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Monique Goyens reply to Joaquín Almunia : A danger for the consumer

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After years of investigations and lengthy negotiations, the Competition Commissioner of the European Commission, Joaquin Almunia, has announced his intention to reach a settlement with Google. Despite the unanimous rejection of the proposed remedies by market players and consumer organisations, Commissioner Almunia has decided to leave the negotiating table empty handed.

Google will strengthen its dominance

The same is not true for Google. Not only do their latest set of proposals fail to address the problems identified by the Commission, but they appear to be tailored to maximise Google’s profits and commercial interests. The Commission is essentially offering Google a free pass to continue manipulating search results and excluding vertical service competitors from the online search market. The impact on consumer choice and innovation has been and will be significant.

The new proposals are based on the incorrect assumption that more prominent (and purchased) display of some of Google’s competitors is the best solution to discriminatory behaviour. Google and the Commission continue to ignore the views of the majority of complainants, third parties and the European Parliament to end its current practices of manipulation of search results.

Instead of remedying the discrimination within the market in which the California-based multinational is clearly dominant, the deal as it stands will provide Google with additional tools to strengthen this dominance. Side effects of the Commission coming away empty handed from a lengthy investigation will be the emboldening of Google and that future action by the Commission will be less likely and credible. Such a situation is worse than doing nothing.

Should the settlement be adopted, Google will be allowed to continue manipulating search results and displaying links to their own vertical services in preference to rival services which could be more relevant to consumers. There is no evidence to suggest Google’s own vertical services are the best on merit or the most relevant to consumers. Even if, as Google claims, the new commitments will place rivals (only 3 of them) in positions comparable to its own, this is still discriminatory, as Google will place their own results in the ‘hottest’ click spots (to the left side of the screen for computers and right side for smartphones). This has been consistently demonstrated by eye-tracking studies.

Furthermore, an auction procedure is an unacceptable way to rank search results as results will then not be based on merit or consumer relevance. Consumers will not see the results which most correspond to their query, but instead the offer of a company who has paid more to display.

There is a real risk that the auction method of displaying results will result in higher prices for consumers of online goods and services. As services will have to pay to be ‘vertically’ visible there is a high risk Google will no longer place the cheapest offers at the top of their list, but rather those who secure the biggest revenue margin. For instance, a consumer searching for a particular camera would no longer see the cheapest offers for that camera, but rather the more expensive ones. The raising of rivals’ costs would exclude the lowest margin competitors, who often offer the lowest prices.

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