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

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Monique Goyens, Director General of the The European Consumer Organisation (BEUC) Bild: picture alliance / dpa

The Director General of the European Consumer Organization argues that Google manipulates search results. And she attacks the EU-Commissioner for Competition Joaquín Almunia.

          Increasingly, people who use Google are placing themselves in a virtual gated community, or what was once known as „a company town“ – you can go anywhere you like, as long as you use the company’s roads and you can buy anything you like, as long as you shop at the company’s stores.  Today, this online company town does not objectively lack the supply of anything, but the cost is a tremendous state of dependency.

          (Deutsche Fassung: „Eine Gefahr für den Verbraucher“ von Monique Goyens)

          Given the scale of the World Wide Web, search engines are indispensable for finding relevant responses to consumers’ queries. Millions of Europeans use search engines daily to source information most relevant to them and access content of their choice. Google happens to be the most frequented search engine in Europe; Google’s services have even been adopted in schools as well as our business and private life.

          Google is becoming a gatekeeper

          As a search engine Google has built much of its success on the repeated claims of its executives that its search results are neutral and objectively generated.

          Consumers trust search results to be impartial, based solely on relevance and without manipulation of the order. In 2009, Google CEO Eric Schmidt said “[W]e work very, very hard to keep the answers – the natural search answers completely unbiased. We never manipulate rankings to put our partners higher in our search results”.

          Google continues to expand its range of activities and develop its own services and products – Gmail, YouTube, Maps, Calendar to name a few. It is becoming something of a gatekeeper to the internet and is uniquely positioned to direct consumers to information, while it continues to acquire a great deal of users’ personal information. To do without Google is often no real option when the worldwide number 2 – Baidu – is from China and could represent a language hurdle for most European consumers for the foreseeable future.

          Google reduces consumer choice

          Google’s launch of its search, which it calls ‘universal’ has allowed it to display its preferred results prominently among what it calls the “vertical results” we see. The combination of the position and the prominence with which Google’s verticals are displayed leads users to focus their attention on those results. The results page is not the consequence of Google’s supposedly “neutral” algorithm. Rather, it is a deliberate decision for its own commercial purposes. Such practices cause consumer harm.

          First, Google’s deliberate promotion of its verticals without clearly notifying users the promoted results are not ranked due to relevance amounts to misleading consumers. Google and other search engines have led users to believe search results are built on relevance. Google has since gone on to abuse this trust.

          Secondly, by diverting traffic away from competing businesses who depend on hits from search results, Google threatens their survival, stifles innovation and reduces consumer choice.

          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.

          The push of vertical services

          Allowing Google to define its field of competitors, then charge them for the privilege of competing, it will be extremely difficult for new entrants to the vertical search market. No matter how relevant their services are to consumers’ queries, for them to compete against Google and its main rivals they will require the financial means to compete in the auction mechanism.

          In his answer to Mathias Döpfner, CEO of Springer, published in the Frankfurter Allgemeine Zeitung of 13 May, Vice-President Almunia wrote it is the role of the EU’s competition watchdog “to fight abuses in the best interests of consumers rather than competitors”. Whether the Commission’s antitrust investigation removes what Mathias Döpfner calls the “fear” of the search giant’s competitors, remains to be seen. However, fighting market abuse in the interest of consumers looks very different.

          This would be a sad conclusion, particularly as Vice President Almunia has also decided not to investigate the relationship between Google’s abuse of dominance and its privacy practices. A key component of Google’s policy in order to maintain its dominance of online search is to increase the scale of data it collects via its different services such as Gmail or YouTube. Search engines can make their results more effective as their scale – including the volume of user data and search queries – increases. With the ever-increasing breadth of Google’s online services, a particular user’s online activities will be traceable on a much more continuous and universal level – resulting in more ‘tailored’ search results. The rightfully contested privacy policy of Google which results in combining user data among its different products is directly linked to its dominance in the online search and should therefore be considered an aggravating factor in the Commission’s analysis.

          A couple of years ago, the Commission launched a competition investigation against tech giant Microsoft, because it offered users its Windows operating system and company-owned Internet Explorer. The similarities of the Google case with that of Microsoft Internet Explorer are as disturbing as they are remarkable. With Microsoft, the dominance in desktop operating systems was abused to push Internet Explorer; with Google the dominance in the online search is being used to push vertical services. But here is where the similarities end. The handling of the case by the European Commission is diametrically different – the Commission obliged Microsoft to change its business model and treat competing browsers in a non-discriminatory way. We see no rationale to taking a different approach with Google.

          The competences of the Commission as competition guardians are comprehensive. Not using them to the benefit of consumers would be negligent.

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