ICOMP

The debate about what remedies are needed to solve the Google problem is in danger of missing the point.  The problem is an absence of effective competition in search and search advertising and any remedy must restore that competition.

At the heart of the competition rules, both in the EU and the US, is the profound belief that in most markets consumers drive competition by exercising choice.  If the price is too high or the customer experience is too poor, consumers move or threaten to move their business elsewhere.

The corollary of this is that, under EU competition law, companies that are able to act independently of their customers, competitors or suppliers are considered to be in a dominant position.  Companies in a dominant position are able to act independently because their customers have no real alternative.

This is the reality that underpins the numerous antitrust investigations into Google taking place around the world.  There is near-universal recognition that Google is in a dominant position and that its customers, such as the advertisers who seek to attract the eyeballs of internet users, have no real choice.

It is because of this absence of choice that Google can act in the way it does.  It can distort search results and discriminate in favour of its own, often inferior, commercial services.  It can implement poor data protection and privacy policies.  It can impose unfair terms on publishers and advertisers.  It can ignore the intellectual property rights of others.  Google faces no discipline other than the threat of outside regulatory intervention.

These practices should and most likely will be brought to an end through regulatory intervention.  That will bring short-term relief to many companies that rely on a Google-dominated online ecosystem.  However, the mere ending of the most egregious practices will not restore choice and will not therefore restore effective competition.

Without effective competition the markets for search and search advertising, as well as the very many adjacent markets, will remain subject to the market power of a single dominant company, Google.  Constant effort will be required to control Google’s excesses and abusive behaviour.  There will be running battles and chaos as online service providers try to wrest a little space where they can do business in the omni-present shadow of Google.

There is only one remedy that can ensure choice and effective competition.  That is a remedy which gives competitors to Google the ability to compete head on with Google in the search and search advertising markets.

Other remedies may be important in the short term to bring comfort and respite to companies suffering from Google’s abusive behaviour.  However, such remedies cannot be more than a palliative until a way is found for markets to discipline Google’s abusive behaviour through the exercise of consumer choice.

David Wood

ICOMP Legal Counsel

As Brussels moves back into work mode after a well-deserved August break, attention is back on the European Commission’s investigation into Google’s anti-competitive practices. Before the summer break, Commissioner Almunia announced at the end of July that his team would engage in ‘technical discussions’ with Google over its search practices. Although we’ve yet to see substantive proposals from Google as a result of these discussions, the ball is firmly in its court.  It also means that third parties are increasingly vocal, putting pressure on Google to come up with real remedies. ICOMP member, Foundem has today published a paper outlining what suitable remedies should look like, and Shivaun Raff has been interviewed by the media today on the potential ‘tsunami’ of follow-on litigation that Google may face if it doesn’t propose remedies that will positively impact its complainants.

Speaking to The Guardian, Bloomberg and MLex, Shivaun issued a warning not to be complacent about the potential impact of the investigation, with the Guardian writing: “Shivaun Raff, co-founder and chief executive of the company, said that Google’s need to avoid huge lawsuits from companies affected by its previous dominance means that Joaquin Almunia’s antitrust division at the EC is “in a far stronger bargaining position than many commentators realise. Anyone suggesting that Google will get away with superficial remedies … is almost certainly mistaken.”

ICOMP reiterates the point – having been given this opportunity, and the time to respond to Almunia’s four, clear points of concern, Google must now propose real, workable and effective solutions. These remedies must be robust, demonstrably end the harm being done to numerous innovative businesses and the wider online ecosystem, and ensure the return to a level playing-field and real choice for consumers .

Foundem’s blog post and white paper on remedies make some important points that are worth highlighting: “Whatever the final form of the remedies adopted by the Commission, they are likely to have a dramatic impact on Google’s power to stack the deck in its own favour. The success or failure of Google’s secondary services, in travel search, price comparison, social networking, and so on, will once more depend on its ability to innovate, rather than on its ability to hijack the traffic of its competitors.”

Raff continues: “With the right remedies, users themselves should not see much immediate difference—just a quiet return to the Google search results of old. The richness, variety, and relevance of users’ search results will improve, and the rate of innovation in areas long suppressed by Google’s anti-competitive practices will increase. The potential for appropriate remedies to restore competition and rekindle the growth of the digital economy cannot be overestimated.”

Foundem’s comments drive home the key point that every day that goes by without a solution means further damage to online businesses, further erosion of choice for consumers and further enrichment of Google. While any fine might appear significant, in the grand scheme of things a mere percentage of Google’s revenue would not be sufficient to restore competition or to help those harmed by Google’s anticompetitive market activity. Complainants expect to get the opportunity to assess Google’s proposed remedies in the next few weeks to ensure that will actually solve the issues they are facing. With each delay they are likely further question Google’s commitment to this process.

Regards,

The ICOMP Secretariat

Earlier this year European Justice Commissioner, Viviane Reding, announced that she sought to effect a major reform of the EU legal framework on the protection of personal data. The Commission noted that the original legislation, passed in 1995, was “fragmented and outdated” and did not address key issues that had arisen in the new digital age. They also noted that at present, data protection across Europe is not uniform amongst the various states within the region.

As a result, the European Commission published in January a draft Data Protection Regulation which would, if enacted, introduce a single data protection law across all 27 EU member states. Companies that process personal data of EU citizens from outside the borders of the trading bloc would also be subject to the rules. Some of the key changes proposed were:

• For people to have easier access to their own data, and find it easier to transfer data from one service provider to another.
• Users to have the “right to be forgotten”, in other words the right to demand that data about them be deleted if there are no “legitimate grounds” for it to be kept.
• Organisations must notify the authorities about data breaches as early as possible, “if feasible within 24 hours”.
• In cases where consent is required, organisations must explicitly ask for permission to process data, rather than assume it.
• Companies with 250 or more employees will have to appoint a data protection officer.

However, over the past few weeks a number of EU states have criticized the Commission’s plans as the suggested legislation would provide the regulator with an “excessive and unjustified use of so-called ‘delegated acts’, which are used to add to existing legislation”, and in doing so override national laws. For example, a leaked document reported that the UK government questioned “whether it was actually possible to enforce business’ compliance with the new data protection regime if they were based outside of the EU”. France in turn stated that “it is particularly important that individuals in France be able to contact the CNIL to obtain redress for damage caused by controllers whose main establishment is in another EU member state. The Commission’s draft would prohibit this”.

Clearly there is still a great deal of work that needs to be undertaken by the European Commission in order for the draft Regulation to be accepted across Europe by all its members. Nevertheless, it is true that every big change brings along with it a big debate, hence the talks and negotiations on the draft Regulation. Member states are more than right to want to debate the Regulation and make sure that they feel comfortable with welcoming laws that will truly protect their citizens’ privacy. At the same time though, it is crucial for states and all interested stakeholders to recognise the importance of this new legislation not only for the plethora of benefits that it will bring to the EU member states, but also for the catalyst role it will play in influencing and controlling companies’ behavior as regards privacy. If the new legislation can raise fines to levels comparable with the competition area, companies which at present breach privacy will not be able to get away with it any more without any serious repercussions. Under the new rules, the threat of sanctions would keep them honest.

ICOMP welcomes the talks about the draft legislation as it acknowledges that privacy is a main issue online and any delay means that citizens’ privacy remains badly protected.

Regards,

The ICOMP Secretariat