Google Competitors Pressure EC To Advance Antitrust Investigation

Google’s competitors in Europe are escalating their pressure on European authorities to finally file formal antirust charges against Google after an investigation that has been going on there since November 2010.

The latest move from some of Google’s rivals is a joint letter from 11 web-based companies that was sent to the European Commission, demanding real progress in the investigation.

Formal charges

The letter, sent to EU Competition Commissioner Joaquin Almunia, asks him to formally charge Google in the case.

“The Commission opened proceedings more than two years ago, and we are becoming increasingly concerned that effective and future-proof remedies might not emerge through settlement discussions alone,” stated the letter, which was signed by Shivaun Raff, co-founder and chief executive of British online shopping website Foundem, which has been helping lead the fight for EU action in the case.

The letter was also signed by leaders of five other European companies, including Streetmap, Twenga, Visual Meta, Hot Maps and Euro-Cities. It was also signed by leaders inside two US-based companies, Expedia and TripAdvisor, and by directors of three German publishing associations.

The biggest issue in the case, the letter stated, is the “anti-competitive impact of search manipulation” that was allegedly performed by Google against competitors. “In addition to materially degrading the user experience and limiting consumer choice, Google’s search manipulation practices lay waste to entire classes of competitors in every sector where Google chooses to deploy them.”

One of the key concerns in the case was that Google promoted its own services while demoting or excluding services of competitors, the letter stated. “Any effective remedies will require explicit commitments to end both aspects; remedying one without remedying the other would simply allow Google to recalibrate the un-remedied practice in order to achieve the same or equivalent anti-competitive effect.”

In the future, Google must desist from such alleged practices, the letter stated.

‘Even-handedness’

“Google must be even-handed,” the letter stated. “It must hold all services, including its own, to exactly the same standards, using exactly the same crawling, indexing, ranking, display and penalty algorithms.”

The only way to get Google to change its alleged practices, the letter continued, is for the EU to file charges and let the matter be given a full review.

Presently, the EU is reviewing a list of suggested remedies, turned in by Google itself in January, for the antitrust concerns. That list was requested last year by the EU.

“We will respectfully withhold judgment on Google’s proposed commitments until we have seen them, but Google’s past behavior suggests that it is unlikely to volunteer effective, future-proof remedies without being formally charged with infringement,” the letter stated.

“Given this, and the fact that Google has exploited every delay to further entrench, extend and escalate its anti-competitive activities, we urge the Commission to issue the Statement of Objections.” Google’s suggested remedies for the antitrust issues in the EU have not yet been publicly released.

Most importantly, it still must be determined whether Google’s suggestions will satisfy EU regulators.

Remedies

Google has been trying to come up with proposed remedies for some time that would satisfy EU regulators and convince them to close their case against the search giant. Google had sent previous lists of proposals to the EU in the summer of 2012, but those earlier proposals failed to satisfy European regulators. Google was given more time – until 31 January – to submit new proposals.

The EU investigation centres on what regulators regard as Google’s dominant position in search.

In July 2012, Google executives sent a list of initial concessions to address the potential antitrust concerns. At that time, Google Chairman Eric Schmidt sent a letter to the EU’s Almunia outlining steps the massive web company would be willing to take to resolve the EU’s concerns, including claims that it favours its own search results over those of others.

Almunia had given Google officials the opportunity to address that issue and other concerns, including the use of material from other search engines in its results and its dominance in web advertising, all of which investigators said put competitors at an unfair advantage.

Since that time, Almunia again spoke to Schmidt and asked for more clarification of Google’s proposals from early July 2012.

Search domination

Google officials are under investigation in Europe and elsewhere regarding its search engine, which holds more than 60 percent of the search market, with Microsoft’s Bing being a distant second.

Competitors have claimed that Google works its search algorithms to favour its own products and results over those of others, giving it an unfair advantage in search and web advertising.

A guilty verdict on such charges could mean a fine of up to 10 percent of Google’s annual revenue, which based on its 2011 annual results, would amount to about $4 billion (£2.6bn) .

Google’s legal quandary in Europe continues, even as a similar antitrust probe in the United States was resolved in Google’s favour in January. Instead of an antitrust prosecution in United States, Google entered into a voluntary agreement with the Federal Trade Commission to change some of its business practices to resolve the complaints of some competitors about Google’s practices.

‘Insufficient evidence’

In the FTC case, Google won a huge battle as the commission voted to close its longtime investigation into allegations that Google has been manipulating its search algorithms to favour Google’s results over competitors.

The FTC found that there was not enough evidence to prove such allegations.

Among the key parts of the FTC agreement with Google is that the search company will end some past business practices that could stifle competition in the markets for popular devices such as smartphones, tablets and gaming consoles, as well as the market for online search advertising, according to the agency.

Under a binding settlement with the FTC, Google will allow competitors access “on fair, reasonable and nondiscriminatory terms to patents on critical standardised technologies needed to make popular devices such as smartphones, laptop and tablet computers, and gaming consoles,” the FTC reported.

Are you a Google expert? Take our quiz!

Originally published on eWeek.