Dear Mr Döpfner
In your open letter to Eric Schmidt, Google’s Executive Chairman, published in the Frankfurter Allgemeine Zeitung on 16 April, you make a number of remarks which are explicitly addressed to the European Commission and myself. You essentially accuse the Commission of failing to take action against Google’s abuses of its dominant market position in online search. I reject this, and I will explain why.
(Zur deutschen Fassung: „Ich diszipliniere Google“ von Joaquín Almunia)
First, let me recall the facts. The Commission, upon my proposal, decided to open antitrust proceedings against Google in November 2010. After a thorough investigation, in particular through the analysis of a large number of formal complaints, I expressed serious concerns about several of Google’s business practices. One of them is Google’s prominent display, within its normal search results, of its own specialised (or „vertical“) search services without informing users of this favourable treatment. Indeed, such a practice could unduly divert Internet traffic to Google’s services to the detriment of services offered by its competitors, which could be just as relevant, or even more relevant, to the user.
With the interest of users in mind, the Commission has consistently challenged this practice and asked Google to offer concrete solutions to put an end to any abuse. After long and difficult negotiations, we have obtained significant concessions from Google. In a few months the Commission will have to decide whether or not to turn these concessions into legally binding obligations for Google. If it does, competition will be restored and users will be able to make informed choices when they use the Google search engine.
Obliged to share
Approving these proposals would indeed introduce three main changes. First, users would be clearly informed of which links are promoted by Google and are not the result of its normal search engine. Second, there would be a clear separation between Google’s specialised services and the normal search results on its page. Third, whenever it promotes its own services, Google would also have to present the specialised services of three competitors in a way that is clearly visible to users. These rival links would also be displayed in a comparable visual format.
In your open letter you describe the concessions as the setting up of „a new advertising window at the beginning of the search list“ which would only grant Google „additional earnings“. This interpretation is entirely mistaken. Under the proposals, the links of three competitors would be presented whenever Google promotes its own specialised search service. When merchants do not pay for being displayed in this service (e.g. restaurants in Google Local) then competitors would not have to pay anything either. The three competitors would simply be chosen based on their ranking in Google’s „normal“ search. In other cases, Google charges merchants to appear in its specialised services, such as in the price comparison service Google Shopping. Then, under the proposals Google would be forced to give a significant part of the space it uses to promote its own services. So whenever Google decides to offer what you call „a new advertising window“, it would be obliged to share it with its competitors, providing them with comparable space inside it. Since the space given to competitors would otherwise have been monetised by Google through payment by merchants, competitors would also pay to appear there. To be selected, Google’s rivals would compete in an auction which would be strictly reserved to providers of specialised search services. Instead of selling this space to its own customers, Google would have to sell it to its competitors. This would not create any „additional earnings“ for Google.