Google’s reported solution to Europe’s giant antitrust fine is already under fire

Competing for ad space just like everyone else.
Competing for ad space just like everyone else.
Image: Reuters/Paul Hanna
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Google competitors are already screaming about the search giant’s proposed solution to breaking Europe’s antitrust laws.

In response to a record-breaking €2.42 billion ($2.7 billion) fine  from the European Union in June, the search giant is reportedly planning to place its shopping services business into a separate unit. The new unit would bid alongside outside companies for the ad placements that appear at the top of search results when people use Google to shop.

Google faced a Thursday deadline to come up with a remedy, or be hit with daily fines of up to 5% of its average revenue. The EU had charged that Google favored its own results when people search for stuff to buy.

The company that in 2009 kicked off the original EU investigation, British comparison-shopping service Foundem,  says a paid auction simply means competitors will be “forced to hand their profits” to Google. Instead, Foundem proposes that Google get rid of its “Universal Search” feature entirely (those boxes that pop up for things like Google Maps or News, for example) and simply display search results as a list. Universal Search has been in place since 2007.

The EU must approve Google’s solution and has said it will listen to customers and competitors.  ”If [competitors] are unhappy and it doesn’t work, then we will start investigating,” the European Commission’s antitrust chief, Margarethe Vestager, told Bloomberg last week. The commission is appointing a firm to monitor Google’s shopping search results to ensure competitors get a fair shake.

Google does stand a good chance of EU approval for the auction mechanism, said Peter Willis, a partner at law firm Bird&Bird in London. ”It has to make sure it’s completely fair and that it doesn’t grant hidden advantages to Google’s own business,” he said. The solution itself is not a breakup of the company, he said, just a placement of the shopping business into a separate unit—only in Europe, presumably—so “it’s easier to monitor for compliance.”