If Google gets fined $US6 billion for abusing its monopoly in Europe, it will be mostly Google’s own fault.
Let’s be clear: while the actions of various European regulatory bodies against Google sound bonkers on their face, they are based on real complaints about real things that Google has actually done. And when people outside the tech/search industry hear about those things, they don’t look good. Google has, on occasion, behaved in unfair ways that hurt competition and smaller tech businesses. (For the record, Google denies wrongdoing and you can read its full statement here.)
And most of the people doing the complaining are NOT Europeans — they are other American tech companies (and their lobbyists) whose international businesses have been allegedly screwed over by Google. Americans can comfort themselves with the image of French politicians, sitting behind red wine glasses, moaning about “les Americains” ruining everything for the workers, but that is not the reality.
It is also highly unlikely that Google will be fined the maximum of $US6 billion, or have its monopoly broken up. Those ideas make good headlines, but it’s not going to happen.
Nonetheless, it’s a big distraction to Google’s management.
Here’s a brief summary of the trouble Google faces:
- Today, EU Competition Commissioner Margrethe Vestager is expected to make a formal announcement of an investigation into Google’s alleged dominance that could end up with maximum fines of 10% of Google’s revenues, or $US6 billion.
- Yesterday, the French Senate began considering a plan that would require Google to publish details of its search algorithm so competitors could inspect it for bias.
- Back in November, the European Union took the first step in an extraordinary process of challenging Google’s dominance: EU parliament members voted in favour of breaking up Google in order to end its monopoly in search. In Europe, 90% of search results come from Google.
Eric Schmidt once admitted Google was “in that area” of being a monopoly
To be clear: We are a long, long way from actually seeing any part of Google hived off into a competing entity. It probably won’t happen.
But the fact that regulatory bodies here are even considering it tells you just how many enemies Google has made over the years, and how obvious its monopoly is.
Google is more dominant in Europe than in the US, even though it is an American company with a towering stateside presence. Everyone admits that Google is a de facto monopoly. Peter Thiel, the libertarian tech investor, has said so. Former Microsoft CEO Steve Ballmer thinks Google is a monopoly. Yelp has lobbied the EU, arguing the same. The US FTC has investigated Google for monopoly practises, although it has concluded no significant antitrust action needs be taken.
Even Google chairman Eric Schmidt has admitted “we’re in that area.” Schmidt and Page once declined to testify to Congress on the topic of their monopoly status.
The fact that it monopolises search is not in itself a bad thing. Merely being a monopoly is not a transgression, even in Europe. (It’s often a sign of natural success.) Rather, EU antitrust law applies when companies abuse their monopoly to manipulate markets around them unfairly.
On that measure, Google has more than qualified for scrutiny over the way it distorts markets that have nothing to do with search.
The smoking gun against Google
You can see that for yourself when you do any type of search. More and more frequently, Google places its own results from its own properties on top of the actual “organic” search results that its algorithm produces. In many ways, this is the smoking gun against Google: Everyone admits Google’s search engine is the best. Its algorithm dominance is natural and not the product of unfair competition. But if the Google engine produces the best search results, why does Google feel the need to cram those results them down beneath its own less-then-stellar properties?
The best evidence for this came from Yelp and a coalition of companies it has formed who believe they are being screwed out of their natural, “organic” ranking in search results because Google simply dumps its own — often unhelpful — content on top of the “real” search ranking of which sites are best.
Yelp’s evidence was elegant and simple: It used Google’s own search API to create a browser extension that displayed Google search results without results that include promo boxes generated from Google+, the unpopular identity/social network product that Google launched to counter Facebook. The extension shows you the “real” result generated by Google’s algorithm, without the self-promotional fluff that Google layers on top of it. Here is what that looks like:
The difference is alarming. Hotel review sites like Tripadvisor — which have hundreds of reader reviews per hotel, and are thus good quality search results if you’re looking for hotels — get buried under Google’s own Google+ review boxes, in which only a handful of people have written reviews. It’s difficult to argue that Google is serving the “best” hotel results if its own algorithm is being crammed down under auto-generated promo boxes for Google’s own properties. Another example:
You should take this argument with a punch of salt: Yelp is an avowed enemy of Google.
Yet … it’s compelling.
A long list of companies hurt by Google
Yelp is not alone. Dozens of companies believe Google uses its search might to dictate terms in industries that Google itself does not compete in. Expedia, TripAdvisor, Microsoft and a bunch of smaller companies have complained that Google sets competition rules within their industries.
Even adultery website AshleyMadison has a case: It cannot advertise on certain Google properties, but Match.com can. Google doesn’t run dating sites, but it sets the rules through which they can advertise against each other.
Over the years, all these complainers have piled up into a veritable tidal wave of discontent against Google. The company, because it is so successful and so dominant, has created an army of enemies that want to see it brought down.
In Europe, they’re making progress.