It has been the worst-kept secret in Brussels. Google has offered the EU Commission a deal to settle the Commission’s concerns following the Commission’s preliminary conclusion that Google was abusing a dominant position. It is all now official and public. The Commission has published the details of the Google offer and is inviting comments from interested parties on the commitments offered by Google in relation to online search and search advertising.
Google has made proposals to try to address the Commission’s four competition concerns. Interested parties can now submit their comments within one month. The Commission will take them into account in its analysis of Google’s commitment proposals. If the Commission concludes that they address its four competition concerns, it may decide to make them legally binding on Google. It has already been made pretty clear that the Commission is in favour of accepting these commitments but there is still plenty of room for change on that.
The concerns
In March 2013, the Commission formally informed Google of its preliminary conclusion that the following four types of business practices by Google may violate EU antitrust rules prohibiting the abuse of a dominant position (Article 102 of the Treaty on the Functioning of the European Union – TFEU):
· the favourable treatment, within Google’s web search results, of links to Google’s own specialised web search services as compared to links to competing specialised web search services (ie services allowing users to search for specific categories of information such as restaurants, hotels or products);
· the use by Google without consent of original content from third party web sites in its own specialised web search services;
· agreements that oblige third-party web sites to obtain all or most of their online search advertisements from Google; and
· contractual restrictions on the transferability of online search advertising campaigns to rival search advertising platforms and the management of such campaigns across Google’s Adwords and rival search advertising platforms.
The Commission considers at this stage that these practices could harm consumers by reducing choice and stifling innovation in the fields of specialised search services and online search advertising.
Google’s proposals
To address these concerns, Google offers for a period of five years to:
· – label promoted links to its own specialised search services so that users can distinguish them from natural web search results,
– clearly separate these promoted links from other web search results by clear graphical features (such as a frame), and
– display links to three rival specialised search services close to its own services, in a place that is clearly visible to users,
· – offer all websites the option to opt-out from the use of all their content in Google’s specialised search services, while ensuring that any opt-out does not unduly affect the ranking of those web sites in Google’s general web search results,
· offer all specialised search web sites that focus on product search or local search the option to mark certain categories of information in such a way that such information is not indexed or used by Google,
· provide newspaper publishers with a mechanism allowing them to control on a web page per web page basis the display of their content in Google News,
· no longer include in its agreements with publishers any written or unwritten obligations that would require them to source online search advertisements exclusively from Google, and
· no longer impose obligations that would prevent advertisers from managing search advertising campaigns across competing advertising platforms.
These commitments would cover the European Economic Area (EEA). The proposals also foresee that an independent Monitoring Trustee will advise the Commission in overseeing the proper implementation of the commitments.
The full version of the commitments is available on DG Competition’s website at:
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_39740
What happens now?
The commitments are now subject to a market test of one month. Complainants, third parties and members of the public are therefore able to comment on the commitments, and the extent to which they address the Commission’s four concerns.
If following the market test, the commitments are considered to form the basis for a satisfactory solution to the Commission’s competition concerns, the Commission may make them legally binding on Google by way of a Commitments Decision (the so-called ‘Article 9 procedure’). Such a decision does not conclude that there is an infringement of EU antitrust rules, but would legally bind Google to respect the commitments offered. If a company breaks such commitments, the Commission can impose a fine of up to 10% of its annual worldwide turnover.
The Commission claims that it will study all feedback very carefully and will take it into account in its analysis of whether Google’s proposals address the four competition concerns. The Commission will in particular assess whether the commitments may need to be improved to adequately address the four competition concerns that have been identified.
If we are all surprised and the Commission concludes that its concerns are not addressed, it would then continue its investigation through the normal antitrust procedure.
This process covers the four competition concerns that have been investigated as a matter of priority. The Commission is, however, thoroughly examining all other allegations brought to its attention by different market players with a view to deciding whether or not a further investigation of those issues is warranted. Google’s Android related business practices are part of those issues.
Anyone can send the Commission observations on the commitments proposed by Google.
Observations can be sent to the Commission under reference number AT.39.740 – Google to COMP-GOOGLE-CASES@ec.europa.eu (other methods of communication are available).
Comment
Paul Stone, competition and regulatory partner at Charles Russell, says: ‘The main concern from Google’s competitors was that Google was unfairly biasing search results to list its own services above rival services. The US investigation couldn’t find any evidence to support concerns in this area – and so this may have influenced the European Commission’s to accept separate labelling requirements for Google’s own services, rather than requiring changes to Google’s search algorithms. It remains to be seen whether Google’s competitors think this goes far enough to allay their concerns.’
Vanessa Barnett, technology and media partner at Charles Russell, added: ‘What we are seeing at Google right now is a shift in approach, possibly a more conciliatory approach to regulators. This is not just in the sphere of competition law but elsewhere, for example privacy, where Google has also recently introduced more ‘up front’ information about cookies.’
One of the main complainers about Google’s practices, Michael Weber, CEO of hot-map.com said: ‘The Commission’s goal in this investigation is to restore competition in the Internet markets quickly to benefit all consumers and web companies, but Google’s commitments read like a master plan to ensure their search manipulation can continue.
I do not believe any anti-trust complainant suggested labeling as the cure-all. Hot Map’s complaint asked for the visually enhanced and top placement of Google Maps to stop. The labeling Google proposes for its preferentially placed Google “Specialised Services” such as Maps will not notably decrease their clicks. Google being a top brand, consumers might even click them more, as the labeling suggests these links are better than others.
Undoubtedly Google has tested its proposed commitments, measuring traffic it is willing to surrender to competitors. If Google believes the small “Rival Links” it is offering will direct sufficient traffic to alternative services and restore competition, it should have no hesitations to agree to my proposal: Place rival sites like hot-map.com, foundem.co.uk in the positions it has been holding for its own services on the search results in the enhanced graphics (with map images, product photos etc.), while to its own services only referring by text links “Search on Google Maps, Places, Shopping” and on mobile screens “Google Sites”.
What really needs stronger visual distinction than mere labelling, and an effective separation by being moved to the side of the search results, are the barely distinguishable paid search results Google stacks on top of the real search results. Many consumers mistake these for actual search results and click them, rather than the lower listed generic organic links to the official website they were looking for. The millions charged by Google to advertisers for these clicks are ultimately paid for by consumers.’
