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As is usually the case when a news event takes place that relatively few people understand, the Internet fills with prophesies of doom while unbridled fear and unfounded gossip circulates among bloggers and on social media.
This is what’s happening now that the European Union’s governing body, the European Commission, announced that it was sending Google a Statement of Objections relating to the way it does a tiny part of its business.
Specifically, the EC will allege that Google is giving preferential treatment to its lightly- used shopping service, Google Shopping. Never heard of Google Shopping, you say? That’s probably because it’s easy to miss. But just so you’ll know, when you enter the name of a product and see a row of photos and prices in the search results, that may be Google Shopping. Or, it might be something else.
In my experience Google Shopping provides a necessary service by presenting poorly- priced options. By using Google Shopping, you’ll know how much is too much to pay. That’s it. That’s the totality of the European complaint. There’s also an Android complaint that’s expected shortly based on the default location of icons on smartphones. Google is strongly disagreeing with the EC on both Search and Android.
The hue and cry that you’re hearing from European politicians is not really related to any ongoing antitrust action. In fact, my experience has been that this anti-American rhetoric is strictly for local consumption. Politicians in Europe can get votes by running against Washington, just as they can in the U.S.
The reason is simple: Since Europe doesn’t really have a capital city, and because Europe’s EU President is only in office for six months, they don’t have an equivalent political target. So Washington, and by extension anything American, is the next best thing.
The reason that more responsible folks are paying attention to all of this is because it’s always possible that two things might happen. One is that the EC might impose a penalty on Google. The other is that Google might make changes to its search engine algorithms.
If the EC imposes a fine against Google, the appeals will take decades, during which time nothing will happen. If Google decides to make changes unilaterally, then users may have to adjust. According to former White House official Karen Evans, the possibility that Google may make changes in the face of the EU complaints means that CIOs will have to be prepared for changes in how they manage search functions.
“Everyone is watching this and it’s a risk,” Evans said. She said it could affect budgeting if IT organizations in both the private and public sectors find they need to do more than usual to keep their search-related functions optimized.
EU Antitrust Case Against Google Shopping Much Ado About Very Little
Evans oversaw the $71 billion federal IT budget as the former administrator of the Office of Electronic Government and Information Technology in the President George W. Bush Administration. Her position was the precursor to the office of U.S. Chief Information Officer, which was created by President Barack Obama.
But it’s only a risk if Google thinks it’s going to lose and makes changes. According to Ed Black, President and CEO of the Computer and Communications Industry Association, and a long-time antitrust lawyer, the EU case against Google may well go nowhere. “It’s a little bit odd and a little bit weak,” Black said in reference to the EU case.
Black said that EU antitrust lawyers tend to be focused on the facts of the case and the requirements of the law. The fact that Google is both an American company and also very large shouldn’t have an impact, Black said. “It does not seem to make a compelling case,” Black said. Antitrust law is supposed to be enforced equally for all players. It isn’t supposed to be used just “for big guys we don’t like,” Black said.
However, Black also noted that there’s a growing protectionist climate in Europe that’s a cause for worry. But he noted that this has led to a change in how antitrust is working in Europe. “It’s unfortunate that antitrust has become a business strategy rather than a way to go after abuse,” he said. “Now it’s just a way to tie competitors up in knots.”
So what’s really going on here? Two things, really. The EU has a new Competition Chief, Margrethe Vestager, and she’s just taken over the Google antitrust matter. Vestager’s predecessor was trying to swing a deal with Google to avoid any antitrust issues. Vestager has said that she wants to proceed more formally. In addition, going after Google is politically safe, regardless of the outcome.
But it’s worth noting that the U.S. Federal Trade Commission has already investigated similar charges against Google, and it chose not to proceed because of a lack of any evidence that anyone was harmed. Black said he thinks the outcome in Europe will be the same. “As long as they stay focused on existing law and on the real facts the outcome will be defensible,” Black said.
In reality, the complaints against Google are as much related to pressure by European politicians to rein in Google. Those politicians are unhappy because of the cultural impact of Google and not because the company broke the law. So it’s likely that the current action will eventually come to nothing. But in the process the case will help demonstrate that the government is doing something even if there’s little it can do.
“The disruptive nature of the Internet causes change and sometimes change makes people angry,” Black said. “It may be good, but it doesn’t necessarily leave people feeling warm and fuzzy.”