Google and the European anti-trust deal – what does it mean?
Friday 7 February 2014
- Analysis for The Conversation by Research fellow Angela Daly, Swinburne University of Technology
After years in the waiting, Google has finally struck a deal with the European Commission regarding alleged abuses of its dominant position in online search and advertising in the European Union.
The Commission opened its investigation into Google more than three years ago. It has been a long saga and the Commission has rebuffed Google’s two previous offers and sent them back to the drawing board.
This deal means that Google will change what European users see on its search results page.
Whenever Google promotes its own services in these results – such as for travel, entertainment and shopping – it will also display results from three of a pool of eligible competitors. These results will be selected through an “objective” method and will be displayed clearly to users, like how Google displays its own services.
This is more than Google offered before, which was to label results from its own services and put a frame around them on the screen and display alternatives from three rivals.
In the new deal the results form competitors must be selected “objectively” and displayed in a similar way to Google’s own services. This might mean that Google has to give equal prominence on its results page to those from rivals services as it gives to its own.
At the moment though it is not clear exactly how Google will go about making these changes, or indeed how the results from rivals will be selected “objectively”.
Consessions so far
The Commission and Google have already agreed on other steps Google must take to deal with concerns over its behaviour.
Content providers such as online newspapers can opt-out from the use of their content in Google’s specialised search services such as Google News. They are still able to opt-in to their content appearing in Google’s general search results.
Google will also remove any exclusivity requirements in its advertising contracts and restrictions on search advertising campaigns being run on other platforms.
As a result of the deal, Google will not have to pay what could have been an enormous multi-billion dollar fine to the Commission and will also escape an official finding of wrongdoing.
Google’s secret algorithm
Perhaps an even bigger victory for Google is that it will also not have to reveal to the public any more information about how its secretive algorithm works.
However, if the results of three of its rivals must be selected in an “objective” way, this might require passing on some information about how the algorithm works to the independent monitoring trustee who will make sure Google keeps to its side of the deal for the next five years.
But Google’s competitors are not happy with this result. They have been asked for feedback on the deal but it is unlikely anything they say now will change its content.
The Initiative for a Competitive Online Marketplace (ICOMP), an umbrella group of competitors, said that without a stronger “market test” of the deal by third parties such as themselves, the Commission’s head of competiton Joaqin Almunia “risks having the wool pulled over his eyes by Google”.
But Almunia has said that his mission, including in the Google case, is to protect competition for the benefit of European consumers, not competitors.
He seems to think that the deal strikes the right balance between allowing Google to improve its services and giving users a “real choice between competing services presented in a comparable way”. This presentation of different options should give users the choice as to what one they think is best.
Search results in future
How Google presents its search results and whether consumers understand the differences between the different parts of the results page has also been an issue in Australia.
In a case decided last year, the High Court found that a hypothetical reasonable user would understand the difference between Google’s sponsored links and organic i.e. unpaid search results.
But the High Court did not point to any evidence of actual Australian Google users and how they understood different parts of the results page. Let us hope here that the European Commission has actually looked at how real European users understand Google’s results page before it struck the deal.
We still have to see what effect the latest deal may have on Google’s business operations in places outside of Europe. The deal is only binding within the EU, but Google might find it efficient to change its search results page in the same way for other places, such as Australia.
A similar investigation into Google in the US ended in the Federal Trade Commission there finding that Google had not behaved anticompetitively and so was not forced to make any changes to how it displayed its search results.
Overall, it will be interesting to see what effect this deal might have on Google’s 93% market share in Europe last month, and how consumers will respond to the changes.