Complainants to Commission: “only sanctions will reinstate competition”

March 22nd, 2013 by ICOMP Secretariat

Today, eleven of the companies which complained to the European Commission about Google’s anticompetitive conduct published an open letter to Commissioner Almunia calling for official sanctions against the company.

The signatories to the letter, which included ICOMP Members Foundem, Hot Maps and Streetmap, voiced concerns that any settlement agreement would not sufficiently address the issue of how Google ranks competitors in its search results.

“There are two equally important aspects to Google’s search manipulation practices,” says the letter: “the systematic promotion of Google’s own services, and the systematic demotion or exclusion of its competitors’ services. Any effective remedies will require explicit commitments to end both aspects; remedying one without remedying the other would simply allow Google to recalibrate the un-remedied practice in order to achieve the same or equivalent anti-competitive effect.”

The complainants said that the overarching principle would ensure a permanent restoration of competition is that Google must be even-handed. “It must hold all services, including its own, to exactly the same standards, using exactly the same crawling, indexing, ranking, display, and penalty algorithms.”

Commissioner Almunia’s statement at the end of January of his “conviction” that Google “are diverting [search] traffic,” was encouraging to complainants and the online marketplace at large. “They are monetising this kind of business,” he told the Financial Times, “the strong position they have in the general search market and this is not only a dominant position, I think – I fear – there is an abuse of this dominant position.”

Since these comments, however, Google has proposed a remedy package which the Commission is currently considering. The contents of this settlement have not yet been shared but complainants fear that it will not deal with allegations that Google forcibly demotes rival sites through penalties, a concern amplified by Google’s past conduct which “suggests that it is unlikely to volunteer effective, future-proof remedies without being formally charged with infringement.

Additional to Google’s illicit business practices is the enormous advantages of scale it has used them to amass; advantages which, for example, enable it to cross-subsidise loss-leading services using its advertising revenue in order to undercut competitors. It is almost inconceivable that a remedy package from Google would address this point. This is another reason why complainants are saying that nothing short of an official sanction will save online competition. ICOMP calls upon the Commission to listen to the marketplace and act on its advice.

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

March 20th, 2013 by ICOMP Secretariat

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!

March 12th, 2013 by ICOMP Secretariat

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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“A strong IP regime is an engine of growth, NOT a barrier” says UK broadcaster

March 12th, 2013 by ICOMP Secretariat

This morning ICOMP attended the UK Culture, Media and Sport Committee’s eighth evidence session to explore the ways in which broadcasters and broadcasting associations are supporting the creative economy and areas in which the UK government could contribute. Among the panel of witnesses were representatives from the BBC, ITV, Channel 4 and BskyB.

Among the topics raised for discussion was the IP framework in the UK and the reforms suggested to it by the Hargreaves Review in 2011.

By way of a brief memory-refresh, the Hargreaves Review was commissioned in 2010 by Prime Minister David Cameron in order to ascertain whether laws designed 300 years ago to incentivise innovation by protecting creators’ rights are now obstructing innovation and economic growth. In response, the Review issued 10 top-line recommendations including the following:

  • Reform should be driven my economic evidence rather than lobbying clout.
  • The establishment of a Digital Copyright Exchange so rights holders can more efficiently license their content.
  • Legislation to enable the licensing of orphan works .
  • Creating pragmatic exceptions to copyright which protect activities such as library archiving and format-shifting for personal use, which do not prejudice its core objective: incentivising content creation.
  • An evidence-based assessment of the connection between design rights and innovation.
  • The Intellectual Property Office should be given the necessary legal mandate to pursue economic objectives, access data and issue statutory opinions.

The broad message which came out of today’s session was that, subject to a few nuances, many broadcasters are cautiously supportive Hargreaves’ recommendations. The BBC and Channel 4 both agreed with the Review’s decision to stop short of creating a “fair use” exemption to IP legislation (as is the case in the US) and supported the notion that a balance could be better achieved by carving out certain exemptions to the UK’s existing framework such as  the “personal use” exemption. Both were also in favour of a refined method by which content-creators could more efficiently licence their content. Indeed, as the BBC’s Group Director for Strategic Operations, John Tate remarked: “Ownership rules must be respected but there could be slicker systems for the clearing of rights”.

The one substantive caveat came from ITV’s Director of Policy and Regulatory Affairs, Magnus Brooke. Interestingly, he said that the aspect of Hargreaves with which ITV took particular issue was the tone.  The impression given by the Review was a robust framework of IP legislation was a deterrent to investment in creativity. This was unhelpful and untrue.

Said Brooke: “A strong IP regime is an engine of growth, NOT a barrier”. We couldn’t have put it better ourselves.

Regards,

ICOMP Secretariat

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CNIL Continues Investigation – UPDATE

February 28th, 2013 by ICOMP Secretariat

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.

UPDATE, 27 February 2013:

The CNIL has today expanded on an earlier announcement that it would be undertaking coordinated “repressive action” against Google “before the summer” by announcing that the company would be called to appear before a group of EU data privacy watchdogs “in the coming weeks” to answer for its failure to bring its privacy policies into line with European legislation despite being given ample time and opportunity to do so. ICOMP welcomes this decisive step to protect consumer privacy from the pernicious conduct of one dominant player in the online market. 

 

Regards,

The ICOMP Secretariat

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Consumers back privacy law action against Google

February 25th, 2013 by ICOMP Secretariat

Almost three quarters (71%) of Britons believe that data protection authorities were right to investigate Google’s privacy policies according to a new study by privacy campaign group Big Brother Watch. 66% of respondents went further than this, saying that national regulators such as the Information Commissioner’s Office in the UK should be doing more to force Google to comply with existing European directives on privacy. More generally, the poll indicates that 68% of respondents are concerned about online privacy with nearly a quarter “very concerned.”

The survey, which polled 2,050 British adults online, comes following a response deadline in the investigation by French watchdog the CNIL into Google’s decision to pool user data from all its services, including YouTube and Gmail. CNIL announced last week that Google had failed to provide “any precise and effective answers” as to how it will bring its policy into line with EU law.

In a much-noted response to this news, a Google spokesman last week replied: “Our privacy policy respects European law and allows us to create simpler, more effective services. We have engaged fully with the CNIL throughout this process, and we’ll continue to do so going forward.”

Big Brother Watch director Nick Pickles said: ‘The message from consumers is clear – regulators were right to investigate Google’s new privacy policy and now they need to do more to force the company to comply with the law. Online privacy is an important issue for a significant number of people and not enough is being done to address these fears.’

ICOMP has repeatedly emphasised the need for online services that give users the necessary trust by offering services that respect people’s privacy.  For Google to say that our privacy must be the cost of innovation is cynical and misleading. True innovation is fostered by a healthy and competitive online marketplace that takes user’s needs seriously, not by one that invades their privacy for monetary gains by a single monopolistic company. Google has consistently ignored this. Now is the time for the EU’s data protection authorities to take things in hand.

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Cyber Security Throughout Europe

February 25th, 2013 by ICOMP Secretariat

Cyber security has rapidly become a topic of intense discussion and debate over the past 12 months. On an almost weekly basis there are media reports of fresh cyberattacks and cases of massive data loss. For example in the first week of February, news emerged of a hacking attack against the Wall Street Journal amongst other organisations. An indication of how seriously this threat is being taken by businesses around the world can be seen by the fact that at the World Economic Forum meeting in Davos in January over 85 companies and organisations signed up to join the Forum’s “cyber resilience” effort.

At the start of February the European Commission published a cybersecurity strategy alongside a Commission proposed directive on network and information security. It was unveiled by Neelie Kroes, EU telecoms commissioner and aims to set out “the EU’s comprehensive vision on how best to prevent and respond to cyber disruptions and attacks”. In doing so it focuses on five core areas:

  • Achieving cyber resilience
  • Drastically reducing cybercrime
  • Developing cyber defence policy and capabilities related to the Common Security and Defence Policy (CSDP)
  • Developing the industrial and technological resources for cyber-security
  • Establishing a coherent international cyberspace policy for the European Union and promoting core EU values

The Directive that was introduced in conjunction with the strategy document “would require all Member States, key internet enablers and critical infrastructure operators such as e-commerce platforms and social networks and operators in energy, transport, banking and healthcare services to ensure a secure and trustworthy digital environment throughout the EU”. This is particularly necessary as EC research indicates that “there are an estimated 150,000 computer viruses in circulation every day and 148,000 computers compromised daily”.

The Directive will have to be approved by national governments and the European Parliament before becoming law. However should this happen, member states will need to create a cyber-security strategy and a national authority “to prevent, handle and respond to NIS [network and information security] risks and incidents.” In addition member states will need to cooperate and share information on current and future threats.

Another facet of the Directive is that organisations would be required to alert the authorities of major cyber incidents within a certain time period, or face a fine. According to reports, this will affect approximately 28,000 businesses across Europe, including IT companies, search engines, social networks and providers of cloud computing.

It is clear to see that the security of Europe’s businesses and citizens are quickly becoming top of mind for regulators. As more of our lives begin to depend upon technology it is increasingly important that necessary steps are taken to secure both our personal data and security.

 

Regards

The ICOMP Secretariat

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Privacy Matters: CNIL Continues Investigation

February 19th, 2013 by ICOMP Secretariat

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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Google’s Informal Offer: What next?

February 7th, 2013 by ICOMP Secretariat

More than two years after the Commission opened formal proceedings into Google’s abuse of dominance, Google has finally put an offer on the table in response to the four competition concerns raised by Commissioner Almunia in May 2012, narrowly meeting the deadline imposed by the Commission for the end of January. If Google manages to convince the Commission that the offer will restore effective competition in the online marketplace, Google’s proposals will be rendered legally binding in an Article 9 Commitment Decision and the Commission will close its investigation into the search giant’s abusive conduct, without imposing a fine or reaching a definitive finding that Google abused its dominance.

It is understood that there are now more than 20 complaints pending before the Commission, alleging that Google has abused its dominant position in search and online advertising, contrary to EU rules on competition. Complainants from all corners of Europe (France, Germany, Italy, Netherlands, Spain, UK, etc.)  have complained to the Commission as regards Google’s illegal web of exclusionary and exploitative business practices which have impeded European growth, killed off competitors and have ultimately reduced choice for the European consumer online.  Complainants include companies, individuals and industry representatives from across the worldwide web: publishers, news aggregators, price comparison sites, other vertical search engines, key players in the travel industry, competing advertising platforms as well as mapping and listing services, etc.

If Google can convince the Commission that its informal offer is “serious and credible”, the Commission will prepare a  Preliminary Assessment: an important Commission document summarising the main facts of the case, the competition concerns and what is required of Google to bring the infringement to an end.  This document will be sent to Google so that it can turn its offer into formal remedies (called “commitments” in these proceedings).  The Preliminary Assessment will not  be made public nor will it be made available to third parties. That said, the Commission recognises that complainants need to be closely associated to the proceedings and there are powerful grounds, given the complexity of the markets and the issues at stake (including the survival of many European businesses), to involve the complainants as much as possible in this process. While there is no absolute right for complainants to access the information in the Preliminary Assessment, the case team can, at their discretion, provide complainants with a copy of the main content of the Preliminary Assessment if they think the complainants can provide important input vis à vis the likely impact of the commitments: this is clearly the situation in the present case, as many of the complainants possess essential technical and commercial expertise that could prove invaluable to a correct analysis of any effective remedies.

ICOMP, as a formal complainant, has written to Commissioner Almunia requesting that the Commission take steps to discuss with complainants and interested third parties the scope of their access to information on the Commission’s file in order to enable an in-depth technical evaluation of Google’s proposed solutions and to better understand Google’s claims and reasoning. Close consultation with complainants and third parties is the only way to prevent further delays and to ensure that commitments are cast in a way which will effectively restore competition swiftly to the benefit of users and the European economy. If the market test shows that Google’s proposal is inadequate and if Google fails to put a better offer on the table, the Commission has said that it will proceed with the case in the normal way, i.e., by issuing a statement of objections with a view to adopting a formal decision, finding that Google has abused its dominant position and imposing sanctions.

 

Regards,

The ICOMP Secretariat

 

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

February 1st, 2013 by ICOMP Secretariat

“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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