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Technology / ANALYSIS

Google Tries to Preempt European Union

This file photo taken April 9, 2010, shows a Google sign at the company's headquarters in Mountain View, Calif.(AP Photo/Paul Sakuma)

photo of Adam  Mazmanian
May 22, 2012

How guilty is Google? That’s essentially the question being asked by Joaquín Almunia, the European Union’s top antitrust regulator, in his preliminary finding that points to four broadly defined “abuses of dominance” in Google’s business practice.

It's a question Google has tried to answer in advance of regulators. The company’s inside game on antitrust inquiries could provide some insight on how it will respond to the EU.

Google has been commissioning and circulating academic papers with pro-Google arguments designed to preempt possible avenues of inquiry. Just over a week ago, Marvin Ammori, a First Amendment lawyer and formerly general counsel of the advocacy group Free Press, coauthored a paper that reads like a possible rehearsal of Google’s answers to several of Almunia’s key objections.

 

The wrench here is that Almunia has asked Google to come up with remedies to four of its own allegedly anticompetitive practices, or else face charges that could include a formal Statement of Objections and fines of up to 10 percent of total annual revenues.

Google’s initial reaction was to disagree with the EU findings. But Almunia is seeking a more substantive response, and on a timetable of several weeks.

Ammori pointed out in an interview that he is paid by Google for public policy advice, not actively engaged in the antitrust case. But he did hold out the idea that his paper is an audition of possible legal arguments Google could make to regulators. “The audience for the work is Google’s lawyers,” Ammori said in the interview.

On the critical question of “search bias” -- Google’s practice of including and allegedly favoring links to its own properties in search, maps, local, and other online verticals -- the paper argues that there is no effective way to prove search bias because there is no objective standard for online search results.

Even if there were search bias, the remedies are onerous and impractical, argue Ammori and his coauthor Luke Pelican, a technology policy specialist at the Competitive Enterprise Institute.

Creating an outside committee to monitor changes to Google’s search algorithm for anticompetitive elements would have the effect of “grinding Google’s engineering process to a halt.” A divestiture solution -- forcing Google to separate the business operations of  its general search from  content and e-commerce properties such as maps and local -- would require an overhaul of Google’s patents, intellectual property, and licensing agreements and would disadvantage Google relative to the integrated offerings from advertising competitors such as Facebook and commercial competitors such as Amazon.

Even the suggestion that Google provide a disclaimer identifying its economic interest in its own links is rejected as redundant. Ammori and Pelican write that there’s “no evidence of consumer confusion” over the issue of links to Google’s properties appearing within search results.

These positions appear to give Google little room to maneuver when it comes to suggesting remedies for search bias. There is the improbable and probably impractical option of ceasing operations on EU Internet domains in the way it redirected users of its .cn domain to its Hong Kong service to protest attacks on its systems by Chinese hackers in 2010 amid a broader dispute about censorship.

Ammori dismisses this idea as “fairly aggressive.” In addition to alienating European regulators, it would do nothing to forestall the case being brought by the Federal Trade Commission.

The paper addresses the EU's allegation that Google is “copying” content -- scraping and republishing excerpts from sites on their own vertical search pages -- but in the context of U.S. copyright law. Ammori says the objections here are “peculiarly European” and probably won’t show up in an FTC case -- a suggestion that is disputed by Google’s opponents. In any case, they say, the proposed remedies here, such as requiring Google to obtain explicit permission to crawl and display snippets of competitors’ content, would lead to “enormous transaction costs” in terms of copyright clearance.

Interestingly, the paper doesn’t directly touch on the two of the EU allegations that appear to have the most direct remedies, although these issues were known to be part of Almunia’s probe when it was launched in November 2010.

The EU complained that Google doesn’t make it easy enough for search advertisers to move information from campaigns stored in its AdWords ad-buying platform to competitive services. This could be addressed by rewriting the user agreement to allow for greater data portability. Similarly, the allegation that Google is unfairly controlling access to advertising markets on third-party sites that license Google’s search engine apparently could be rectified by allowing Google competitors access to that limited marketplace.

The universal search issue, however, goes to the core of Google's business. “I would think they’d have difficulty reaching a settlement there," said Ben Edelman, a Harvard Business School assistant professor and longtime critic of Google’s business practices. But Ammori points to Google's public statements. “Google doesn’t believe they’ve done anything wrong," he said in the interview.

With a powerful regulator demanding a settlement or else, it may be that Google will look to the more obscure points of the EU charge sheet for compromise.

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