European Antitrust Chief Says Google’s Auction-Based Shopping Remedy Not Working

At a conference yesterday, Margrethe Vestager, the European chief, said that Google’s efforts to drive more traffic to European comparison shopping rivals have basically failed. This is the opposite of what she said back in 2017 with her previous, qualified support for the changes Google made in response to a European Commission finding that the company had “abuse its market position” in shopping search.

The determination made back in 2017, which Google tried to appeal, came with a penalty of nearly €2.4 billion ($2.7 billion). Not only that, Google was required to give “equal treatment” to European shopping comparison competitors on the SERP. This ended out to be a remedy that involved bidding for placement in Product Listing Ads (PLAs). It required Google Shopping itself to compete for placement with the comparison engines with no dedicated or reserved slots.

Google Shopping, which now stood as a stand-alone business unit, was required to maintain a profit (20%) and submit a regular review by the Europeon Commission to ensure it was competing on equal terms.

Vestager did offer support for the approach and was encouraged by the initial results early on, the comparison engines vociferously complained about what they perceived to be ongoing unfairness. Other criticisms included:

  • There’s no material difference between the auction and the previous system, which violated EU antitrust rules
  • Google’s pledge to operate profitably is “just meaningless internal accounting, paid from one Google pocket into another.”
  • The auction forces comparison engines to “bid away the vast majority of their profit.” 
  • Because users who click on comparison engines’ PLAs go directly to merchant sites and not the comparison engines themselves, they have no opportunity to “derive value from the process.”
  • Consumers are harmed because the auction-based approach is not based on relevance and “all but eradicating” a “thriving [online] comparison shopping market in Europe.”

Fourteen comparison engines that signed a November 22, 2018 letter to Vestager urged “the Commission to enforce its Prohibition Decision by rejecting Google’s non-compliant ‘compliance mechanism’ and demanding an effective remedy that adheres to the principle of equal treatment set out in the Decision.”

There was at least one competitor in Europe that asked the European Commission to initiate a “non-compliance case” that could end up bringing more penalties to the table.

SourceGreg Sterling

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