ICOMP

On the 8th April 2011, the US Department of Justice (DOJ) handed down its long-awaited decision on Google’s proposed acquisition of the travel search engine ITA Software.

The DOJ found that the deal, as it stood, would have substantially lessened competition among providers of comparative flight search websites in the US, resulting in reduced choice for consumers and less innovation in the sector. The DOJ concurred with many customers and competitors of Google and ITA that this was an illegal deal that should not be allowed to be consummated without stringent safeguards.

Accordingly, the deal is to go ahead but under strong, ongoing oversight and enforcement provisions designed to minimise its anti-competitive effects. Broadly, the three key control measures prescribed by the judgment are as follows:

• Google is required to license ITA data and technology (including any under development) to competing websites (and anyone else for that matter) on fair and reasonable terms and continue to fund development of its existing offerings with at least the same level of investment as ITA had previously provided. This is intended to help other service providers compete effectively and thereby ensure choice for the consumer.

• Google is required to implement internal firewalls to prevent it from accessing ITA customer data and is prohibited from entering into agreements with airlines that would restrict their right to share booking information with Google’s competitors.

• Perhaps most significantly, the ruling also creates a formal reporting mechanism for third parties to lodge complaints about Google’s anti-competitive behaviour in online travel search. This mechanism allows DOJ to have immediate knowledge both of direct violations of the decision and of other anticompetitive conduct. The agreement also grants DOJ access to formal remedies if Google reverts to old habits and begins to favor its own products in search results.

The DOJ’s enforcement action constitutes a massive vindication of concerns expressed throughout the online ecosystem about Google’s business practices of late and sends the welcome message that manipulation of search results or depriving rivals of access to critical content can amount to a serious and actionable antitrust violation and will be censured as such. As a precedent for future enforcement action, it is invaluable.

The aspect which has perhaps surprised observers more than the content of the ruling itself is that Google has chosen to go along with far-reaching oversight rather than abandon the deal and walk away. In any event, the forward-looking nature of this ruling, coupled with growing concern among regulators, consumer groups and industry participants worldwide heralds the direction of broader antitrust enforcement action by competition authorities around the world going forward.

David Wood, ICOMP Legal Counsel

The US Department of Justice (DoJ) has confirmed today that Google needs to be subjected to continuing regulatory oversight, sharing widespread concerns about the compatibility of its behaviour with US antitrust rules. The DoJ’s enforcement action, which is subject to the approval of a US Federal judge, follows its long and intensive investigation into the proposed acquisition of travel search engine ITA. Although that transaction will be permitted to proceed, the antitrust concerns mean that Google’s behaviour, and in particular the danger that travel search results will be manipulated by Google, will be kept under close scrutiny by the DoJ. In addition to licensing requirements, a formal reporting mechanism is being provided for complainants if Google acts in an unfair manner.

This will provide comfort not only to consumers but also to the online business community which depends on Google for their access to search results. It will of course also be relevant to the ongoing antitrust investigations in the EU where it was announced today that the Commission had received over 500 responses to questionnaires sent to Web companies, publishers, and advertisers earlier this year. This overwhelming response, together with today’s decision, follows hot on the heels of last month’s ruling in a New York Federal Court that Google’s Book Settlement was neither just, fair nor reasonable and reflects growing unrest in the online search market over which Google has cast such a long shadow in recent years.

David Wood
ICOMP Legal Counsel

Conservative Members of Parliament Dominic Raab and Dr Phillip Lee, on 5th April, led calls for the UK competition authorities to investigate the search market dominance of Google, mirroring the current investigation by the European Commission.

Dominic Raab, who secured the Westminster Hall debate on Net Neutrality, opened by saying he wished “to raise the increasingly important topic of protection of competition on the online marketplace and the neutrality of search engines” adding that there is increasing evidence to suggest Google has abused its dominant position in online search. ICOMP has long argued that Google’s 95% share of the European search market is of great concern to many, and the timing of the debate suggests this feeling resonates with Members of Parliament who are increasingly showing a high level of understanding of the search marketplace.

Both Mr Raab and Dr Lee spoke proficiently about the complaints received by the Commission and the case brought by Foundem, an ICOMP Council Member, was particularly highlighted. Dr Lee, who represents the constituency of Bracknell, where Foundem are based, questioned the Office of Fair Trading’s view that there is no case for the regulator to challenge Google’s dominance and urged the Minister to meet with Foundem to discuss the case.

Mr Raab further noted that the Chancellor, in his Budget statement, had “highlighted the importance of promoting high-technology growth in small business.” ICOMP fully supports this notion, serious consideration should be given to Mr Raab’s fear that anti-competitive abuses online pose a serious threat to the achievement of this aspiration.

Despite all of this the Government’s position doesn’t seem to have altered.

Regards,

The ICOMP Secretariat