Commentary

Think Google Will Just Get A Slap On The Wrist From The EU? Think Again

It's good to challenge your assumptions and those of others. Take the antitrust case against Google, which has been knocking around Brussels for at least three to four years now. I had always assumed it was just a case of the European Commission (EC) and the European Parliament wanting to appear to do their jobs. They would talk tough, maybe levy a fine, and all would go back to normal.

Having put in a few calls outside the marketing industry, however, I was given a lot of food for thought. Within London media circles there's a resigned acceptance that in search, Google is the only game in town -- and so it gets to call the shots. The EC feels it has to say something but that's about as far as it will get. Like Microsoft, Google will probably get what appears to be a huge fine but, of course, in Google land a few hundred million dollars is arguably the equivalent of an accounting error.

Talk to those involved in the case and so know a little about the mood in Brussels, off the record, and there is a much more vehement message. Google could ultimately be the first non-utility to be seen as a utility and broken up with clear separation between how its search algorithm develops on the one hand and how it presents results in slots that appear to be run outside of normal SEO results on the other. We're not talking about the clearly labelled pay per click (PPC) slots that appear at the top of the search engine, here, although they would likely be impacted.

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The real issue is the boxes which appear in search results that are seemingly only available to Google's verticals -- including hotels, finance, maps and shopping. They don't appear for every search, but they do appear often enough for competitors to cry foul. How can a mapping company or price-comparison site, for example, compete with a Google vertical that would appear to be guaranteed space in prime box-outs that nobody else has access to?

Google didn't want to discuss the case with me, but its argument has been laid out publicly that it doesn't see itself as dominating search and they can't see the problem in their own systems deciding what appears on their own site. In other words, it's not a monopoly -- because other search engines or means of discovering content exist, plus it should be free to decide what it publishes on its own site.

Yet if you talk to people close to Brussels, it's not an argument that is going down well. The case has been before the European Commission, the executive arm of government within the EU, for nearly four years now. The outgoing commissioner responsible for competition, Joaquin Almunia, was widely believed to have been too placatory with Google. His idea was that the boxes that appear to be reserved to for Google verticals should be made open for all. Google was reported to have not been happy with the suggestion and many Members of the European Parliament (MEPs) were furious. Far from redressing a complaint, the suggested remedy would have offered the internet giant a new revenue stream.

Thus, when a new parliament formed last year and Almunia was replaced as competition chief by Margrethe Vestager, MEPs wanted to send a strong message -- as is their right -- to their executive arm that they wanted a firmer line to be taken with Google. The vote at the end of last year insisted splitting the company up should be considered. Effectively, it would mean, as outlined above, Google not having full control over both its algorithm and who goes where on the search page under a single roof. Like a utility, the wholesale and the equivalent of retail (advertisers) would be separated and closely watched over by a regulator.

The MEPs have sent their very strong message to Vestager, which was widely reported as something new. I have to admit, I was among the many who didn't realise this was really more a case of MEPs saying we're the new guys on the block and we want this sorted out in a stronger manner than what has been applied by your predecessor. 

What happens next is up to Vestager and the rest of the European Commission. She could ignore the advice of MEPs entirely, which is unlikely, or she could either accept their recommendations in full or in part. Over the next couple of weeks she is expected to be talking to the dozens of complainants in the case, as well as Google, before deciding what to do. 

The easiest option would be a fine, but the people I've spoken to close to Europe think this may seem too simple and too weak after the case has dragged on for years. They are seriously suggesting that some order to make Google change its ways could come in to being. The company could be fined and told to stop reserving slots just for its own companies or face further action down the road, or it could be told it's had enough chances to change and, by a particular date, will have to cease keeping slots open for itself. No second chances, this is the decision before you. Then, ultimately, Vestager could cement this decision by forcing the company to change its structure.

That's at one end of her options, while a simple fine is at the other. Nobody knows for sure what will happen but a decision is expected to be made by Easter and it's expected that it will be stronger than a fine with no attached requirement to change. 

What has to be further considered here is that the American Internet giants have angered MEPs and the EC. There have been snooping and privacy allegations, alleged copyright infringements and tax-planning schemes that appear to border on the evasion more than avoidance -- even though it has to be accepted the schemes appear to have broken no laws. 

Put simply, Google clearly has more of a case to answer than it publicly appears to concede. Plus, MEPs want their executive arm to take a firmer line at the same time, as Europe is concerned about how American iInternet giants are conducting themselves when they do business within the EU.

So, given this, ask yourself a question. When you first started reading this blog, did you think Google was likely to get just a slap on the wrists, maybe a small to medium fine?

I know I did. Then I made some calls.

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