Head of European Antitrust Says That Google’s Auction-Based Shopping Remedy Is Not Enough

Margrethe Vestager, head of European antitrust, said at a conference that Google’s efforts to increase traffic to European competitors were essentially unsuccessful. This is a reversal from her previous qualified support for Google’s changes in response to the European Commission’s statement of 2017 that the company has abused its market position in shopping search.

Google Shopping
Google Shopping

The provision in 2017, which was appealed by Google, included a fine of nearly 2.7 billion USD. In addition, Google was obliged to treat equally comparison shopping European competitors. It was also required that Google Shopping competes for the available slots on an equal footing without special or reserved seats.

Google Shopping, a newly established independent business unit, was also required to retain a profit (20%) and be regularly monitored by the European Commission to ensure that it competes on a level playing field.

While Vestager supported and encouraged this approach at an early stage, the comparison engines complained loudly and clearly about what they considered to be a continuing injustice. Furthermore there is no significant difference between an auction and a previous system that disregarded EU antitrust rules. Google’s commitment to profitability is “just pointless internal accounting, paid from one Google pocket to another”.

The auction forces search engines to “bid the vast majority of their profits”.

Because the users who click on the PLA’s go directly to the trading sites and not to the comparison engines themselves and as such do not have the opportunity to benefit from the process.

Consumers suffer from the fact that the auction approach is not based on accuracy and eliminates  a flourishing comparison shopping market in Europe.

The 14 comparison shopping engines that signed the letter to Vestager on 22 November 2018 requested the Commission to implement the Prohibition Decision by rejecting Google’s non-compliant compliance mechanism and to require an effective remedy in line with the principle of equal treatment set out in the Decision.

At least one competitor in Europe is asking the European Commission to initiate a non-compliance case which may lead to further fines.

Why should we be concerned about this? Google may have the last word if the appeal is decided in its favor. But the timing of a decision may still be a long way off. However, in the near future, Commissioner Vestager may consider further changes to the SERP to help significantly increase the traffic of comparison engines.

If Google’s auction-based buying solution is rejected, it casts a shadow over another Google antitrust solution: “search choice” for Android users. Google planned to use an auction to decide which search engines should be presented to Android users as a potential default engine.  Supposedly the 3 highest bidders will appear together with Google. But this approach could be undermined by the finding that the auction approach is fundamentally unfair.

 

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