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EU-Google Antitrust Charges – Google’s Hidden #1 Problem

Google’s biggest problem is not being charged with violation of antitrust laws in Europe; its biggest problem is a gross violation of trust of its roughly two billion users.

Google became the world’s #1 most reputable and valuable brand in the world per the Reputation Institute and Millward Brown respectively, by continually publicly representing Google search as “objective and unbiased;” by promising “never to manipulate search results” and that Google does “not accept payment” for higher search ranking; and the company as honest, ethical and trustworthy via its signature “Don’t be evil” corporate motto.

In a nutshell, the EC is charging in a formal Statement of Objections that Google Search is not objective or unbiased as claimed; that Google does accept payment for search positioning contrary to its public promises; and that as a >90% dominant search provider in Europe it “has given an unfair advantage to its own comparison shopping service, in breach of EU antitrust rules.”  The Commission’s preliminary view is that to remedy such conduct, Google should treat its own comparison shopping service and those of rivals in the same way.”

Google’s #1 hidden problem here is that the EC antitrust enforcers are effectively charging Google has long lied to its users and the public, and the EC is pledging to force Google to do what it has long-claimed it was doing and what it knows and claims is best for its users. Simply, it can’t be good for Google’s reputation, brand, and business to be mired in a potentially decade-long antitrust enforcement process that at core is about forcing Google to honor and live up to its own brand-building promises and touted trustworthy (“Don’t be evil”) corporate values.  

Consider the blanket public corporate promises the EU is implicitly charging Google has violated.        

For over a decade, the top of Google’s “About” page has said: Ten things we know to be true. We first wrote these “10 things” when Google was just a few years old. From time to time we revisit this list to see if it still holds true. We hope it does—and you can hold us to that.” … “You can make money without doing evil.” …“Advertising on Google is always clearly identified as a “Sponsored Link,” so it does not compromise the integrity of our search results. We never manipulate rankings to put our partners higher in our search results and no one can buy better PageRank. Our users trust our objectivity and no short-term gain could ever justify breaching that trust.

From Google’s 2004 Founders’ IPO Letter  -- “Don't be evil. …Google users trust our systems to help them with important decisions: medical, financial and many others. Our search results are the best we know how to produce. They are unbiased and objective, and we do not accept payment for them or for inclusion or more frequent updating.”

The EC’s focused charges of Google Shopping search bias indicate it has overwhelming evidence Google has “given unfair advantage to its own comparison shopping service.” From the outside evidence to date, these Google Shopping focused charges looks like a very easy-to-prove, open-and-shut-case.  

First, the leaked FTC Staff Report on the FTC Google search bias investigation concluded Google manipulated search results, and included many highly-incriminating Google Gmails that prove it.

Second, Danny Sullivan of Search Engine Land, a widely-recognized leading search expert, has put forth a detailed public case that Google in fact has broken its search promises; has manipulated search rankings; and has allowed companies to buy better search rankings. See his Marketing Land post, 11-17-13: “Google’s Broken Promises & Who’s Running The Search Engine?” And see his Search Engine Land post, 4-30-12: “Google “Comparison” Units Get New Look; Change Highlights Paid Inclusion In Some Vertical Search Areas.”

Finally, and most embarrassingly, is the incriminating evidence Google effectively presented against itself when it proposed three successive antitrust settlements to former EC VP Joaquin Almunia, that obviously would force Google’s shopping comparison competitors to bid and pay to appear higher in Google’s supposedly unbiased Google search results.

In sum, Google is busted in Europe.

The evidence that Google lied and misrepresented its search business and anti-competitively favored its own Google Shopping results over its competitors is overwhelming. The EU is very wise to laser-focus on the part of its case that is open-and-shut strong and foundational for follow-on charges involving other market verticals, and it’s just announced formal antitrust investigation into Google’s alleged Android tying and bundling to extend its search dominance into mobile products and services.

As for America, this high-profile EC action has major American repercussions as well.

The Chairman of the Senate Antitrust Subcommittee, Mike Lee, is reportedly investigating whether Google used its White House political influence to make the FTC-Google antitrust search bias case go away.

Now with the EC-Google enforcement action spotlighting Google’s manipulation of search, Chairman Lee obviously will be interested in exploring if Google Chairman Eric Schmidt, when he testified before the Senate Antitrust Subcommittee under oath in September of 2011, potentially lied or obstructed justice.

Consider the LA Times report on an exchange between then Subcommittee Ranking Member Mike Lee:

“In one pointed exchange, Schmidt was asked to explain an independent study that compared the search results on three popular product-comparison websites and the Google shopping site. While the results from the other sites varied widely, Google Shopping results consistently ranked third, Sen. Mike Lee (R-Utah) said.

"When I see you magically coming up third every time … you've cooked it so you're always third," Lee charged.

"Senator … I can assure you we have not cooked anything," Schmidt responded.

He said Google Shopping was different from a product comparison site because it simply pointed users to where to buy the item rather than to sell it to them.

"I'm not aware of any unnecessary or strange boosts or biases" given to Google services in search results, Schmidt said.

But Schmidt's answer didn't satisfy some senators. Sen. Al Franken (D-Minn.) called the response "pretty fuzzy." And as Schmidt was finishing his 90-minute appearance, Lee said: "I'm troubled by what we've learned today about Google's practices."

I can also imagine that Congressional overseers of the FTC would be interested in asking FTC officials under oath why Google representing to over 200 million Americans for over a decade that they “never manipulate search results,” when the FTC staff report found damning Gmail evidence that they in fact did and still do, is not at least worthy of a Section 5 deceptive and unfair practices charge from the FTC against Google?   

 

 

Scott Cleland is President of Precursor LLC, a consultancy serving Fortune 500 clients, some of which are Google competitors. He is also author of “Search & Destroy: Why You Can’t Trust Google Inc. Cleland has testified before both the Senate and House antitrust subcommittees on Google and also before the relevant House oversight subcommittee on Google’s privacy problems.

 

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