27 August 2015
Legal action by European commission over shopping price comparison service ‘wrong as matter of fact, law and economics’, says Google
Google has described the European commission’s antitrust case against its search engine business as “wrong as a matter of fact, law and economics” in a lengthy counter submitted to the regulator.
The commission’s competition policy chief, Margrethe Vestager, launched a full-scale legal attack on Google in April, accusing the company of abusing its market dominance by systematically favouring its shopping price comparison service.
The challenge is a defining case for Europe in testing its regulatory muscle against one of the giants of the digital age. Shopping is seen as the opening salvo, with the commission still examining other Google services such as travel price comparison and local directories, as well as complaints about the copying, or “scraping”, of rivals’ content and restrictions on advertisers. A separate investigation has been launched into Google’s Android software, which is the world’s dominant mobile phone operating system.
Google’s response, which runs to more than 100 pages, is confidential. But the company’s general counsel Kent Walker outlined his defence in a blog postpublished on Thursday, saying that far from harming rival shopping price comparison services, the Google had increased traffic to their sites.
“The universe of shopping services has seen an enormous increase in traffic from Google, diverse new players, new investments and expanding consumer choice,” Walker claimed. He said that over the last decade, the company had delivered 20bn free clicks to rival price comparison sites, with free traffic – as opposed to traffic acquired by paying for adverts on Google – increasing by 227%.
“Economic data spanning more than a decade, an array of documents, and statements from complainants all confirm that product search is robustly competitive,” said Walker. Google’s submission is understood to claim that in recent years several hundred new price comparison businesses have launched in a handful of larger European markets.
Google shopping uses a box at the top of the page to show photos, prices and shipping costs for a product when users type in a name. So a search for “Nike Air Max” will return a box featuring five pairs of shoes with links to different retailers.
UK price comparison site Foundem, a similar French service called Twengaand the US consumer reviews site Yelp are understood to be among the complainants which the commission has used to build its case. Its formal statement of objections, sent to Google on 15 April, is confidential.
Google claims the commission has defined its competitors too narrowly, and says Google shopping should be seen as operating in a field that includes big retailers like Amazon and marketplaces like eBay, where shoppers frequently go to compare prices. Far from being harmed by Google, these retail businesses are growing fast, the search company points out.
“The ways people search for, compare, and buy products are rapidly evolving,” blogged Walker. “Users on desktop and mobile devices often want to go straight to trusted merchants who have established an online presence.”
He also rejected the commission’s proposed remedy. Vestager wants Google to use the advertising box at the top of its results page to show products sourced and ranked by other price comparison services, not just Google shopping.
The company argues that implementing this would be technically difficult, produce poor quality search results, and that the solution is not legally justified.
An opinion commissioned by Google from the Danish judge Bo Vesterdorf, a former president of the European court of first instance, claims such an obligation could only be legally justified where a company has a duty to supply its own rivals. This kind of duty tends to apply to utilities, providing essential services such as gas or electricity.
Google will now wait for the commission’s response. If its defence is unsuccessful, it could in theory be fined up to 10% of the previous year’s turnover. Google revenues were $66bn (£43bn) in 2014.
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