Google’s Proposed Remedy in Europe Fails to Deliver “Equal Treatment” and Threatens to Make the Problem Worse
September 28, 2017
On June 27, the European Commission ordered Google to treat rival price comparison services the same as it treats its own Google Shopping service. The EC demanded that Google implement this principle of “equal treatment” by today, September 28. Google’s proposed remedy, according to media reports, is to make Google Shopping an independent unit within Google and then require the unit to compete for space against non-Google services. Google also changed how it designates search result slots, introducing an auction model in which top slots can be bought by the highest bidder.
We at Open Markets believe this proposal falls far short of what is necessary to address Google’s abuse of its dominant position in search. The only way to ensure that Google provides true equal treatment to all companies that sell services across Google’s monopoly platform is to completely separate ownership of Google search from ownership of any shopping service that relies on this platform.
The principle that a powerful corporation that provides essential services to other companies not compete with those same companies is an old one. At the U.S. federal level, we can trace decisions to simply outlaw such conflicts of interest at least as far back as the Banking Act of 1863. Google’s proposal in Europe actually gestures at exactly such a structural fix, then fails to establish any enforceable safeguards against that corporation favoring its own products and services. Enforcers, both in Europe and the United States, should take Google’s proposal to its logical conclusion – and order a complete breaking apart of the two lines of business.
Moreover, Google’s proposal to switch from a model of free, relevance-based rankings to a model where ranking is sold to the highest bidder threatens to make the problem even worse. The EC’s order sought to ensure that the shopping search market is fair and open. But the auction model that Google now proposes would tilt the playing field to favor rich companies such as Google – which can simply pay more for search result slots – over less well-capitalized companies that may offer the public better services and more relevant results.