Antitrust Law Daily Wrap Up, ANTITRUST NEWS: EC’s preliminary findings on search results are unfounded, Google says, (Aug 28, 2015)

By Greg Hammond, J.D.

The European Commission’s (EC’s) preliminary conclusions that Google Inc. treats its comparison shopping service more favorably in search results than rival services are “wrong as a matter of fact, law, and economics,” Google claims. Senior Vice President & General Counsel Kent Walker posted Google’s statement yesterday after the company filed its formal response to the EC’s April 2015 Statement of Objections (SO).

The EC claims that Google has a 90 percent market share in most European Economic Area countries and that the company consequently has a dominant position in providing online search services throughout most of Europe. In its SO, the EC preliminarily concluded: (1) beginning in 2008, Google has regularly positioned and prominently displayed its comparison shopping service in general search results pages, regardless of whether the results are the most relevant; (2) Google does not apply the “system of penalties” to its own comparison shopping service, which affects ranking in search results; (3) Google’s first comparison shopping service, “Froogle,” performed poorly; (4) by favoring its newer comparison shopping services, the services had higher rates of growth, which negatively affected competing comparison shopping services; and (5) Google’s conduct has negatively impacted consumers and innovation because users may not actually see the most relevant comparison shopping results, and competitors understand their product will not benefit from the same prominence as Google’s product.

“Our response provides evidence and data to show why the SO’s concerns are unfounded,” Google stated. “We use traffic analysis to rebut claims that our ad displays and specialized organic results harmed competition by preventing shopping aggregators from reaching consumers. Economic data spanning more than a decade, an array of documents, and statements from complainants all confirm that product search is robustly competitive. And we show why the SO is incorrect in failing to consider the impact of major shopping services like Amazon and eBay, who are the largest players in this space.”

Specifically, Google rejects allegations that its search format is anticompetitive, noting that “showing ads based on structured data provided by merchants demonstrably improves ad quality and makes it easier for consumers to find what they’re looking for.” The company additionally claims that the SO’s preliminary remedy—that Google should treat its own comparison shopping service the same way it treats those of rivals—is inappropriate, as such remedies are legally justified only where a company has a duty to supply its own rivals. “Given the many ways to reach consumers on the Internet, the SO doesn’t argue that standard applies here,” Google claims.

“Our search engine is designed to provide the most relevant results and most useful ads for any query,” Google wrote. “Users and advertisers benefit when we do this well. So does Google. It’s in our interest to provide high-quality results and ads that connect people to what they’re looking for. The more relevant the ads—the better they perform in connecting potential buyers and sellers—the more value they generate for everyone.”

Companies: Google Inc.

News: Antitrust