Google risks turning into the war that never ends for the European Commission.
Multibillion-euro fines against Google’s shopping services in 2016 and its Android operating system in 2017 could prove to be just the beginning, as momentum now ramps up for wider action against Google’s other specialized search services.
Lawyers and Google’s corporate rivals argue that the EU’s most likely next target is Google’s “local” service, that offers you suggestions of everything from restaurants or hotels to dentists or locksmiths in your neighborhood.
European Commissioner for Competition Margrethe Vestager is making increasing reference to these services, and expectations of a case in these fields are being fanned by the fact that the EU over the last few weeks sent out questionnaires to online providers of local search results.
In June 2017, Vestager levied a €2.4 billion fine against Google for abuse of dominance in relation to its price-comparison shopping services. Her goal was to create a “broader precedent” for tackling other Google search services.
Firstly, significant competitors appear to be suffering from the updates Google made to its display of local search results.
It’s becoming increasingly clear, however, that the shopping case is struggling to provide an all-embracing solution to the wider ecosystem of Google services that thrive thanks to the runaway success of the company’s search bar. The original complainants are far from happy about the remedies under discussion. This makes it increasingly likely that Brussels will have to take on the other search services.
Last week, Vestager herself admitted as much. Having the framework established by the shopping case does “not replace the need for a case-specific analysis to account for the specific characteristics of each market,” she wrote in response to a parliamentary question.
According to Thomas Vinje, a lawyer acting against Google in the shopping case, the complainants were so unhappy about the remedies under discussion that there was no question of rolling them out more widely.
“There would be a firestorm of protest,” he said.
Growth of search
There are plenty more potential targets for Vestager.
At least 29 complainants fed into its investigation across the search services, the Commission revealed. They include multinationals such as Yelp, Expedia and TripAdvisor (local search and flights) and Rupert Murdoch’s News Corp and Germany’s Axel Springer (news; Axel Springer is co-owner of POLITICO Europe), but also a bunch of smaller companies and associations.
Why is local proving to be of such intense interest?
Firstly, significant competitors appear to be suffering from the updates Google made to its display of local search results. And while Google is further entrenching its position, Vestager needs to salvage what she can.
“Yelp in 2016 decided to close its commercial operations in Europe, because Google’s self-preferencing prevented us from turning investments into traffic,” Yelp’s head of EU public policy Kostas Rossoglou said.
Consumers are harmed because Google’s own content figures artificially high in its search results, Rossoglou argued. That can be particularly problematic when you need to search for a doctor nearby, he said.
In hotel search, Google entered into direct competition with “metasites” including TripAdvisor, Kayak and Expedia-owned Trivago that mainly display offerings from online travel agents such as Expedia and Booking.com, a person close to the case said, adding that the lines between metasites and online travel agents are blurring. Appearing in Google’s specialized hotel box costs significantly more than appearing in general search advertising, the person said.
That does not seem to prevent some of the online travel agencies from flourishing, however. Dutch-based and U.S.-owned online travel agent Booking.com registered spectacular growth in recent years and is keeping a low profile about Google’s practices. Expedia and Booking effectively run a duopoly in the hotel booking space, one industry source claimed.
The duopoly claim does not hold if rooms directly booked with hotels are taken into account, Expedia executive Jean-Philippe Monod argued. “The whole of the online travel agent market is [only] about 25 to 30 percent of European hotel distribution,” he said, referring to research by Phocuswright.
Another element that might tip the scales in local’s favor is that the Commission appreciates complainants with the drive and resources to assist it in its probe.
Yelp ran a very active PR campaign, feeding the Commission and the public with data and academic arguments. Expedia and Tripadvisor also have in-house lobbyists, external lawyers and consultants in Brussels.
The rest of the rest
Unlike their peers in local, the three active complainants in maps, British company Streetmap and German Hot Map and Euro-Cities, are broadly said to have limited firepower. In 2016, Streetmap lost a similar case in front of the U.K.’s High Court, which ruled that the company failed to show Google’s actions have a clear negative impact on its business.
Vestager has already made it clear that she regards news and images to be more of a copyright issue.
“Naturally, our financial firepower is not unlimited, and certainly smaller compared to Google and some of the larger complainants, but sufficient to take Google to court and see the case through,” Hot Map CEO Michael Weber said.
“Access to finance can be provided by litigation funders in cases in the U.K. and there is an active market here,” Timothy Cowen, a lawyer acting for Streetmap said.
The last series of complaints relates to “scraping” of news and images, or the display of others’ content on Google’s own pages. Vestager has already made it clear that she regards news and images to be more of a copyright issue. New copyright rules approved by the European Parliament in September, including so-called “publishers rights” would resolve the main concerns in news, said Thomas Höppner, a lawyer at Hausfeld, who acts for the publishing associations BDZV and VDZ. Axel Springer is a member of both groups.
The copyright reform and recent Google concessions met concerns of picture agencies, but issues surrounding for example ranking remain, Sylvie Fodor, executive director at pictures industry body CEPIC said. Fodor conceded that CEPIC’s focus is currently on copyright, however, and that it would need to update its competition complaint.
The European Commission declined to comment when asked about the prospect of new cases.
Google did not respond to a request for comment.
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