Google says it will offer antitrust remedy to EU to avoid further penalties

Google parent Alphabet is preparing to comply with EU regulators’ demand that it no longer “favor its own content” in shopping search results. Google must propose a solution that will offer “equal treatment” to Google’s shopping rivals by Tuesday at midnight.

In June, Google received a long-anticipated antitrust fine of EUR 2.4 billion (now $2.9 billion). The European Commission gave the company until September 28 to discontinue its alleged anti-competitive practices. Google’s indication that it will comply suggests it has declined to challenge the Commission’s decision in court.

Failing to meet the Tuesday deadline would expose Alphabet to additional fines, which could amount to millions of dollars per day. The question is: what will Google’s proposal look like? Will it affect shopping-related ad placement in search results? It’s not clear to me whether ads will be impacted.

Before current European Commission head Margrethe Vestager took office in late 2014 and adopted a more aggressive approach toward antitrust, Google was on the cusp of settlement with former European Commission competition chief Joaquín Almunia.

However, Almunia was unable to sell any of several Google proposals to colleagues and European politicians. Those proposals included modification of search results to make competitive offerings more prominent. A formal Statement of Objections was filed in April 2015 which stated the following:

• Google systematically positions and prominently displays its comparison shopping service in its general search results pages, irrespective of its merits.
• Google does not apply to its own comparison shopping service the system of penalties which it applies to other comparison shopping services on the basis of defined parameters, and which can lead to the lowering of the rank in which they appear in Google’s general search results pages.
• As a result of Google’s systematic favouring of its subsequent comparison shopping services, Google Product Search and Google Shopping, both experienced higher rates of growth, to the detriment of rival comparison shopping services.

Any proposed remedy will need to address these considerations, among others. Accordingly, Google may need to remove any results at the top of search results that points to Google Shopping or other Google-hosted content. Addressing this in a mobile context could bring the unwelcome return of “10 blue links.”

On the desktop, Google could use the right column for display of Google Shopping ads or content. It could also take a native advertising approach and put third-party content at the top of the page, moving Google Shopping results and ads down the page, which could also be done in mobile.

Shopping search is the first of multiple antitrust cases that Google faces, including potentially other “vertical search” categories (e.g., Travel, Maps/Local). Other active cases involve exclusivity provisions in Google AdWords agreements and Android-OEM contracts.

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