EC Must Learn from Almunia’s Google Mistakes – An Open Letter to EC

Dear European Commission Official,

History teaches that those who do not learn from the past are doomed to repeat it.

Specifically, as the new European Commission takes charge of the mess that is the Google competition case, it is important to learn from, and not repeat, Mr. Almunia’s many big Google mistakes.  

Summary of Almunia-Google Mistakes

1. Acquiescing to U.S. pressure to settle with Google
2. Politicizing the case
3. Mimicking the FTC’s shut-down of its Google search investigation
4. Freezing its search investigation for 29 months while negotiating
5. Assuming the EU settlement market-test requirement was unimportant
6. Creating the appearance of special treatment for Google
7. Expecting the EC to be a rubber stamp
8. Repeatedly delivering toothless ultimatums
9. Accepting Google’s user-market definition

Lessons Learned from Almunia-Google Mistakes

Mistake: Acquiescing to U.S. pressure to settle with Google. Early on, Mr. Almunia apparently agreed to follow the U.S. FTC’s lead in settling with, and not prosecuting Google, despite Google’s much higher market shares and Europe’s much stronger competition law. Google apparently interpreted Mr. Almunia’s unshakable public preference for settling to be a sign of weakness and political submission.

• Lesson: Settling best serves Google’s interests not the EU’s.  

Mistake: Politicizing the case. Mr. Almunia publicly chose to carry out a political settlement negotiation process in the media that ultimately would require the political approval of the European Commission. Mr. Almunia repeatedly rejected the more appropriate, fair and normal judicial process: based on legal procedures; judged on the legal merits of the case, the law, and precedent; and subject to due process.

• Lesson: Don’t politically negotiate via the media with a defendant that dominates discovery of information online.

Mistake: Mimicking the FTC’s shut-down of its Google search investigation. Similar to the FTC’s Google settlement, Mr. Almunia’s Google settlement would: shut down any further EC investigation of search abuses of dominance (for five years); find no market dominance (despite publicly stating Google controlled a 90% dominant search share in Europe); find no abuses of dominance; require no admission of wrongdoing; and impose no fines; in return for largely minor voluntary changes in Google’s business practices.

• Lesson: EC should enforce EU, not U.S., law in Europe.   

Mistake: Freezing its search investigation for 29 months while negotiating. Mr. Almunia’s unilateral surrender of the EC’s legal authority and negotiating power by not continuing its search investigation during negotiations ensured that the EC’s case would become increasingly stale and less serious over time, while enabling Google to strengthen and extend its search dominance into other markets like mobile, video, maps, etc. If one wanted a tough settlement one would continue to investigate faithfully to strengthen the case and add potential additional charges.

• Lesson: Don’t unilaterally surrender one’s negotiating leverage unless one seeks to capitulate.   

Mistake: Assuming the EU settlement market-test requirement was unimportant. Mr. Almunia and Google agreed to an original settlement that virtually no one else could support. In response they cosmetically tweaked the settlement and generated more opposition. In response to that increased opposition they tried to reject a third market test. Clearly, neither Mr. Almunia nor Google ever expected or wanted to address complainants’ competitive concerns.

• Lesson: Don’t adopt a no-market-test FTC settlement model when the EC’s settlement model requires market tests.  

Mistake: Creating the appearance of special treatment for Google. Mr. Almunia admitted to personally texting Mr. Schmidt. Mr. Almunia reportedly had an undisclosed private meeting with Mr. Schmidt at the notoriously-exclusive Davos conference. Mr. Almunia gave Google more public chances and more time to settle than any company ever. Mr. Almunia even tried to deny a market test of his third proposed settlement with Google.

• Lesson: Don’t let the defendant drive the process and design their own remedy. 

Mistake: Expecting the EC to be a rubber stamp. Repeatedly presenting the EC with the same fatally-flawed settlement approach -- that would not address the problem and would prevent the EC from addressing it differently for five years -- was clearly not in Europe’s interest.

• Lesson: Don’t forget from where one’s authority comes.  

Mistake: Repeatedly delivering toothless ultimatums. Mr. Almunia publicly threatened to issue a formal Statement of Objections no less than three times, but never did.

• Lesson: To retain credibility, do what you say.

Mistake: Accepting Google’s user-market definition. Google claims to work for users, when in fact users are the product that Google effectively sells to online advertisers for about ~$50 billion annually. If users are actually Google’s customers, why can’t users meaningfully control how Google uses their data? Why has Google’s privacy and user security track record been so harmful to users? Why does Google deceptively rank Google-owned shopping-results highest when they are not the objective, unbiased, and best results that Google promised and consumers expect?

• Lesson: Don’t let dominant companies define their own market.

Conclusion

In sum, Mr. Almunia’s handling of the Google competition case could go down in European history as the textbook example of how not to handle the enforcement problem of a dominant firm abusing its dominance.  

Sincerely,

Scott Cleland

Publisher, GoogleMonitor.com & Googleopoly.net

Author, Search & Destroy: Why You Can’t Trust Google

President, Precursor LLC, a research consultancy for Fortune 500 clients, some of which are Google competitors

Virginia, USA  

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Past Open Letters to European Commissioners on Google

1. Open Letter to European Commissioners to Reject Google Settlement Proposal [2-16-14]
2. The Growing EC-Google Settlement Scandal – An Open Letter to European Commissioners [3-31-14]
3. Google’s Anti-Competitive Rap Sheet Warrants Prosecution not Leniency – An Open Letter to European Commission Officials [4-30-14]
4. Why Handcuff the Next EC with a Bad Five-Year Google Deal? – An Open Letter to EC Commissioners [7-8-14] 
5. Why Settlements with Google Fail – Open Letter to New EC Commissioners [9-15-14] 

Key Background Google Research for European Commission Consideration

1. Google’s WorldWideWatch over the WorldWideWeb here
2. Google’s Anti-Competitive Rap Sheet – May 2014 -- here
3. Google’s Privacy Rap Sheet -- June 2014 -- here
4. Google Android’s Data Protection Failures -- August 2014 – here. 
5. Satire I: Grading Google’s Search Antitrust Remedies in EU Market Test -- here
6. Satire II: Grading Google’s Search Antitrust Remedies in Second EU Market Test -- here