, FairSearch, one of the main lobbying groups fighting Google in the antitrust debate, has today released the results of a survey of consumers that shows (surprise!) how ineffective Google’s current remedies would be, were they implemented.

On the third point above, for example, “We conclude that the ‘three rival’ links remedy proposed by Google would not draw consumer attention to rival websites,” said the study conducted by University of Illinois professor David Hyman and University of San Francisco professor David Franklyn. In one case, when one in five users clicked on a Google Shopping link, only one in 200 clicked on rival links presented in a box.

It also found that most users didn’t know that Google specialised search links were actually paid-for placements. “Consumers trust search results to be impartial and based solely on relevance to their query, without manipulation of the order or results,” the authors note.

And with the ongoing march to mobile screens, it appears that the issue becomes even more acute. “The researchers also tested mobile surfing-style screens and found the disparity between clicks on Google services and others even more pronounced than for desktop search,” the found. “Only one in 1,000 surfers clicked on a small blue box labelled ‘other links.'”

The report was part of FairSearch’s response that it submitted to the EC at the end of June. It will be interesting to see how much of this makes its way to Almunia’s next progress statement and Google’s next stab at a settlement.