Google is appealing against the commission’s ruling and is confident its concessions meet Brussels’ requirements © EPA
Concessions made by Google to address EU complaints of abuse that earned the tech company a record €2.4bn antitrust fine have so far had barely any impact on its shopping search results, according to a Financial Times analysis.
The case is the first of a trio of EU antitrust investigations into the search giant that have stretched over seven years and which have become an important test of the European Commission’s ability to shape the behaviour of big technology platforms.
The commission decided in June that Google had allegedly abused its dominance in general search to illegally favour its own shopping service over rival comparison shopping websites. Brussels levied the fine and ordered the search giant to start treating its own service and those of rivals equally from late September.
The EU can levy an additional daily fine of up to 5 per cent of the average daily turnover of Alphabet, Google’s parent, if the company fails to comply.
To meet the commission’s order, Google began allowing price comparison websites to bid for space in its prominent “shopping box” that appears at the top of the results page when a user searches for a product. The box was previously reserved for its in-house shopping service.
While the concession has allowed some competitors to secure prime ad space, the frequency of successful rival bids is low. Competitors appeared in under 1 per cent of the shopping box ads that came up in more than 500 product searches run by the FT on Google’s site in six European countries.
Surprisingly, shopping comparison websites now appear more often on the first page of Google’s search results that appear below the shopping box. This outcome is unexpected because Google insisted the commission did not require changes to its search algorithm that ranks search results.
In the FT tests, shopping comparison sites such as Idealo and Trovaprezzi appeared in the first page of natural search results 50 times in late October, compared with just twice in late September, in the days before Google implemented its remedy. The changes were seen primarily on the German and Italian Google sites.
For this article, FT ran more than 500 searches for 35 products in local languages across six Google domains from computers located in Belgium, Germany, Italy and the UK.
Some of Google’s rivals are deeply frustrated by the limited concessions made so far, which they see as a means for Google to further squeeze their margins by forcing them to compete in auctions for space in the shopping box against the US group’s own service.
The remedy is not working, according to Richard Stables, chief executive of Kelkoo, a European comparison shopping website. “The main beneficiary of Google’s new way of doing things is, shockingly, Google. They’re still popping up on 99 per cent of the shopping product searches and we’re getting very little volume,” he said.
Proportion of Google’s shopping box ads occupied by its competitors
Google is appealing against the commission’s ruling and is confident its concessions meet the commission’s stated requirements for equal treatment.
A spokesman for the company said: “Four weeks ago, we implemented a remedy to comply with the European Commission’s order. As required, comparison shopping services now have the same opportunity as Google Shopping to show shopping ads from merchants on Google’s Search results pages.”
A person familiar with the service pointed out that nearly a dozen rivals were bidding in the auctions when it launched four weeks ago and participation is growing.
EU officials are monitoring the effects of Google’s remedy in a process that could take months. “It is for Google to show that they live up to the decision,” said Margrethe Vestager, the European competition commissioner. “This issue will remain on our desks for some time.”
If the commission concludes the remedy is insufficient, it will launch a new investigation that could be as long as the original case. Critics argue that the case has taken too much time, tried to solve last decade’s problem and provided a remedy that misses the point.
There are very few comparison shopping rivals left in Europe, according to Gary Reback, a lawyer for the complainants against Google at Carr & Farrell. “What the commission does not get is the network effect on the market — when competition is gone, it’s gone and it’s not coming back.”
However, some long-time antitrust experts argue a battle with regulators eventually makes a company accept that it is dominant and has special responsibilities, altering its future behaviour — much as happened following EU cases against Microsoft and IBM.
Rivals have filed claims against Google in national courts to recover compensation for the alleged abuse.
Additional reporting by Tobias Buck in Berlin, Madhumita Murgia in London, James Politi in Rome and Richard Waters in San Francisco