Improving quality isn’t anti-competitive
Thursday, August 27, 2015
Google has always worked to improve its services, creating new ways to provide better answers and show more useful ads. We’ve taken seriously the concerns in the European Commission’s Statement of Objections (SO) that our innovations are anti-competitive. The response we filed today shows why we believe those allegations are incorrect, and why we believe that Google increases choice for European consumers and offers valuable opportunities for businesses of all sizes.
The SO says that Google’s displays of paid ads from merchants (and, previously, of specialized groups of organic search results) “diverted” traffic away from shopping services. But the SO doesn't back up that claim, doesn't counter the significant benefits to consumers and advertisers, and doesn't provide a clear legal theory to connect its claims with its proposed remedy.
Our response provides evidence and data to show why the SO’s concerns are unfounded. We use traffic analysis to rebut claims that our ad displays and specialized organic results harmed competition by preventing shopping aggregators from reaching consumers. Economic data spanning more than a decade, an array of documents, and statements from complainants all confirm that product search is robustly competitive. And we show why the SO is incorrect in failing to consider the impact of major shopping services like Amazon and eBay, who are the largest players in this space.
The universe of shopping services has seen an enormous increase in traffic from Google, diverse new players, new investments, and expanding consumer choice. Google delivered more than 20 billion free clicks to aggregators over the last decade in the countries covered by the SO, with free traffic increasing by 227% (and total traffic increasing even more).
Moreover, the ways people search for, compare, and buy products are rapidly evolving. Users on desktop and mobile devices often want to go straight to trusted merchants who have established an online presence. These kinds of developments reflect a dynamic and competitive industry, where companies are continuing to evolve their business models and online and offline markets are converging.
But our central point is our consistent commitment to quality -- the relevance and usefulness of our search results and the ads we display. In providing results for people interested in shopping, we knew we needed to go beyond the old-fashioned “10 blue links” model to keep up with our competitors and better serve our users and advertisers. We developed new ways to organize and rank product information and to present it to users in useful formats in search and ads. In 2012, as part of that effort, in addition to our traditional ads, we introduced the Google Shopping Unit as a new ad format:
We don’t think this format is anti-competitive. On the contrary, showing ads based on structured data provided by merchants demonstrably improves ad quality and makes it easier for consumers to find what they’re looking for. We show these ad groups where we’ve always shown ads -- to the right and at the top of organic results -- and we use specialized algorithms to maximize their relevance for users. Data from users and advertisers confirms they like these formats. That’s not “favoring” -- that’s giving our customers and advertisers what they find most useful.
The SO also seeks a peculiar and problematic remedy, requiring that Google show ads sourced and ranked by other companies within our advertising space. We show in our response that this would harm the quality and relevance our results. And, in a report submitted with our response, former President of the General Court Bo Vesterdorf outlines why such an obligation could be legally justified only where a company has a duty to supply its own rivals – as where it controls an input that is both essential and not available anywhere else (like gas or electricity). Given the many ways to reach consumers on the Internet, the SO doesn't argue that standard applies here.
Our search engine is designed to provide the most relevant results and most useful ads for any query. Users and advertisers benefit when we do this well. So does Google. It’s in our interest to provide high-quality results and ads that connect people to what they’re looking for. The more relevant the ads -- the better they perform in connecting potential buyers and sellers -- the more value they generate for everyone.
Throughout the almost 17 years since Google started, our engineers have been developing innovative approaches to search and ads that are valuable for both users and advertisers. In the video below you can hear from our engineers about how our services have evolved to give people better results and ads. We are proud of their work and eager to tell their story.
We believe that the SO's preliminary conclusions are wrong as a matter of fact, law, and economics. We look forward to discussing our response and supporting evidence with the Commission, in the interest of promoting user choice and open competition.
The SO says that Google’s displays of paid ads from merchants (and, previously, of specialized groups of organic search results) “diverted” traffic away from shopping services. But the SO doesn't back up that claim, doesn't counter the significant benefits to consumers and advertisers, and doesn't provide a clear legal theory to connect its claims with its proposed remedy.
Our response provides evidence and data to show why the SO’s concerns are unfounded. We use traffic analysis to rebut claims that our ad displays and specialized organic results harmed competition by preventing shopping aggregators from reaching consumers. Economic data spanning more than a decade, an array of documents, and statements from complainants all confirm that product search is robustly competitive. And we show why the SO is incorrect in failing to consider the impact of major shopping services like Amazon and eBay, who are the largest players in this space.
The universe of shopping services has seen an enormous increase in traffic from Google, diverse new players, new investments, and expanding consumer choice. Google delivered more than 20 billion free clicks to aggregators over the last decade in the countries covered by the SO, with free traffic increasing by 227% (and total traffic increasing even more).
Moreover, the ways people search for, compare, and buy products are rapidly evolving. Users on desktop and mobile devices often want to go straight to trusted merchants who have established an online presence. These kinds of developments reflect a dynamic and competitive industry, where companies are continuing to evolve their business models and online and offline markets are converging.
But our central point is our consistent commitment to quality -- the relevance and usefulness of our search results and the ads we display. In providing results for people interested in shopping, we knew we needed to go beyond the old-fashioned “10 blue links” model to keep up with our competitors and better serve our users and advertisers. We developed new ways to organize and rank product information and to present it to users in useful formats in search and ads. In 2012, as part of that effort, in addition to our traditional ads, we introduced the Google Shopping Unit as a new ad format:
The SO also seeks a peculiar and problematic remedy, requiring that Google show ads sourced and ranked by other companies within our advertising space. We show in our response that this would harm the quality and relevance our results. And, in a report submitted with our response, former President of the General Court Bo Vesterdorf outlines why such an obligation could be legally justified only where a company has a duty to supply its own rivals – as where it controls an input that is both essential and not available anywhere else (like gas or electricity). Given the many ways to reach consumers on the Internet, the SO doesn't argue that standard applies here.
Our search engine is designed to provide the most relevant results and most useful ads for any query. Users and advertisers benefit when we do this well. So does Google. It’s in our interest to provide high-quality results and ads that connect people to what they’re looking for. The more relevant the ads -- the better they perform in connecting potential buyers and sellers -- the more value they generate for everyone.
Throughout the almost 17 years since Google started, our engineers have been developing innovative approaches to search and ads that are valuable for both users and advertisers. In the video below you can hear from our engineers about how our services have evolved to give people better results and ads. We are proud of their work and eager to tell their story.
We believe that the SO's preliminary conclusions are wrong as a matter of fact, law, and economics. We look forward to discussing our response and supporting evidence with the Commission, in the interest of promoting user choice and open competition.
Can you link us to Google's full response? Thank you.
ReplyDeleteYeah, that's right, nice article ;)
ReplyDeleteAs a retired lawyer who practiced in the field of intellectual property I find this opinion well reasoned and convincing. The European view seems more about protecting old technology and by that measure is by itself anti-competitive. You can't put the genie back in the bottle.
ReplyDeleteIs it simply about trying to improve quality, or more like trying to make the all of the information free so that one company can exploit it for profit? Google's power is all about the network effect, and there seens to be nothing wrong about lawmakers' wanting to regulate firms disproportinately benefiting from the network effect, which has been hitherto left unregulated for too long. Personally, I think that arguments about "helping consumers making choice" has been much overblown. Consumers in this era are simply part of the products and the choice they make is often not their own choice.
ReplyDeleteAnd of course ... Google is NOT the only search engine out there. If someone else does it better, use them.
DeleteUnder EU competition law dominant undertakings are subject to a special responsibility not to abuse their power. Winning through fair competition in one market (general searches) does give anyone the right to abuse that power in another market (specialised search services).
DeleteWhether that is what has happened or not is totally up for debate and I really look forward to seeking the Commission's decision and Google's response in court. But to take such a simplistic classical economic view of the market ignores the practical realities.
This is not a comment but rather a request:
ReplyDeleteWhere does an individual find information to defend this (read: any) business's rights? How is this business practice (read: the pursuit of profit) an issue on any scale? By what right does anyone have to tell this (read: any) entity how to conduct business? When and how did Google (read: anyone) force the "consumer" to utilize its services? Do (or did) these ideas exist?
Regards,
Anonymous
It is called antitrust law in the US and competition law elsewhere.
DeleteThe merits of various levels of enforcement are the subject of great economic debate.
I thought that the European complaint was actually about how Google is a dominant platform which essentially stops any other company performing the same kind of service in Europe. It may equalise products and services across different retailers, but it's Google itself at issue here - do we want a dominant platform? No.
ReplyDeleteThe EU are socialist technocrats. Well-reasoned and convincing arguments are irrelevant. Technocrats have to do something - anything - or their lives are meaningless and a waste.
ReplyDelete