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Google in last chance saloon

Wednesday, April 24th, 2013

After over 2 years of formal inquiry and negotiation, the online industry is now set to have its say on whether Google’s proposed remedies will effectively end the abuse of its dominance, restoring competition to the marketplace. ICOMP welcomes the formal market testing phase of the Commission’s investigation as a significant step forward and possibly a new lease of life for the digital ecosystem.

After years of denial and obfuscation, Google’s submission of remedies for market testing constitutes a de facto admission of dominance and abuse. Google has also finally accepted that any solution worthy of the name would have to involve changes to its search page – action it has never before countenanced. The fact that these admissions and concessions come only at the eleventh hour and only when the Commission saw fit to wield the threat of direct punitive action is disappointing but does not lessen their significance. They are certainly not concessions which would have been given willingly.

Market testing now presents the final and best opportunity for those harmed by Google to obtain redress. Recent leaks suggest that, perhaps unsurprisingly, Google’s offer falls far short of what is needed to provide this redress. If this is the case, it will be incumbent on the rest of the industry to stand up and make its message clear: “we need far more serious improvement if we are to level the playing field.”

ICOMP hopes, of course, that Google’s commitments will be rigorous, meaningful and published in detail for scrutiny and testing by those they will affect. In any event, the commitments will provide compelling evidence in any future action for damages.

It is perhaps the essential principle of a healthy marketplace that a company which enjoys Google’s overwhelming dominance cannot fail to offer a guarantee of equal treatment to would-be competitors. In view of Mr Almunia’s commitment to restore effective competition and the Commission’s own guidelines which refer repeatedly to need to deal with ‘persisting effects’ of infringing behaviour, the Commissioner must not accept anything which falls short of this.

ICOMP calls upon all concerned to participate and provide the evidence which allows the Commission to perform its duty and, if necessary, insist on enhanced commitments.

There is everything to play for.

David Wood, ICOMP Legal Counsel

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Against the Goliaths of the online marketplace the law must stand behind David, says Reding

Wednesday, March 20th, 2013

Yesterday the European Commission’s Vice President Viviane Reding addressed the EU Consumer Summit on the issue of enforcement.

Ms Reding reaffirmed the vital importance of consumer defences, particularly in times of economic crisis, saying that consumer spending accounts for 56 per cent of the EU’s GDP but that its full potential could only be tapped once consumers were given the confidence to shop across EU borders. This confidence, said Reding, has to stem from consumer rules which “protect David when he is negotiating with Goliath.”

The Vice President went on to say that “strong rules become weak when they can be disregarded with impunity” and that therefore, the Commission needs to take a more prominent role in monitoring and coordinating enforcement of these rules, in particular by:

  • Making use of the Unfair Commercial Practices Directive to improve consumer welfare;
  • Simplifying internal procedures and strengthening deterrents within Member States; and
  • Ensuring information supplied to consumers about legal rights and warranties is accurate.

One area specifically mentioned by Reding as a market where consumer vulnerability continues to be exploited is the online sphere – a problem about which ICOMP has spoken extensively.

The behaviour of today’s digital “Goliaths” is all too often inimical to the interests of consumers. Taking, for example, the issue of privacy, consumers are often given little or no indication of the policies which apply when they use online services and have scant recourse when they feel their concerns have been ignored. As the number of ongoing multijurisdictional privacy investigations will attest – certain dominant online service providers clearly recognise no existing deterrent to their infringement of consumer privacy rights.

Ms Reding makes an important point when she says that it is up to the Commission to enforce the rights of the consumer and that this needs to extend beyond the high street. ICOMP Director Auke Haagsma said “Ms Reding is right that the Commission cannot sit on the side-lines when rules are disregarded.  We welcome her determination to ensure that these protections are  extended to the digital marketplace.”

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Caught again!

Tuesday, March 12th, 2013

Another day, another Google privacy breach.

This time no less than 30 US states have taken aim at Google for surreptitiously collecting sensitive personal data sent over their WiFi networks.  According to a press release from Attorney General Jepsen of Texas, they have not only fined Google, but they have also ordered Google to “engage in a comprehensive employee education program about the privacy or confidentiality of user data; to sponsor a nationwide public service campaign to help educate consumers about securing their wireless networks and protecting personal information; and to continue to secure, and eventually destroy, the data collected and stored by its Street View vehicles nationwide between 2008 and March 2010.”

“While the $7 million is significant, the importance of this agreement goes beyond financial terms. Consumers have a reasonable expectation of privacy. This agreement recognizes those rights and ensures that Google will not use similar tactics in the future to collect personal information without permission from unsuspecting consumers,” Jepsen said.

The fact that it requires repeated action by privacy regulators before a company will respect the privacy of its users is unacceptable. When one considers the unprecedented access this company has to our sensitive personal data, it also becomes dangerous. This case is simply the latest of numerous other privacy violations by Google, including the Buzz debacle, the well-documented “Spy-Fi” data grab in which Google was found to have breached privacy legislation in 9 countries before the US, and, of course, the new privacy policy under which Google shares user data across all platforms.

ICOMP’s Auke Haagsma said “ The statement by the State AGs is further evidence of Google’s complete and utter disrespect for people’s privacy. Internet users around the world deserve that their personal data are being treated with care, not simply used to prop up Google’s advertising business from which it derives some 96% of its income.”

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Privacy Matters: CNIL Continues Investigation

Tuesday, February 19th, 2013

On 16th February 2013, France’s National Commission for Computing and Civil Liberties, (CNIL) announced that in response to Google’s Privacy Policy, it would be forming a working group “in order to coordinate their repressive action which should take place before summer”. The probe itself focused on the degree to which the Privacy Policy directly impacts the personal privacy of its users.

This latest announcement indicates that not only has the Data Protection Authority found that the concerns it was investigating are valid, but the advertising giant has also proven to be non-cooperative throughout. The CNIL’s statement noted that Google had not provided “any precise and effective” responses in answer to an EU-wide investigation and that this was a deciding factor in the continuation of the investigation. This has in fact been the disposition of Google throughout the process.

Going back as far as May 2012 just 8 weeks after concerns were initially voiced, the French Data Protection Authority (the CNIL) wrote to Google expressing its regret that responses to earlier questionnaires concerning Google’s privacy policies were “often incomplete or approximate”.

A further indication of Google’s disassociation and even disregard for Europe’s DPAs has been its ever present statement in response to media enquiries, which has not changed at all since the start of the investigation, even though the circumstances have evolved. The statement itself in fact seems to be completely at odds with that of the CNIL, with Google expounding on-going engagement and coordination whilst the regulators saying the complete reverse.

ICOMP Director Auke Haagsma said, “As ICOMP’s director with responsibility for our Privacy Working Group I have been meeting with a number of lawyers, regulators, media and other concerned parties around Europe to discuss how to get the right balance on privacy. One thing stands out from all these conversations: people want to be able to trust that companies to whom they give sensitive personal information use that information very carefully and in full respect of their privacy. Google’s attitude towards the CNIL specifically and European Privacy rules generally seem to fly completely in the face of this reasonable expectation.

Just two days after it refused to even respond to the CNIL and provide clear explanations to the users of its products on what personal data it collects and what it will use this for, Google’s Global Privacy Counsel called Europe’s privacy rules “whacky” and  “hopelessly vague”.  His view is very simple: if Europe wants “fast innovation” which is “the only hope to maintain high rich-world living standards for our aging Western societies” it has to allow Google to act as it pleases, if it wants to protect the privacy of its citizens Google will offer them “slower, less-cutting-edge services”. 

ICOMP will continue to conduct conversations with members, interested parties and media across Europe about digital privacy. The Initiative would like to see Google take this investigation seriously by cooperating with the CNIL, working on behalf of Europe’s citizens to protect their privacy and personal data.

 

Regards,

The ICOMP Secretariat

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ICOMP Statement: What’s required for a successful settlement?

Friday, February 1st, 2013

“To be seen as a success, any settlement must include specific measures to restore competition and allow other parties to compete effectively on a level playing field.”

“Any settlement must include explicit acceptance by Google of its dominance and that it has damaged European businesses through its anti-competitive practices.”

David Wood, ICOMP Legal Counsel

ICOMP is pleased that Google has finally offered proposed actions to address its 90% plus dominant market share of Europe’s search and search advertising markets. However, we note that this is just the first step and, as Google’s previous attitude to both voluntary and binding commitments has shown, we need to be diligent in ensuring that these proposals are both effective and can be closely monitored to ensure compliance.

There are more than twenty formal complainants in this case from all sides of the online economy, including ICOMP and a number of its members. We all look forward to assisting the Commission in assessing Google’s proposed remedies, once they have been made public. However, in the meantime it is clear that for any settlement based on these proposals to be considered a success there are a number of criteria that must be satisfied.

In May 2012, Vice President Almunia outlined four areas of concern with Google’s practices and behaviour. It is clear that each of these must be fully addressed by Google’s proposals and under-pinned by measures that ensure enforceability and transparency.

In addition, Vice President Almunia has himself publically stated that he believes that Google is dominant and that “my conviction is they are diverting traffic [to their own service]”[1]. Any settlement must recognise and include explicit acceptance by Google of this dominance and that its actions as a dominant player have damaged European businesses through the use of anti-competitive practices.

Almunia has also stated on several occasions that rapidly restoring effective competition, not just ending anti-competitive practices is his goal. To be seen as a success, any settlement must therefore include specific measures to restore competition and allow other parties to compete effectively on a level playing field with Google in the key markets of search and search advertising.

This is essential in order to address not just current unlawful practices but also to ensure that Google is not allowed to profit from the fruit of its illegal behaviour.

1] As reported by the Financial Times 10th January 2013 http://www.ft.com/cms/s/0/42a827b2-5b24-11e2-8d06-00144feab49a.html#axzz2JTjv4xab

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Google’s submission: what happens next?

Friday, February 1st, 2013

Google has submitted a settlement offer to remedy the effects of its anticompetitive behaviour. What happens next?

Below is a simple flow-diagram which outlines the procedure we should expect to see the investigation following in the coming weeks.

Kind regards

ICOMP Legal Counsel

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The Root of the Google Problem: a Conflict of Interests

Friday, February 1st, 2013

Competition authorities in Europe and other jurisdictions are investigating claims by dozens of companies and associations that Google is abusing its monopoly power in search, search advertising, and other markets.  Many of these claims come down to a fundamental conflict of interests at the heart of Google’s business model which acts to the detriment of both consumers and online businesses, and ultimately causes great harm to jobs, growth and innovation.

The conflict of interests stems from Google’s role as a supposedly neutral search engine serving the interests of its users, and its interests in driving profits through advertising (the source of 96% per cent of its revenue last year). This conflict was even described as long ago as 1998 by Google co-founders Sergey Brin and Larry Page in their seminal work “The Anatomy of a Large-Scale Hypertextual Web Search Engine”.  In that paper, Brin and Page describe their expectation that “advertising funded search engines will be inherently biased towards the advertisers and away from the needs of the consumer.” As they go on to say, “this type of bias is very difficult to detect but could still have a significant effect on the market. Furthermore, advertising income often provides an incentive to provide poor quality search results.”

It is true that many businesses face similar conflicts, but in the Commission’s view (explained in the Guidance on its Enforcement Priorities in applying Article 102 and supported by many other antitrust agencies around the world), it is the combination with Google’s unassailable dominant position across a growing range of markets that poses such a major threat to competition.

Google’s effective monopoly in search allows it to play a gatekeeper role to the Internet. The fact that Google is able to exploit its conflicts of interest to advance its own commercial goals in ways that run directly contrary to the interests of business users and consumers is evidence in itself of Google’s market power.  In a competitive market with effective alternatives to Google, Google’s behaviour would be constrained by the threat of loss of market share.  Absent such competition Google therefore has a special responsibility as a dominant undertaking not to distort competition more than it has already been distorted.

As long as it persists in abrogating this responsibility, the impact of Google’s conflict of interests will continue to be felt across the online marketplace, on advertisers, publishers, vertical search providers and, latterly, mobile phone operators and manufacturers. Just as important is the impact on consumers who (though Google does a very good job of hiding this from them), are paying for Google’s conflict of interests with the personal data they surrender, the lack of choice they are forced to accept and ultimately the dearth of innovation which arises from an uncompetitive marketplace.

It is now incumbent on regulators to eliminate the Google conflict of interests by ensuring that Google no longer has the opportunity and incentive to leverage that dominance into and harm competition in other markets.

Regards,

The ICOMP Secretariat

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A Review of Government Investigations of Google by David Wood, ICOMP Legal Counsel

Thursday, November 1st, 2012

A Review of Government Investigations of Google, David Wood, ICOMP Legal Counsel from ICOMP on Vimeo.

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A Glimpse Inside Google’s Antitrust Woes

Wednesday, October 31st, 2012

On 29 October 2012, Google Inc. filed its standard quarterly financial report with the US Securities and Exchange Commission.  US law protects investors by requiring listed companies to disclose financial and other significant information on a regular basis.

It is pretty standard practice to disclose brushes with regulatory authorities, investigations into allegations of unlawful behaviour, and significant civil litigation matters.  But Google’s recent disclosures shed light on the extraordinary scale of the number of anti-trust investigations currently going on into its practices.

United States

Google disclosed that in the US its business practices, including search and advertising, are being investigated by the U.S. Federal Trade Commission’s (FTC) Bureau of Competition and, in June 2011, it received a Civil Investigative Demand (CID) from the FTC and a subpoena from the FTC’s Bureau of Consumer Protection.  Google has also received similar CIDs from the State attorneys general from the states of Texas, Ohio, and Mississippi.

Google also disclosed that, in June 2012, it received a CID and a subpoena from the FTC’s Bureau of Competition seeking documents and information broadly related to Motorola’s licensing practices for standards-essential patents and use of standards-essential patents in litigation.

European Union

With regard to the European Union, Google acknowledged that the European Commission’s (EC) Directorate General for Competition has also opened an investigation into various antitrust-related complaints against Google.   This seems to be the first time that Google has acknowledged all the complaints to which it has been asked by the Commission to respond.  It confirms speculation that the number of formal complainants now numbers at least twenty.  A full list of the complainants can be found below.

Google also confirmed that the EC has opened an investigation into Motorola’s licensing practices for standards-essential patents and use of standards-essential patents in litigation on the basis of complaints brought by Microsoft and Apple.

Rest of World

Finally, Google acknowledged that the Comision Nacional de Defensa de la Competencia in Argentina, the Competition Commission of India, and the Korea Fair Trade Commission in South Korea have also opened investigations into Google’s business practices.

 

David Wood,

ICOMP Legal Counsel

***

List of parties that have submitted formal complaints against Google to the European Commission (in chronological order):

Ciao; Ejustice; Foundem; 1plusV, parent company of Ejustice; VfT, an association of business listings providers in Germany; Microsoft; Elfvoetbal; Hotmaps; Interactive Lab; nnpt.it; dealdujour.pro; the Spanish Association of Daily Newspaper Publishers; Twenga; the German newspaper associations, Bundesverband Deutscher Zeitungsverleger (BDZV) and Verband Deutscher Zeitschriftenverleger (VDZ); Expedia; Tripadvisor; Odigeo; Streetmap; Nextag.

 

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CEPIC Response to Google Agreement with French Publishers

Wednesday, June 13th, 2012

The framework agreement was announced on Monday between the Syndicat National de l’Edition (National Syndicate of Publishers) the Société des Gens de Lettres (SGDL) and Google, constituting a hard fought victory for the whole of the online book market, and a first step towards the recognition of the need for the protection of cultural and artistic heritage.

After six years of dispute with Google, a framework agreement has been established, aiming to regulate and indexation of works unavailable for sale in paper versions (out of commerce books) and still under copyright. From now on, Google will only be able to digitize and exploit works with the agreement of the French publishers concerned.

This initiative constitutes a step forward in the spread of the e-book and the diversity of creation, as well as the respect of copyright.

CEPIC welcomes the initiative, but questions the use of images in the books in question. Out of print books include numerous images which are still under copyright and should give way to a new reproduction  right in case of reprint of the book. Does this initiative include a diligent search on protected photographic material or will all pictures be treated as orphan works, or constitute a new kind of “DR”? The implementation of the agreement should therefore be closely monitored.

 

CEPIC
http://www.cepic.org/

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