Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Brazil investigates Google’s alleged anticompetitive practices in online search market, (Oct 15, 2013)

By John W. Arden, J.D., LL.M.

The Brazilian antitrust authority has initiated three administrative proceedings to investigate alleged anticompetitive practices in the Brazilian online search market by Google Inc. and Google Brazil Internet Ltda., according to an October 11 announcement. The investigation was prompted by complaints to the Brazilian Counsel for Economic Defense by Microsoft Corp., owner of online search provider Bing, and E-Commerce Media Group Informacao e Tecnologia Ltda., owner of websites Buscape and Bondfaro.

Google’s free online search engine allows open and rapid access to online information, providing “organic search results,” where listed websites are not required to pay, and are “supposedly searched and ordered through an algorithm, established by Google, according to certain criterion,” the Council for Economic Defense stated. Other spaces on the search website show “sponsored links” results, which are websites that remunerate Google.

Other websites specialize in specific search services, such as price comparisons of products offered online. This service is provided by Buscape, Bondfaro, and Google Shopping. Google also offers specialized search services, such as Google Images, Google News, and Google Books, the agency said.

The three administrative proceedings will investigate different aspects of the search engine offerings.

Searches favoring its own websites. Administrative Proceeding n. 08012.010483/2011-94 will investigate whether Google unduly favors its own specific search websites (such as Google Shopping) within the organic results, to the detriment of competing websites (such as Buscape and Bondfaro). The proceeding will investigate E-Commerce’s allegation that Google Shopping would be unduly positioning itself in a more privileged manner in other spaces on the website (among the sponsored links), aiming to favor itself in relation to its competitors. The proceeding will investigate whether Google Search grants less room to the organic search in relation to the sponsored search and adopts mechanisms to confuse Internet users when identifying unpaid and sponsored search results, with potential anticompetitive outcomes.

Another practice investigated by the proceeding is related to the allegation that Google Search would allow the use of photo ads by Google Shopping but would not allow photo ads by competing websites that provide specific search services. The complaint brought to the antitrust authority claims that Google refused to sell space for photo ads to its competitor Buscape and required the transfer of its rival’s sensitive data in return for allowing the ad.

Scraping practices. Administrative Proceeding n. 08700.009082/2013-03 will investigate alleged scraping by Google of relevant competitive content held by rival specific search websites, in order to use it in Google’s specific search services. According to E-Commerce, Google Shopping unduly appropriated reviews (clients’ opinions regarding qualities and faults of products and stores) gathered by price comparison websites Buscape and Bondfaro. The complaint alleged that since Internet user reviews compile relevant information and appeal to users of shopping search engines, Google’s conduct could take away competitive advantages from these rivals and benefit from it. The complaints brought before the authority allege that Google would not allow its competitors to “scrape” from Google’s specific search engines.

AdWords program. Administrative Proceeding n. 08700.005694/2013-19 will investigate supposed anticompetitive restrictions within the contracts of Google’s online advertising platform, known as AdWords. Through this platform, advertisers purchasing space for ads in Google’s website manage their advertising campaigns and define key words to which they wish to associate their ads, so that they are shown in the results of certain searches, such as “television” or “mobile.” Through this platform, advertisers are selected to be shown among the limited sponsored links, according to criterion such as the value of the bid or the quality of the ad. Microsoft claimed that Google imposed restrictions that hamper the advertisers’ ability to manage their campaigns, simultaneously, in Google and other competing search providers. Such interoperability is known as “multihoming.” Multihoming is alleged to facilitate and lessen the costs associated with creating and managing campaigns in different search platforms and to allow comparisons between each platform’s performance. By imposing restrictions to the sharing of information in advertising platforms, Google would end up discouraging advertisers from also launching campaigns in competing search engines, thus harming the development of these competitors, which already hold little market share, according to the complaint.

This conduct may hinder the entry and development of competitors in the Brazilian online search market, as well as increase Google’s already elevated market power, which is close to 99%, according to some analysts. Such practices could result in obstacles to innovation; fewer options for companies, products, and services to Internet users; and a negative impact on prices of products and services offered to consumers online.

After the opening of the proceedings, Google will be notified to present its defense. At the end of the investigation, the General Superintendence will render an opinion and will send the cases for final trial by the authority’s Tribunal.

Companies: Google, Inc.; Microsoft Corp.; E-Commerce Media Group Informacao e Tecnologia Ltda.

News: Antitrust