How European regulators are targeting Google’s search dominance
European regulators are after Facebook and Google on several fronts.
In the latest saga between Google and the European Commission’s antitrust ruling, price comparison sites allege that Google’s attempts to be compliant with European competition law is instead lining the search engine’s own pockets.
On top of shelling out a €2.4 billion ($2.72 billion) fine last summer, in September, Google introduced auctions so price comparison sites can bid on slots on Google Shopping, which features ads as an insert at the top of product searches, in order to level the playing field.
However, last week 14 CEOs of price comparison sites including Idealo, PriceRunner and StyleLounge, signed an open letter to European commissioner Margrethe Vestager complaining that allowing price comparison sites to bid on slots on Google Shopping remains non-compliant with competition law.
Google has 78 percent of desktop search engine market share globally, according to Net Market Share. Ultimately, the ruling was created to prevent Google from diverting traffic and revenue to its own coffers, yet by turning its competitors into customers, industry sources are confident this has led to more revenue for Google.
If the Commission finds that Google has not been compliant, the maximum it could be fined is 5 percent of Alphabet’s global annual turnover since the Commission made its ruling, some estimate this to be around €5 billion ($5.67 billion).
The Commission is looking into whether Google’s introduction of the new auction option is compliant or not with the ruling. But progress is slow. And price comparison sites have claimed their businesses are still suffering as a result of Google’s “remedy.”
“This letter draws a public line in the sand,” said Shivaun Raff, CEO and co-founder of price comparison site Foundem, which has suspended its service until a conclusion is reached. “This is to encourage the Commission to move a little bit faster. It’s been over a year; there is a market out there of comparison shopping services that is on its knees and needs intervention urgently, or there might not be any competition left to protect.”
Since September 2017, price comparison site Kelkoo said its traffic from the search engine has dropped 68 percent while the revenue it gets from Google has plummeted 67 percent.
French comparison site Acheter Moins Cher had to close in September, issuing a statement blaming Google’s dominance, which has a 90 percent search engine market share in France. “We do not want to change our business model to become click merchants on the Google Shopping model. The current solution proposed by Google does not work and we must close our doors, asphyxiated financially,” read the statement.
In an emailed statement, a Google spokesperson said: “We’ve complied with the European Commission’s order. We allow all comparison shopping services to compete equally to show product ads from merchants on Google’s Search results page.”
In June, Google launched its Comparison Shopping Service where competitors could bid for ad placement on Google Shopping, which features ads as an insert at the top of product searches. Demand was low because the idea of paying to play is at odds with fair price comparison, according to the open letter. Google then approached ad agencies to create price comparison sites to offer them 20 percent discounts to retail clients who passed their ads through a Google-certified Comparison Shopping Service.
Within the first four months of launch, more than 120 sites signed up to the scheme, more than 60 from the U.K.
A Google spokesperson said, “To help drive awareness amongst merchants who are unfamiliar with these new opportunities, we’re currently offering incentives for them to work with comparison shopping services. One year on, both services that existed before the remedy and services that are new to comparison shopping are participating successfully.”
In another blow, in early November Google reduced the rebates from 20 percent to 5 percent, frustrating agencies who pivoted to create price comparison sites that weren’t part of their core competency. For some, the discounts amounted to multiples of hundreds of thousands of pounds.
“It’s creating a false ecosystem,” said Jules Bazley, regional vp for Europe, Middle East and Africa at online ad company CJ Affiliate. “The ruling was there for the right intention, but the output hasn’t been the desired effect for anyone. The impact has not created a level playing field. Ultimately, it’s the consumer who loses out in the end.”
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