ICOMP: Initiative for a Competitive Online Marketplace

Internet giant Google has announced it will track, share and use all user data across all its platforms following a major privacy policy update – and there is no way for users to “opt out”

Search giant Google announced on Tuesday it is combining most of its 70 privacy documents covering its different products into a single shared privacy policy.

On the face of it, this simplification seems a step in the right direction.

Fundamental user impact
However, studying Google’s official blog post on the privacy policy update in more detail soon reveals the true magnitude and user impact of these fundamental privacy policy changes.

From 1 March, all user data collected on Google’s many platforms will be collated and used by Google across all of its products, and there is no “opt out” option for users.

Google’s blog post reads: “[...] we may combine information you’ve provided from one service with information from other services. In short, we’ll treat you as a single user across all our products [...]”

Grand-scale data mining operation
For the user, this means that everything and anything done on Gmail, Google search, YouTube, Google Maps, Google+ or any Google’s other services will be tracked and centrally analysed to build an accurate profile of the user’s interests. A profile which will aid the Internet giant to display more relevant ads to the user and further increase profits.

Google can also store cookies on people’s computers to see which web sites they visit or use its popular Google Maps program to estimate their location.

Even mobile phones based on Google’s popular Android operating system will be including in the grand-scale data mining operation.

Consumer group concerns: “Frustrating and a little frightening”
Consumer advocates have responded to Google’s announcement with great concern as users don’t expect their data to be shared between seemingly unrelated websites such as Gmail and YouTube.

The Washington Post quoted Common Sense Media chief executive James Steyer as saying: “Google’s new privacy announcement is frustrating and a little frightening,”

“Even if the company believes that tracking users across all platforms improves their services, consumers should still have the option to opt out — especially the kids and teens who are avid users of YouTube, Gmail and Google Search.”

Technology analysts have interpreted Google’s radical privacy policy changes as the search engine giant violating users’ privacy and abandoning its founding philosophy “Do no evil”.

That philosophy, said Mat Honan, writing on the technology news site Gizmodo, had “been largely interpreted as meaning that Google will always put its users first, an interpretation that Google has cultivated and encouraged. Google has built a very lucrative company on the reputation of user respect.”

“And now it’s pulling the stakes out, collapsing it. It gives you a few weeks to pull your data out, using its data-liberation service, but if you want to use Google services, you have to agree to these rules,” Honan wrote.

Journalist Raakhee Mirchandani wrote in a Boston Herald blog that “Google’s aggressive changes to its privacy policy could quickly turn everyone’s favourite company into Public Enemy No. 1.”

The true extend and impact of Google’s changes to its privacy policy are yet to be realised by consumers.

“There is no way a user can comprehend the implication of Google collecting across platforms for information about your health, political opinions and financial concerns,” Jeffrey Chester, executive director of the Center for Digital Democracy, a privacy advocacy group, was quoted by the Washington Post as saying.

The latest move by the Internet giant comes after Google recently disappointed Wall Street investors for the first time in several quarters, and as the company is facing antitrust investigations of its business practices both in the U.S. and Europe.

Obscure search rankings
These investigations also probe whether Google may have manipulated search rankings in favour of its own services. Obscure search rankings which hinder growth of innovative smaller and medium-sized enterprises are the subject of a campaign for greater search engine transparency, “Have I been penalized..?”, which is spearheaded by One News Page. For more information, please visit the campaign website.

By Marc Pinter-Krainer,
One News Page

It seems that hardly a week goes by without one of the world’s biggest monopolies changing the way that individuals access information online, whilst causing controversy in the process.

Last week Google announced its latest change to the way in which it ranks search results. Called the “page layout algorithm”, the latest modification is aimed at websites that appear to bury content under advertisements. This means that websites which feature pages that are considered to be ‘weighed under’ down ads, would have a ranking decrease attached to the entire site. If the content on a web page is obscured, or pushed below-the-fold, by an unorthodox amount of ads, the website as a whole will feel the repercussions and will consequently appear further down the search results.

In what is apparently a case of the ‘responsible gatekeeper’ looking after its citizens, the changes have been introduced essentially to attempt to weed out those sites that rely on pushing ads at users and restrict them from getting in the way of the information being sought. Interestingly however there is no definitive measure of how much is too much or what defines content ‘weighed under’ down ads. Google does not state where it draws the line with websites nor what counts as having too many ads on the page but instead leaves it to the judgement of site owners, with the consequences coming into effect regardless.

The reasoning behind the new algorithm suggests that Google’s own heavily ad-ridden search results would stand condemned by the logic of its own argument. We ask, will Google, for the second time this month, penalise itself and be subject to the same ramifications as other web pages! Once more, Orwell might well smile at the authoritarian nature of this monopoly and the use of doublespeak on exhibition.

The screen shot below demonstrates what happens when the word ‘casinos’ is typed into the search bar. As shown over 50% of the search results page real-estate is devoted to advertising links, whilst almost a further 35% contains links to Google products. Just 11% of the entire page is left over for organic search results.

Whilst Google is proud of its clean and clear page design, and does not feature banner or display advertising, nonetheless, a great deal of this page is taken over by advertising. Perhaps more insidiously, although some is labelled as advertising – but not the links to Google’s own services which are displayed as natural search no matter how unnaturally favoured their ranking seems – much of it is hard to distinguish from actual search results. Research in Australia shows that more than one-in-four internet users did not realise that the listings at the top of the page were ads. In this case how can over 85% of the page real-estate not equate to an “abnormally large” percentage of the page?

This is not the first instance of Google exhibiting a certain degree of double standards:

• The Panda update in September 2011 caused controversy when it appeared to demote a number of legitimate and popular websites in search results, whilst Google-owned websites such as YouTube, were unaffected, and actually gained visibility as a result.

• The ‘lack of original content’ has long been a guiding mantra for those at Google in determining search results, however the search giant itself holds no original content, yet its services still appear at the top of almost every search.

• On several occasions Google has directly violated its own rule which does not allow paid-for links by sponsoring blog posts favourable remarks about the Google Chrome web browser.

There are a number of other instances where Google has appeared to hold its own services to a different standard, telling consumers and businesses one thing whilst treating itself beyond the law. Before pushing the wider online community to fall into line with its demands, perhaps Google needs to begin by looking closer to home first and examining its own practices.

Regards,
The ICOMP Secretariat

Support for SMEs is one of the cornerstone policies of the EU and European Governments. SMEs make up 99 % of all businesses, provide two out of three private sector jobs (around 90 million) and contribute to more than half of the total value-added created by businesses in the EU. They also play a key role in innovation and R&D.

With its new action plan on eCommerce, the European Commission is seeking to boost online sales, create new opportunities for citizens and businesses and bring Europe more growth and employment. Its aim is to double the volume of e-commerce across Europe by 2015. SMEs are absolutely essential to achieve this objective.
As an organisation committed to the sustainable growth of the Internet and whose members include many innovative SMEs, ICOMP believes that fair competition and transparent business practices are essential pre-conditions for a healthy and open market environment that encourages entry, fosters innovation and allows online businesses to flourish.

Given the essential role of online search in connecting consumers and businesses of all sizes, competition in this area is essential to create a business environment where innovative SMEs can unleash their full potential.

SMEs play a central role in the virtuous circle that, starting from healthy competition and openness, brings economic growth, employment and innovation. However, they are also extremely vulnerable to obscure, non-transparent or abusive business practices from much bigger businesses and dominant business partners on whom they depend for access to infrastructure, such as, in the case of many SMEs, Google.

As if to illustrate this imbalance, last week Google announced its fourth quarter and fiscal year 2011 results. According to the official press release, Google’s revenue was up 29% and its quarterly revenue flew past the $10 billion mark for the first time. Overall, 96% of Google’s revenue came from advertising.

SMEs, on the other hand, are facing a very different situation. According to research recently published by Workbooks.com, a survey of more than 500 small business leaders across the UK conducted online by YouGov (and reported on the highly respected blogosphere website Technorati) found that only 18% of SMEs using Google Adwords believe that they recoup the cost of their investment in terms of online sales. The implication is clear: they feel they must use Google to access customers but the benefits of that relationship flow overwhelmingly to Google.

A growing number of innovative European companies are now complaining that the search engine is using its market dominance to favour its own services and disadvantage its competitors. This is despite Google’s much publicised claims that it helps small businesses to get online (its conference entitled “The single market opportunity – getting Europe’s SMEs online” to be held in Brussels tomorrow and the comments made to the Wall St. Journal over the weekend by its new Head of Northern and Central Europe ).

A high proportion of the antitrust complaints against Google (though by no means all) emanate from SMEs, including members of ICOMP. They show how Google has:

• penalised SMEs offering good quality and highly innovative online services by pushing them down Google’s search rankings out of useful reach of consumers,

• abused its monopoly position in search by discriminating in favour of its own commercial services at the expense of its competitors, and

• undermined its competitors by using its monopoly profits in search related advertising to offer services initially for free or at prices that its commercial rivals cannot match.

Many of the practices described above, which would put the existence of any given small company at risk, are being investigated by competition authorities around the globe.

Opaque business practices, lack of transparency and responsiveness and onerous terms and conditions are hallmarks of businesses which enjoy monopoly power. Google denies that it is dominant, claiming that the competition is only ever a click away. However, this is simply not the case for SMEs looking to advertise their products and services; in the online advertising world alternatives simply do not exist in Europe, so to reach their audience SMEs have no choice but to work by Google’s rules.

The latest example concerns the Kenyan SME Mocality, an online business directory that boasted the largest and most accurate listing of businesses in Kenya. In a stunning blogpost, Mocality CEO Stefan Magdalinski described how Google appeared to have been systematically accessing Mocality’s database and attempting to sell a competing product to Mocality’s customers.

SMEs need fair treatment and a fair share of the rewards from their entrepreneurship. Deceptive and abusive business practices harm the entire Internet ecosystem and small players are the first ones to suffer the consequences.

Regards,
The ICOMP Secretariat

Google’s founding principle to ‘Do no evil’ has been subject to challenge for some time now, but the last few weeks have perhaps seen the most concentrated level of emerging evidence that its business practices actually fall very short of this altruistic claim.

Since Christmas Google has been variously accused of deliberately obstructing an official investigation by the Korean Fair Trade Commission – complete with the digital version of Enron-esque shredding; of profiting from the illegal sale of Olympic tickets in the UK; and of ignoring the terms of its commitments to the DoJ over its acquisition of ITA. Then today, in perhaps the most egregious example of arrogance of power yet, allegations of Google’s deliberate and systematic filleting of the database of an incumbent player, complete with the apparent use of fraudulent claims of partnership in order to steal business from it.

The case raised by Mocality CEO, Stefan Magdalinski, on his blog is astounding in its own right. Not only for the arrogance of the initial activity, but what appears to be the sheer aggression of an orchestrated attack against a local enterprise that not only posed no threat, but was actually contributing to Google’s business. However, what is most alarming to us at ICOMP is what we see as an emerging pattern of apparent behaviour that shows scant regard for business ethics, accepted norms of behaviour and even legislation and the rule of law.

What these cited cases, plus those we know of from our own members, illustrate is a view of the world that says that if it is for the good of Google then it must be good. Dominance, it seems, has convinced Google that it’s okay to trample on anyone that opposes it, or indeed just gets in the way. This rash of well-sourced stories reveal not only an aggressive and bullying business, but one that either does not see, or does not choose to acknowledge, that it is doing anything wrong.

Time and again, when confronted with evidence of illegal, or at least unethical, behaviour Google executives see fit to respond with glib statements that take no responsibility nor express any contrition for their transgressions. Google’s response today was:

“We’re aware that a company in Kenya has accused us of using some of their publicly available customer data without permission. We are investigating the matter and will have more information as soon as possible.”

It is clear from this that Google is seeking to down play and obscure the real facts; that they had been accused of fraud and predatory tactics – here’s what Stefan Madalinski actually alleged on his blog (our emphasis)4:

“Since October, Google’s GKBO appears to have been systematically accessing Mocality’s database and attempting to sell their competing product to our business owners. They have been telling untruths about their relationship with us, and about our business practices, in order to do so. As of January 11th, nearly 30% of our database has apparently been contacted.

I did not expect to find a human-powered, systematic, months-long, fraudulent (falsely claiming to be collaborating with us, and worse) attempt to undermine our business, being perpetrated from call centres on 2 continents.”

So, something far more serious that the implied misunderstanding over some public data!

Earlier this week, as well, in response to wide-ranging concerns over privacy and unfair use of dominance it responded to Twitter’s legitimate concern that useful, relevant information would be lost in search thanks to its new Google Plus Your World, by implying sour grapes:

“We are a bit surprised by Twitter’s comments about Search plus Your World, because they chose not to renew their agreement with us last summer.”

In similar vein, when asked by the BBC about the profits made from advertising the illegal sale of tickets for the London 2012 Olympics Google simply replied that it would keep the money made from organizations advertising illegal products on its service.

Google trades heavily on its ‘Do no Evil’ motto, and its claim that consumers benefit from its range of free products, but surely all must now be asking – what is the real cost, in terms of the businesses and livelihoods of the many organizations and individuals that are suffering around the world?

Regards,
The ICOMP Secretariat

Earlier this week, Google launched its new ‘Search Plus Your World’ feature which, as the Financial Times reported, was said to involve levels of “unprecedented security, transparency and control” alongside a revolution in how users experience search. However, the alterations have the potential to cause serious harm to both users and other internet companies.

In brief, the changes mean that Google search results will now integrate photos and Google+ posts above natural search results. Your own search results will include other links suggested to you based on your Gmail contacts, chat buddies, Google Reader subscription and Google Social Search. In addition, if you are a user of these Google applications, the information you share through them will be included in the searches of any of your contacts and anyone that Google deems a ‘suggested contact’

What does this change mean for users privacy?

One of the most concerning aspects of ‘Search Plus Your World’ is the increased threat to user privacy it poses; this has been commented on extensively online. By default, individuals’ data is now constantly being sifted through in order to populate search results. This is a new feature which has been automatically turned on for all English-language searches.

Though there is an opt-out option, according to an article on the EPIC website, whether or not an individual wants their data appearing on search pages, website users, “cannot opt-out of having their information found through Google search”. This data can be drawn from almost any Google product that a person is using. To paraphrase Mr Schmidt’s own words, it looks like Google has now gone “beyond the creepy line”.

Furthermore, very little has been disclosed about how this process actually works, how this may evolve in the future and what all this personal data is being used for. As this Network World article says, the fact that we are living in a connected world does not mean that “I would personally chose to have my privacy stripped in an ‘I’ll show you mine if you show me yours’ search world.”

How relevant are your online searches?

With the advent of all this data, one must be concerned about whether search results are actually going to get better for the end user. Will they be more effective at finding the information that an individual is seeking, or will it merely prove to be a distraction. At best, it is questionable whether the new ‘innovations’ will produce results as efficiently and which are as relevant as provided by organic search. Will search become polluted with irrelevant content from social media? Will it be harder to find the things you want to know amongst the clutter of things you already did know? Is the real driver Google’s desire to provide results relevant to a specific individual, or to drive adoption of its own social media platforms and extend its dominance in search into this new arena? This leads directly to the third point.

Are competitors being harmed?

In light of recent events, and steps being taken by competition authorities in both Europe and the US, it is important to examine whether Google’s ‘Search Plus Your World’ will harm other companies operating in the online environment, and ultimately consumers. As PCWorld notes, “postings made to Google+ either by you or someone in one of your “circles” will appear in your search results. Photos from Picasa, Google’s photos service, will appear in searches, too”. In contrast, results from Twitter and Facebook (and others) will not be included.

This means that Google will be able to harness its dominant market position in search (where it has a near monopoly in many European countries) to drive consumers to its own social media products. In turn, maximising the commercial value of those products and, above all, increasing their advertising revenue potential. This tactic has been seen and reported on before and a similar discussion evolved around the introduction of Universal Search which featured prominently in ICOMP member Foundem’s complaint to the European Commission. It seems from Twitter’s reaction that Google is attempting to strong arm other data sources into compliance. They are offered a choice between opening their data up or exclusion. But the experience of Yelp in the US, as it testified before the Senate Subcommittee in September 2011, is that cooperation can lead to losing your data and suffering commercial disadvantage. Non-cooperation lines you up as ‘against’ Google, with all that implies.

The changes being implemented are certainly controversial, with many adding their voices to those who have expressed concern already. Behind the shadow of ‘doing no evil’ it appears as though these modifications are about to change the rules of the game once more and that they do not quite live up to the benchmark of “unprecedented security, transparency and control.”

Regards,
David Wood
ICOMP Legal Counsel

ICOMP member, One News Page has published a blog on Google’s latest search addition which can be found here.

Google Flight Search set to threaten online travel agents such as Expedia and Kayak

Internet search giant Google has rolled out a new product, Google Flight Search, in an effort to get a share of the $110 billion-per-year online travel market.

Powered by ITA Software, which Google acquired last year, the new Flight Search results appear at the top of Google’s pages when searching for flights such as “SF to NYC”.

Search Advantage
Starting in December 2011, Google began placing its Flight Search results prominently above links to major online travel agents such as Expedia, Orbits, Kayak, FareCompare and Priceline.com.

These online travel agencies are worried because hitherto around 20-30 percent of their traffic – and revenues – originated from Google. However, with the prominent placement of Google’s own Flight Search at the lucrative top spot on search results pages, this traffic is set to decrease substantially – in favour of Google.

Many online travel industry providers are now concerned that Google is abusing its dominant market position in search to effectively squeeze them out of the market. They say Google is violating its promise to use its new Flight Search function to send more traffic to online agencies as well as airlines.

Anti-trust investigations
Google is already facing scrutiny for the way its own services appear in its search results – with investigations by competition authorities on both sides of the Atlantic underway.

According to a report in The Financial Times, the European Commission was examining claims that Google “downgrades some rival websites in its search results, while playing up its own services”.

In the U.S., two senators called on the Federal Trade Commission last month to investigate whether Google was exploiting the fact it had a majority of both search via PC and mobile devices.

“A key question is whether Google is using its market power to steer users to its own web products or secondary services and discriminating against other websites with which it competes,” Senators Herb Kohl and Mike Lee wrote.

Obscure search penalties
Another aspect of the all-important ranking of search results includes Google’s obscure search penalties which often appear to be applied to websites “accidentally”. The search engine currently provides no explanation or any reasonable appeals process for concerned website owners. Information about a campaign for greater transparency surrounding search penalties – spearheaded by One News Page – can be found on the “Have I been penalized..?” website.

By Marc Pinter-Krainer
Founder & CEO of One News Page

Syndicated from One News Page

The pressure on Google to come clean about its business practices and behaviour as a dominant player was raised in the US this week as two leading senators made a formal plea for an investigation into Google.

Senators Herb Kohl (a Democrat) and Mike Lee (a Republican), both members of the Senate Antitrust Subcommittee, released a letter supporting an investigation by the Federal Trade Commission into Google. The clear implication is that following the subcommittee’s hearing in September Google still has many questions to answer. In the press release accompanying the letter the following paragraph is pulled out:

“We believe these allegations regarding Google’s search engine practices raise important competition issues. We are committed to ensuring that consumers benefit from robust competition in online search and that the Internet remains the source of much free-market innovation. We therefore urge the FTC to investigate the issues raised at our Subcommittee hearing to determine whether Google’s actions violate antitrust law or substantially harm consumers or competition in this vital industry.”

ICOMP wholeheartedly supports these views and applauds the Senators for continuing to press on these issues. It is evident that Eric Schmidt’s testimony in front of the Antitrust Subcommittee did little to allay their fears that it was both a dominant force in search and that its practices continue to raise cause for concern.

ICOMP member Foundem commented at the time on Schmidt’s evasion and lack of clarity in answering many of the senators’ questions, posting this blog highlighting the areas in which it felt Google’s answers were not sufficient. It seems that the Senators’ shared their views.

Significant amongst the Senator’s comments was the concern that Google was stifling competition. For all its PR and public policy behind encouraging entrepreneurs, it seems Google’s practices are seen by some as harmful to the innovation that is the oxygen of development and competition on the Internet. The letter calls out comments from Jeremy Stoppelman, CEO of Yelp!, and Jeffrey Katz, CEO of Nextag – both erstwhile Google partners, that suggests they would not be given the chance to exist in the environment Google has now created:

“Indeed, both CEOs testified that they would not attempt to launch their companies today given Google’s current practices, raising serious concerns about the impact of these practices on innovation.”

At a time when a number of jurisdictions are engaged in, or considering investigations into Google’s abuse of its market position, or related topics, this letter and pleas to the FTC is clearly a significant development that will help to assure regulators that Google does have a case to answer, and that its practices have attracted the attention of their colleagues and peers around the world.

ICOMP echoes the penultimate paragraph of the letter:

“It is important to note that the concerns raised in this letter are not an effort to protect any specific competitor. Rather, our interest is to ensure robust competition in this vital market. We recognize that the internet is fast evolving and subject to rapid technological change. We are motivated by a strong desire to protect the Internet’s openness, competitiveness and capacity for innovation.”

This closely mirrors our own principles and we welcome the Senator’s drive to ensure that they are respected by all parties.

Regards
The ICOMP Secretariat

It is not difficult to argue – when the powers of the marketplace are concentrated into one body or organisation, competition and innovation are stifled. The evidence for this is boundless. This themes are set out in the Australian Institute paper What you dont know can hurt you; How market concentration threatens internet diversity, which examines the detrimental effects of market dominance.

Market competition breeds new ideas and in the online sphere, new content, greater choice and lower prices for the consumer. In many industries competition law has been introduced in order to maintain these effects and protect the end user.

Market dominance can also lead to further temptation for organisations to chase after even greater profit margins, often at the expense of competitors by squeezing out viable alternative options.

Just this month a ZenithOptimedia survey indicated that the internet is unequivocally dominated by one single player. The results of the survey state that it this organization has, “increased its share of the internet ad market from 34.9% in 2006 to 44.1% in 2010” and simultaneously, “tightened its grip on global search (raising its share of searches from 72% in 2006 to 85% now)”. Comparatively, “combined market share fell from 33.1% in 2006 to 13.8% in 2010”.

These statistics note how market dominance translates across industries.

Google is generally thought of as being a search engine first and foremost. However as mentioned in the Martin Cave and Howard Williams paper, The Perils of Dominance, the majority of its business revolves around online advertising profits. The recent survey also notes that in 2011 the US online advertising market was worth approximately 72,842 millions of which Google dominance has grown from “34.9% in 2006 to 44.1% in 2010”. And this is set to rise.

Consequently the online advertising industry should feel at risk, if it is not already. The emergence of a single dominant player in the industry, combined with the increased ‘digitalisation’ of our everyday lives means that this oasis of online advertising is at risk

ICOMP is one of a number of voices, making itself heard in efforts to limit the damage to innovation, competition and the advertising industry.

Regards,

The ICOMP Secretariat

As businesses across Europe struggle against a daily barrage of economic challenges at home, they could be forgiven for overlooking more bad news from across the Atlantic. But on Friday, the U.S. Department of Justice added to their woes by approving Google’s acquisition of AdMeld, a leading provider of services that help websites maximise their revenues from ad space on their sites.

Why, you might ask, does a deal between two U.S. businesses matter for Europe? For two reasons.

First, the deal is bad news for Europe’s online publishers and for the millions of European businesses that advertise online. Google already holds a monopoly grip over Europe’s search advertising sector, with market shares over 90% in some Member States. With AdMeld, Google will further extend its display advertising activities–the other major form of online advertising–allowing it to control as much as 65% or more of the display ads served through online ad exchanges.

Until Friday, Google and AdMeld competed fiercely for online publishers’ business. That competition has now been eliminated, and it is only a matter of time before Europe’s online economy pays the price.

Second, the deal strikes a blow to online competition and innovation just when we need them most. AdMeld was particularly successful in offering innovative new services for some of the most valuable websites on the Internet. This success was what allowed it to mount a formidable challenge to Google –and why Google was so keen to eliminate this threat. With that competition now gone, innovation will surely suffer.

We’ve seen this film before, of course. Google has a long track record of buying up innovative companies that threaten core parts of its business, then using their assets to extend its grip over the online economy–YouTube, DoubleClick, Android, AdMob, ITA, the list goes on and on. The AdMeld decision makes one wonder if competition regulators are powerless to stop the Google juggernaut.

Regards,
The ICOMP Secretariat

On 5 December 2011, the Commission will hold its first Innovation Convention of the EC. This historic convention marks the one-year anniversary of the Commission’s flagship Innovation Union Initiative – the EU’s “roadmap to turn Europe into a more innovation-friendly and competitive continent.”

Innovation is at the heart not only of Europe’s plans for growth and recovery, but is a cornerstone of the global economy. So whilst we welcome the Commission’s convention, and applaud the high-level delegates it has amassed to discuss this crucial issue, we must draw attention to the damage that we and our members feel that Google has done, and is doing, to innovation in Europe and worldwide.

Dominant players can abuse their position by preventing new innovations or new entrants from being discovered; by temporarily lowering prices to ensure that new entrants are unable to compete profitably; and by leveraging their market power into new markets to prevent competition from establishing itself. This is why Google’s market share in online search and search advertising has grown to over 90% in some parts of the EU.

Consequently, as Eric Schmidt presents on the value of innovation at the Convention this week, ICOMP would like him to answer some simple questions:

Does Google acknowledge that its overwhelming dominance (at or above 90% in some markets) in European search and online advertising impose special responsibilities on it under EU competition law?

Despite exceedingly high market shares, especially in Europe, Mr. Schmidt recently claimed under oath before the Committee that Google is not dominant in search or any other market. This contradicted his earlier sworn testimony that Google was “in [the] area” of a monopoly.

If Google is genuinely interested in contributing to Europe’s innovation agenda, will Google commit to refraining from acting in abusive ways?

Does Google agree that companies that develop innovative online content have exclusive rights in exploiting that content?

At recent Senate Committee hearings in the US, innovators Yelp and TripAdvisor claimed that Google populated its own Google Places product by taking and exploiting content from them without their authorization – content which they had invested millions to create and cultivate. Is Google prepared to end such practices and allow content creators to determine how their content is used?

How does Google respond to the criticism that it is leveraging its dominance in search and related markets to strong-arm innovators into allowing Google to use their content for Google’s own commercial ends?

In Europe, French-language Belgian newspapers claimed a victory against Google in a legal battle that challenged Google’s practice of scraping content from Belgian newspapers for its Google News service. In response, Google reportedly removed these newspapers from its general search results.

Does Google agree that the practice of a dominant search engine favoring its own offerings in its search results could deny innovative businesses and users of the commercial opportunities they would receive if Google ranked sites based on relevance alone?

Search engines can be powerful tools for users to discover innovative new web sites and services. Several companies, however, claim that Google manipulates its search results to favor its own services and disfavor competitors. Independent research has shown that these Google offerings consistently appear within the first few “natural” results on Google’s search pages. Conversely, critics claim that Google frequently demotes competing sites. Indeed, a major focus of the EC investigation of Google is its practice of lowering the rankings of sites that pose a competitive threat, such as smaller search engines specializing in travel, price comparison, health and other vertical services.

Does Google dispute that, by locking down key content, locking in advertisers, and engaging in exclusive deals, Google impedes the ability of competitors to obtain the scale they need in order to compete effectively?

Critics claim that Google uses several tactics to make it hard for consumers and advertisers to “click away” from its dominant search and search advertising platform. For example:

• Locking down content. Since 2004, Google Book Search (GBS) has scanned over 15 million books without authorization of the respective copyright owners. A U.S. court rejected a proposed settlement of a lawsuit by authors and publishers against GBS, holding that the settlement would “arguably give Google control over the search market” and that “Google’s ability to deny competitors the ability to search orphan books would further entrench Google’s market power in the online search market.” Google likewise for many years blocked competing search engines from efficiently indexing video content from its #1 video sharing site, YouTube.

• Locking in advertisers. Among the abuses under investigation by the EC is Google’s practice of restricting the ability of advertisers to port data associated with Google’s AdWords advertising platform to any other ad platform using third-party tools that would make the process simple or even automatic. Because of these restrictions – which only Google and no other search ad platform imposes – managing an ad campaign across any platforms in addition to Google AdWords forces advertisers to manually cut and paste data (or use similarly burdensome procedures) that for most SMEs is too costly, error prone, and time consuming to undertake.

• Exclusive dealing. Google has entered into a broad network of exclusive search syndication and distribution deals with websites, web browser companies, software developers and device manufacturers (among others). These deals have made it impossible for competing search engines to achieve the number of users and search queries necessary to compete effectively with Google. At any given point, Google has locked up roughly 90% of the search syndication market through these cumulative exclusive deals. This is a startling number, considering that search syndication accounts for over one third of all Internet search queries.

How does Google respond to claims that it is better at buying up innovations developed by others than at innovating on its own?

Google claims that its success is a direct result of its innovative culture. Yet the company has spent billions for several years acquiring innovative companies, rather than inventing new ideas on its own. Since 2001, Google has acquired 103 companies, 30 of which have been acquired in the last twelve months. Among the innovative technologies it has purchased are mobile operating systems (Android – 2005), video sharing and search (YouTube – 2006), display advertising technology (DoubleClick – 2008), mobile advertising technology (AdMob – 2010), and travel search technology (ITA – 2011). In August 2011, Google announced it would buy a major mobile device manufacturer, Motorola Mobility Holdings, for $12.5 billion – its largest transaction to date.

In conclusion, given Google’s dominance of search and related markets, its deep pockets and relentless march to control more and more aspects of the digital market – is it really the right organization to be providing Europe with advice on how to innovate?