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Google is proposing an auction plan that would enable competing shopping sites to bid for any spot in Google’s Product Listing Ads (PLA) section that appears at the top of the results page when people search for products, according to a Reuters report.
The proposal is in response to a directive from European Union antitrust regulators that Google take action to ensure that rival comparison-shopping websites get the same visibility in search results that Google gives to its own shopping site. Reuters reported the Google proposal Sept. 15 citing four unnamed sources.
The company submitted the proposal to the European Commission on August 28 and has so far received feedback from five competitors, all of which has been overwhelmingly negative, Reuters said.
EU regulators fined Google $2.9 billion after determining the company was using its market muscle to shut out competing shopping sites from product search results.
The fine stemmed from complaints by several comparison-shopping sites that Google gives the top placement in search results to paid product ads. The sites have said that when users search for specific products on Google Search, the items that appear on top of the results page are all paid advertisements that link back to Google’s own Shopping site.
In contrast, organic, and often the more relevant results that point to other shopping sites, are pushed much further down in the search results and are therefore far less viewed and clicked on. In addition to hurting traffic to rival sites, Google’s practices are also harmful to consumers and deny them true choice, the rival sites have complained.
In agreeing with the complaints, the EU regulators ordered Google to come up with a mechanism for ensuring that all shopping sites get an equal shot at being clicked on. The regulators had warned Google it would incur additional fines if it failed to comply with the order.
Google’s auction proposal to this demand is actually a rehash of a remedy it proposed previously and which was roundly rejected by rival comparison shopping sites. While it does give a way for rival sites to get visibility at the top of the results page, they will need to pay for that visibility.
In a Sept. 18 blog U.K. price comparison site Foundem explained once again, why Google’s proposed remedy is unworkable.
“It is difficult to imagine how Google could devise an auction mechanism that would not inflict significant additional consumer harm, both by further restricting competition and by aiding and abetting Google in its long-term goal to substitute unprofitable, relevance-based natural search results with highly-profitable, pay-for-placement advertisements,” the site noted.
It is also unclear how Google could meaningfully participate in such an auction-based mechanism without structurally separating its Shopping business from the rest of the company, Foundem asserted in its blog.
“Unless Google is volunteering to break up its general- and specialized-search businesses, the inclusion of Google’s comparison shopping competitors into a new or existing pay-for-placement auction would simply create an additional anti-competitive barrier,” Foundem claimed.
But Charles King, principal analyst at Pund-IT Inc. said Google’s proposed remedy seems relatively fair. “It seems like a reasonable compromise to me, and fairer than past Google offers which reserved the top two PLA spots for its own ads,” he said.
“It also appears to make sense from a corporate asset governance standpoint for Google, since it offers rival ad companies the same positions and features the company provides to its own business groups and organizations.”
It is entirely possible that the remedy will not be sufficient and that Google’s rivals will demand more. But Google has the motives and the means to fully exercise the appeals process available to it under EU law, King said.
“Depending on how the EU responds to Google’s offer, some competitors may decide that taking this offer is a wiser course than continuing to suffer what they believe is second class status for additional months or even years.”