Google’s antitrust settlement under attack by rivals

May 13, 2013 8:59 pm

By Richard Waters in San Francisco and Alex Barker in Brussels

Google’s rivals have called its proposed antitrust settlement with Brussels too weak to redress the imbalance in the internet search market – and warned it is likely to have the opposite effect, discouraging users from visiting rival sites.

The deal, intended to make Google list more competitors’ services, contains loopholes that will undermine its impact, some opponents of the US search company say.

Their critiques are the first in-depth responses to the provisional deal the US company struck with Joaquín Almunia, EU competition commissioner, this year.

Mr Almunia will have to decide next month whether to try to force Google to make more concessions to head off a possible formal complaint, following the end of a “market testing” period for the draft remedies agreed so far.

Attention has focused in particular on provisions designed to reduce the risk that Google is unfairly steering users to its own specialised, or “vertical”, services – such as maps, shopping and travel listings – robbing others of traffic.

In some circumstances, Google has agreed to include links to rival sites in the panels at the top of its search results pages, which currently display links to its own services. However, where these panels show results that advertisers have paid to have included – as happens with Google’s shopping service – rivals will also have to pay to be included among the new links.

These paid links are “a potentially catastrophic escalation of Google’s abuse, providing a new and immensely powerful anti-competitive tool, which in many cases would hand Google the majority of its rivals’ profits,” according to Foundem, a UK shopping comparison company that has been one of the most vociferous critics of the deal.

This provision will encourage Google to convert more of its services to paid listings, Foundem says.

Another rival, which declined to be named, attacked the concession as producing “orphan links” that would be too small and lacking in detail to attract much traffic.

Several critics also said there were flaws in the auction through which Google was proposing to sell the links. Unlike its regular search advertising service, companies will have to submit a single bid regardless of whether their link appears against searches for high-value items or less expensive ones.

In addition, the auction will not permit the dynamic pricing that allows regular Google advertisers to adjust their bids based on results, instead forcing them to submit a single bid that will apply for up to four weeks at a time.

Among the loopholes identified by rivals is a failure to address future changes in Google’s search service, such as a potential shift to voice-activated search on mobile devices. The settlement only covers searches done through the “Google general search box”, or “input field”.

“We will look carefully at the comments and information received through the market test,” a spokesperson for the commission said.

Copyright The Financial Times Limited 2013.


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