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Even if Google can settle it faces numerous more antitrust probes on other topics in the EU and U.S.

On Monday, Jonathan Todd, spokesman for the European Commission (EC) -- the European Union's (EU) market regulatory watchdog -- revealed that Google Inc. (GOOG) had reached out to the EC and promised to make serious changes to address allegations made by EU antitrust regulators.

I. EU Receives Google's Last Ditch Pitch

Mr. Todd told Reuters in a statement:

The Commission received a proposal from Google and is assessing it.

Google's spokesperson, Al Verney added:

Our proposal to the European Commission addresses their four areas of concern. We continue to work with the Commission to settle this case.

For Google -- who makes the world's most use mobile operating system, search, and internet advertising platforms -- it's been a bewildering ride with European antitrust regulators.  The company has been probed and threatened by the EU for over three years now.
Google fortified
Google has been warding off antitrust accusations from Microsoft, who runs the smaller rival "bing" search service. [Image Source: Fast Company]

The company can largely thank Microsoft Corp. (MSFT) for its EU antitrust woes.  Microsoft has led two key coalitions -- The FairSearch Coalition, whose members also include Expedia Inc. (EXPE) and TripAdvisor Inc. (TRIP), and ICOMP, whose members also include Foundem, Hot-map, Streetmap, and NexTag -- both of which filed complaints about Google, claiming that Google boosts the ranks of its own services when consumers use its search engine.

While this might sound like smart business, Microsoft alleges it's illegal, and it could be right due to Google's dominant position in the search market and the way EU antitrust laws are structured.

Also, Google is accused of "scraping" or gathering results from its competitors’ services using automated scripts to improve the quality of its own results.  Google does not deny doing some scraping; pointing out that Microsoft does the same.  However, given that scraping is a gray area in current antitrust laws, it is possible that Google could be viewed as committing antitrust abuses when it scrapes smaller competitors.

web scraping
Google has also been accused of abusive scraping [Image Source: Google Images/unknown]

Part of the problem is that in the EU Google has traditionally held a much larger piece of the market.  In the EU Google has held as much as 86 percent of the search market; currently it has around an 80 percent market share, according to Reuters.  This is much higher than in the U.S., where its market share is currently around 67 percent, according to market research firm Comscore.

II. More Antitrust Woes Loom for Google

But whether or not Google has abused its dominant position to further its own services like Gmail, Google Docs, Google Flights, and Google Shopping, it's hard not to feel a bit of sympathy for the chaotic way in which antitrust punishments for Google have been handled in the EU.

After being given a "last chance to settle" in May 2012, Google in Feb. 2013 released a full response, which promised big changes as to how it was scraping and ranking search results.  The EC initially accepted that proposal.  But after Microsoft and others claimed that the punishments weren't severe enough, the EC went back on its approval of the Google settlement and demanded more flesh from Google.

EU books antitrust
 The EU "changed its mind" about Google's settlement offer. [Image Source: nrw.nl]

The EC is a pretty fearsome regulator.  It has nailed Microsoft Corp. (MSFTwith multiple fines totaling around $2.8B USD over Windows antitrust abuses, plus pounded Intel with a $1.45B USD fine for allegations of CPU price fixing.  Its policies have been so aggressive that Apple, Inc. (AAPL) opted to settle in the EU over e-book price fixing accusations, while fighting similar accusations in the U.S.

Google is clearly prepared for the worst.  It has set aside $500M USD to pay for potential antitrust fines in the EU.

To make matters worse for Google, the U.S. debate over Google's search engine tactics has yet again resurfaced.  After probing Google, the U.S. Federal Trade Commission (FTC) agreed to a proposal where Google promised to make minor changes and would not face any fines.  The FTC even defended that decision against criticism by Microsoft and others who felt that the punishments were too light.  But recently the FTC has been rumored to be cooking up a fresh probe examining a new angle -- looking at whether Google's acquisition DoubleClick engaged in anticompetitive tactics in the search market.
Google Android
Google is also accused of using abusive tactics to promote its free Android operating system, which accounts for four out of every five smartphones and two out of every three tablets sold.

Google also faces allegation of abuse in the U.S. and EU of so-called "standards essential patents" (SEPs), which are supposed to be licensed under the "fair, reasonable, and non-discriminatory" (FRAND) rules.  Last, but not least, Google also faces a privacy probe in the EU, in which EC regulators have demanded Google make changes by the end of this month.


Privacy is another major issue Google is being grilled on. [Image Source: Inquistr]

In short, even if Google manages to win over the EU with its settlement proposal and escape fines, it still faces at least two more major topics of antitrust investigation in the EU, U.S., and elsewhere.

Source: Reuters



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The big picture
By Tony Swash on 9/14/2013 5:28:24 AM , Rating: 1
Google is an advertising company whose USP is the ability to taylor advertising and serve bespoke ads to viewers based on data Google possesses about the activities, interests and proclivities of each individual advert viewer.

Google gathers the data about user activity that it needs to add value to it's advertising product by striving to be a universal service level horizontally across all personal computing activity. The users of Google services are not it's customers.

Google's business environment is changing significantly because the amount that on average it can earn from each mobile user is less than it can earn from each desktop user. Therefore it needs to ensure that it's services are ubiquitous, Google has to be everywhere, and that when users interact with any of it's services the maximum amount of organised data as possible is collected about them.

Google+ is not an attempt to create a rival Facebook type social network, it is a mechanism that seeks to ensure that all users of Google's services are logged in to Google+ as often as possible so the maximum amount of organised data can be collected about them.

For Google all the world's data, no matter who it belongs to, or who collected and maintains it, is potential raw material for it's services. Google is very, very good at collecting and serving data in ways that are very useful to users and hence which encourages the maximum use of it's services.

It's default condition is collect all the world's data, that's one of it's self proclaimed goals, and the only way to block Google collecting data is to set out to actively block it. The fact that if Google collects and then serves data generated outside of Google it may devalue the product and undermine the business model of other businesses or even entire business sectors is both invisible and irrelevant to Google because it has no impact on it's own business model.

All personal computing activity, especially on the internet, that is outside of Google's data collection system and services is a threat to Google, one that it seeks to route around. It is a threat because uncollected data about user activity devalues the USP of it's advertising product.

Google's services are often very popular with users, they are free (who does not like free) and they are often very well implemented and hence very useful. But viewed on a large scale it is clear that Google's business model will always push it in the direction of prioritising it's own need for user data. Google's default condition is to priorities the collection of user data by ensuring that it can monitor users activity. The corollary of that default position is that Google will always place zero value on third party services and systems that block Google's ability to collect user data, or third party attempts to supply information services to users outside of Google's systems.

It used to be said that the 'Net interprets censorship as damage and routes around it'. Similarly Google treats all third party activities which are opaque to it's data harvesting as damage and tries to route around it.

Whether Google is doing something that benefits everyone or doing something that is damaging to our collective interests cannot be assessed from either inside Google's own business model or from the point of view of an individual user of it's services. It has to be judged at a higher level where questions such as "would it be good if Google uses it's vast search footprint to drive out of business alternative purveyors of data services?" can be asked and answered.

Personally I think the answer to that one is obvious.




RE: The big picture
By deltaend on 9/14/2013 3:24:45 PM , Rating: 3
Oh Tony, Tony, Tony... that was a waste of a perfectly eloquently long explanation. Let's distill Google to the bottom line shall we?

1) Google is a huge and self sustaining ecosystem.
2) Ecosystems survive due to circular and sustaining demand (i.e. we need them and they need us).
3) EU wants money and they will get it, if not from Google than from another successful company. I bet they are just salivating over the possibilities right now.
4) Losers hate the winners which is why so many search companies hate Google. When the tables turn their tune will change.
5) It is more profitable to litigate than it is to compete in an open market. (i.e. the system is broken in this respect).
6) Google doesn't FORCE data out of anyone. Simple META tags setting ROBOTS correctly will stop Google and many other search engines from indexing your site.
7) We have all known how Google works and it's smart business. Since when did smart business become so smart that it has mutated into "anti-competitive" and need to be shot down? This seems like a great mentality to destroy every successful company and support stupid business practices. I say, survival of the fittest and smartest not the stupidest, laziest, and most litigious.
8)
quote:
Would it be good if Google uses it's vast search footprint to drive out of business alternative purveyors of data services?
and the obvious answer is yes. Survival of the fittest yields only the best solutions. We don't need the worst solutions surviving because they were given every advantage over better solutions, simply because they were a smaller company. Create something better, let it grow and compete in the open market. If it is worth our attention and our devotion it will get it. If it isn't, it will die and that's a good thing.
9) Your loyalties to Apple are clearly presented. I'm sure you will be singing a different tune when it is Apple's turn on the EU money chopping block and that's just plain hypocritical.


RE: The big picture
By Kiffberet on 9/16/2013 8:07:09 AM , Rating: 2
quote:
3) EU wants money and they will get it, if not from Google then from another successful company.


You don't know sh1t.
The EU gets the equivalent of over a trillion dollars each year from it's member states. It doesn't need the loose change from these law suits.

The EU doesn't like companies with market dominance, because they very rarely do good for everyone.

Just because they give software and services away for free, isn't always in everyone's best interest.


RE: The big picture
By Reclaimer77 on 9/16/2013 8:23:22 AM , Rating: 2
Fining companies does little to cure "market dominance" however. Unless you fine them so much they can barely remain profitable.

There's little Google can do at this point, even if it wanted to. People ARE going to choose Google as their default search engine, people choosing Google - willingly - is how they got to where they are today.

The EU is trying to "fix" problems that aren't really problems.

quote:
Just because they give software and services away for free, isn't always in everyone's best interest.


Soo they should charge a per-search use fee? Does anyone else do that? Instead of platitudes about peoples best interests, actually go into detail on what you would suggest.

I just have to reject this absurd notion that beating the competition and attaining large market-share is inherently wrong and MUST be stopped by a Government entity.


RE: The big picture
By retrospooty on 9/14/2013 3:43:33 PM , Rating: 2
"Google is an advertising company"

1 sentence and you have it all wrong. Google is a software company. They make great software and give most of it away for free making money from ads, placement, etc. That is not an advertising company, that is a software company. An advertising company creates ads for revenue (commercials, radio spots, slogans, billboards , ad campaigns, magazine, web art etc.

Tony, really you dont need to belittle a company that you dont understand. They arent a threat to Apple so you dont need to spin them down. They are what they are whether you get it or not.


RE: The big picture
By Tony Swash on 9/14/2013 4:04:57 PM , Rating: 1
quote:
1 sentence and you have it all wrong. Google is a software company. They make great software and give most of it away for free making money from ads, placement, etc. That is not an advertising company


So a company that makes all it's money from advertising, a company whose only paying customers are buyers of advertising, is not an advertising company?

I presume you don't buy any of Google's products (like I would guess 99.9% of all DT readers) and so as a consumer of their free services and free software it's easy to think that delivering that free stuff is what drives the company. But that's the wrong perspective, and it's especially wrong since Larry Page took over as CEO, because to understand any company you have to understand it's core business strategy and core business dynamic. And core to Google is the need to spread across all computing activity (and I say computing activity and not the net because of the Chrome off-line apps initiative), to collect as much data as possible and to be present everywhere ready to serve ads.That basic drive is what stitches together everything of import that Google does.

quote:
1) Google is a huge and self sustaining ecosystem.
2) Ecosystems survive due to circular and sustaining demand (i.e. we need them and they need us).
3) EU wants money and they will get it, if not from Google than from another successful company. I bet they are just salivating over the possibilities right now.
4) Losers hate the winners which is why so many search companies hate Google. When the tables turn their tune will change.
5) It is more profitable to litigate than it is to compete in an open market. (i.e. the system is broken in this respect).
6) Google doesn't FORCE data out of anyone. Simple META tags setting ROBOTS correctly will stop Google and many other search engines from indexing your site.
7) We have all known how Google works and it's smart business. Since when did smart business become so smart that it has mutated into "anti-competitive" and need to be shot down? This seems like a great mentality to destroy every successful company and support stupid business practices. I say, survival of the fittest and smartest not the stupidest, laziest, and most litigious.
8)


I am not sure how any of that relates to anything I said or to the issue at hand. The notion that the EU is financially motivated is laughable and that's from someone who worked for 20 years as an outsider operator across all branches of the EU bureaucracy and spent many, many months working through the Byzantine corridors of Brussels. It's really not what this about. What this is about is using a monopoly in one area to suppress competitors in another. It's that simple. I am not saying that is what Google did I am just saying that is the issue. And doing that, using a monopoly in one area to suppress competitors in another, is a big no no in the EU. The EU cannot stop the emergence of monopolies, Google got it's share of search by being easily the best, but the EU can stop it using that share to steamroll itself to domination in others areas if that's what think Google is doing. Stop dicking with search results. That can't be difficult for Google surely.


RE: The big picture
By retrospooty on 9/14/2013 10:01:56 PM , Rating: 2
" I presume you don't buy any of Google's products"

2 Nexus 7's a Chromecast and countless apps from the play store. No matter how you twist it, they are a software company. No matter what you wish would happen, Google is steadily taking over the smartphone and starting on the tablet markets. Instead of wasting your efforts trying to spread FUD to deaf ears, your best hope is for Apple to to update their aged OS and give better hardware options to stop Apples marketshare from eroding further. Its always funny when you make these posts anout Google, who they are and what their goals are. You are so far off its funny. Its a lot like Asymco. Your entire focus is on Apple with a microscpoe and you just dont seem to get whats going on with the rest of the tech world which goes on right outside of your microscos view. Hmmmmm. Makes me wonder.


RE: The big picture
By spaced_ on 9/15/2013 7:51:52 PM , Rating: 2
To be fair, I think with their automated vehicles, balloons, and space elevator projects, describing them as a software company is perhaps not accurate either.

Perhaps a technology and engineering company would be more apt at this point.


RE: The big picture
By spaced_ on 9/15/2013 7:18:42 PM , Rating: 2
How old are you Tony? You do realise Google was founded in 1998 right?

Surely you're older than 15.

You do realise, they didn't used to have ANY advertisements when they started as a company.

It took Larry and Sergey QUITE ALOT OF TIME to settle on the advertising method to make money. They even swore they wouldn't do advertising in their very early days (prior to Google existing). They were planning on selling their search software to other companies. But they weren't making any money and they started getting investors who were wanting some form of a business model. They figured out a way to make advertising work without defacing their service with in-your-face animated gifs draped all over every page.

So, the question Tony, is, are you simply a retard, or just 15? Which one?

The first step to recovery, is admitting you have a problem.


RE: The big picture
By retrospooty on 9/15/2013 9:24:13 PM , Rating: 3
Tony is an old guy. He isnt retarded, hes actually a fairly smart person, but he is here on an agenda... To make any competitor of Apple look bad in any way he can. He sees Google as a threat, so they are a target for his FUD. Take anything he says with a huge grain of salt. What it means is Google is doing well. Note, he doesn't say a whole lot about Microsoft or Blackberry in mobile because they are not a threat in his odd company focused mind. Google has him worried.


RE: The big picture
By sprockkets on 9/15/2013 10:55:03 PM , Rating: 2
quote:
So a company that makes all it's money from advertising, a company whose only paying customers are buyers of advertising, is not an advertising company?


Google has plenty of paying customers, both private and government, for their Google apps.

And it seems that only Google makes any money from the search business, while others are now floundering to MS never making a dime off of it.


"Let's face it, we're not changing the world. We're building a product that helps people buy more crap - and watch porn." -- Seagate CEO Bill Watkins














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