Leave Google Alone

The brief history of Google is nothing short of amazing. Just twelve years after being founded in a Menlo Park, California garage, Google has become a catch-all verb describing Internet search itself and a company that generates nearly $28 billion in annual revenue with a market capitalization of about $180 billion (roughly equal to Singapore’s or Egypt’s GDP). But as all wildly successful companies will tell you, with great success comes great scrutiny. Oftentimes, that scrutiny comes in the form of an antitrust investigation brought about by smaller rivals complaining to government regulators about unfair practices – and that’s Google’s current predicament.

Last week, prompted by complaints from British price-comparison site foundem, French legal search engine ejustice.fr, and the shopping site Ciao!, the EU’s antitrust watchdog, the European Commission (EC), announced it was moving ahead with an investigation of Google for alleged antitrust violations.

Basically, the three companies accused Google of manipulating its search results to deliberately demote their sites, and the European Commission has found that these complaints warrant further investigation.

According to the EC:

The European Commission has decided to open an antitrust investigation into allegations that Google Inc. has abused a dominant position in online search, in violation of European Union rules (Article 102 TFEU). The opening of formal proceedings follows complaints by search service providers about unfavourable treatment of their services in Google's unpaid and sponsored search results coupled with an alleged preferential placement of Google's own services. This initiation of proceedings does not imply that the Commission has proof of any infringements. It only signifies that the Commission will conduct an in-depth investigation of the case as a matter of priority.

Although the EC’s statement indicates that the initiation of proceedings does not imply any violations, this investigation could prove very costly for the world’s preferred online search provider. History has shown that the EC’s antitrust regulators tend to take a more aggressive approach to their jobs than their U.S. counterparts. Tech giants such as Intel, Apple, and Microsoft have all felt the wrath of the EC in recent years. What’s more, the scale of the fines that could be levied on Google likely has its management and shareholders sweating bullets. If the EC finds Google guilty of monopoly abuses, the company could be on the hook for up to 10% of its annual revenue, a whopping $2.8 billion based on trailing twelve-month results.

Suffice it to say that it would behoove Google to take this investigation seriously. But that’s not really the point.

The point is that, at the end of the day, the EC is investigating Google for acting like a search engine. Last I checked, that’s the company’s business, yet that’s exactly what it’s being investigated for.

Think about it. In the words of the EC:

The Commission will investigate whether Google has abused a dominant market position in online search by allegedly lowering the ranking of unpaid search results of competing services which are specialised in providing users with specific online content such as price comparisons (so-called vertical search services) and by according preferential placement to the results of its own vertical search services in order to shut out competing services. The Commission will also look into allegations that Google lowered the 'Quality Score' for sponsored links of competing vertical search services. The Quality Score is one of the factors that determine the price paid to Google by advertisers.

Google was built for users, not websites. And the whole point of a search engine is to take you to the content you’re searching for, not another search engine that also lists results to your query. A great analogy I came across in this article read, “Getting upset that Google doesn’t point to other search engines is like getting upset that The New York Times doesn’t simply have headlines followed by a single paragraph of text that says ‘read about this story in the Wall Street Journal.’” Furthermore, it’s no crime to favor your vertical search services over competing ones. All search engines do this.

The bottom line is that the investigation makes no logical sense. Google is doing what it is in business to do, and it might have to pay a hefty fine for it because it does it better than everybody else.

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