Google: EU Antitrust Fine is "Inappropriate"

[engine]

You'll all recall the EU statement of objections (see link below) and here's the latest reply from Google which Reuters managed to see.

Google is saying it's offering a free search service, and that there's "no trading relationship" between it and it's search users, hence the statement from Google that a fine, potentially as much as $.6.6 billion, would be "inappropriate."

"Imposing a fine in the present case would be inappropriate. The novelty of the statement of objections' theory, the selection of the case for commitment negotiation and Google's good faith participating in these negotiations militate against the imposition of a fine," the document said.

Google said it should not be charged with abusing its dominance in Europe as it provided a free search service.

"The statement of objections fails to take proper account of the fact that search is provided for free. A finding of abuse of dominance requires a 'trading relationship' as confirmed by consistent case law. No trading relationship exists between Google and its users." Google: EU Antitrust Fine is "Inappropriate" [uk.reuters.com]

Google Challenges the European Commission's Statement of Objections [webmasterworld.com]

[heisje]

as it provided a free search service

Let's see the transparent fallacy:

- They display information they get-for-free from billions of web pages in return of providing a free search service - web pages have a recurring cost, they don't come free.
- By displaying information they get-for-free they get *free traffic* and they establish the ability to display ads and the right to charge for advertisements. They make billions in net revenue OVER the cost of the free service they provide, not shared with webmasters.
- While there is no written contractual "trading relationship", there is an implicit 'trading relationship' between webmasters and Google, as value is exchanged : value of "information to display" provided by webmasters in exchange for the "service of displaying" that information. Out of this "trading relationship" Google eventually makes a substantial profit, as on the basis of this implicit "trading relationship" they sell advertisements - not sharing this revenue with webmasters who provide their information for display.

So, Google's assertion that there is no "trading relationship" does not stand.

Google's "trading relationship" with webmasters and Google's profit therefrom constitutes an acceptable practice. Also, nothing wrong with their dominant position, as they are the best existing search service.

But then follows the ABUSE of dominant position, in a multitude of ways, already broadly discussed by now.
The EU is after the ABUSE of Google's dominant position, not the dominant position itself - and the profit resulting from any practices that constitute ABUSE. They are not after Google for making a legitimate profit as described above.

The abuse the EU is talking about is not solely and mainly against visitors/consumers (although they suffer too), it is mainly against WEBMASTERS (publishers, businesses, small businesses, professionals, entrepreneurs, educational institutions, NGO's. government agencies, etc).

At Google they know well they cannot fool by their leaked PR spin either the EU or webmasters. Their PR is aimed at the masses of end users of their search service, who use it without a paid fee (although they "pay" implicitly by creating value for Google by their mere visit) - so that they may rally mass consumer and political support.

Lets' watch who blinks first. My take : it will be hard for Google to win this.

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[superclown2]

It's a good try.

However, the contractual relationship between Google and the search users isn't relevant. The one between Google and the companies they sell ads to, and those they exclude from the market through their monopoly position, certainly is. I hardly think the EU legal bods will be worried.

[fathom]

I lean the other way. Difficult for Google to lose!

[glakes]

Hmmmm, Google getting their reconsideration request denied. Some will see this as justice, while others don't. But I will say nothing is free. Advertisers pay, while searchers are profiled for more ads. If Google were truly a free service, they should give us all the money we spent on Adwords back.

[lucy24]

Imposing a fine in the present case would be inappropriate.

Uhm, Google, I don't think you understand. People don't get to choose their own punishments.

[tangor]

Tough to view this via the webmaster lens, all those things WE have invested/divested, etc. to play the game of "g".

From a bureaucrat's point of view, however, it is quite different. All those dollar signs created by legislation. Hoo-hah!

Waiting to see how it shakes out. I'm betting on the gubermint (sic)!

[engine]

A monopoly that offers a "free service" is an interesting angle to take. I'm trying to think of other examples that are commercial businesses. I believe this is all new territory.

[londrum]

I wonder how long it will take for the EU to actually make a decision and force google to make some changes... another fifty years, i'm guessing. By which time we will all be dead

[heisje]

I wonder how long it will take for the EU to actually make a decision

True, they have been very slow, but they are finally moving forward. In contrast the U.S. is not even starting to contemplate a serious investigation - why Americans are so quiet, almost indifferent, to this? Also, is Uncle Sam going to do his best, behind the scenes, to stifle EU action? American webmasters/publishers/small businesses/consumers/etc must voice their position clearly, if any.
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[jmccormac]

Certainly turning out to be fun watching this. Google's FUDbuddies will be going into overdrive trying to present Google as everybody's friend and Big Brother. :) The EUC doesn't seem to want to comment and this article quotes from a redacted Google document. If Google documents are being leaked like this, then one party might be rather upset with the way things are going.

Regards...jmcc

[jmccormac]

True, they have been very slow, but they are finally moving forward.

There was a change in commissioners, from what I remember.

Regards...jmcc

[Simon_H]

"By using our Services, you agree that Google can use such data in accordance with our Privacy Policies."

A user's private data has value and so Google's search isn't free. There's your trading relationship.

[fathom]

Technically "TRADE" is the buying & selling of good & services.

...and FREE, even if you preceive there is substantial value in the collective data, a single user's data isn't worth very much.

[jmccormac]

Not quite trading relationship but effectively a contract.

[en.wikipedia.org...]

Regards...jmc

[Simon_H]

@fathom I certainly won't pretend to understand what 'trade relationship' means in practice. But I can say with certainty that in contractual relationships, the magnitude of consideration (value) is irrelevant. If there is *any* consideration, however small, then there's a contract. I believe it will be argued that Google offers a service and users pay for that service by allowing Google to use their privacy data.

[samwest]

A free service to ad a toll to our virtual goods.
If it's a free service, how did you make 70 billion dollars last year?

They assume our time means nothing. When they place an ad that takes time to watch, read or dismiss, it takes up our time, and as we all know, time is money. They've no doubt wasted trillions of man hours of time with their ads.

[edited by: samwest at 9:09 pm (utc) on Nov 4, 2015]

[masterjoe]

heisje makes some excellent points. Google was built from helping webmasters, not trying to divert all their traffic away to paid advertisements that they continually cram down everyones throats to a greater degree. My last informational search was for a supplement called "pregnenolone" (which was purely informational), yet I was faced with 2 ads above the search results, an answer box on the right, and more ads below that in the sidebar. They have gotten extremely aggressive over the last few years about how many ads they show, to the point where it is actually distracting from the informational searches. Greed conquers all.

[fathom]

The EC can certainly change their mind and file something different but I believe the sum of their current objections were towards competitors with shopping comparison sites, database scraping, etc.

I don't recall any user-oriented objections.

[tangor]

I don't recall any user-oriented objections.

True, most of the suit involves EU based companies getting shorted on the results page by G products. In that regard there is some consideration to be made as to how "fair" that list return might be.

IIRC these complaints stretch back nearly ten years....

[skibum]

It does seem odd that the US doesn't tend to pursue these types of things much with Google. Is there perhaps something in European law or tradition that prevents "lobbying" in Europe whereas in the US offering up campaign and other contributions is rather customary?

[jmccormac]

There is lobbying in the EU. However this case has political and financial aspects of which most SEO commentators and webmasters are unaware.

Regards...jmcc

[Nutterum]

EU is hampered by Google, be it intentionally or not. And the European Commision is not happy. There is enough data to prove that some verticals american companies are pushed ahead instead of local ones. I can see the legitimacy of the argument from a mile, but what concerns me is that in a more and more global world, there are more and more government entities trying to get their piece of the cut instead of contribute to the global economy effort.

[Simon_H]

Google is well known in Europe for tax avoidance, e.g. using Bermuda as a tax haven to deprive EU governments of £billions of tax. It's all allegedly legal, but whereas the US may not want to upset such a big tax payer, the EU will be far more inclined to pursue them.

[fathom]

The only problem standing in the way of a legitimate argument are the courts. Pushing for a settlement when the opposition doesn't want to settle "SUCKS!"

[jmccormac]

Google is well known in Europe for tax avoidance, e.g. using Bermuda as a tax haven to deprive EU governments of £billions of tax. It's all allegedly legal, but whereas the US may not want to upset such a big tax payer, the EU will be far more inclined to pursue them.

This is one of the major political aspects of the case and it is one of which that some commentators in the US are completely unaware. The EUC has been looking at the activities of other large multinationals too and the tax avoidance issue is a problem especially when the rate of corporation tax varies from country to country within the EU.

Regards...jmcc

[jmccormac]

The only problem standing in the way of a legitimate argument are the courts. Pushing for a settlement when the opposition doesn't want to settle "SUCKS!"

I'm sure that the learned counsel for Google and the EUC will be labouring long into the night to figure out that one. :) This an EU action against Google. It is not L.A Law or Boston Legal where cases are investigated, initiated and resolved in the space of sixty minutes. These cases can, and do, take years to resolve. As has been pointed out, the arguments are not simply about web development. Once the political, taxation and anti-trust elements started to influence the case, the opinions of various SEOs and webdevs unaware of the legislative and political aspects of this case became even more irrelevant. In many investigations, it isn't what one knows that matters but rather what one can prove. The EU is a separate jurisdiction to the US and has its own legislative framework. This means that US law may not apply in the way that EU law applies to EU cases.

Regards...jmcc

[fathom]

I absolutely agree with you on that. More POPCORN please!

[jmccormac]

To paraphrase, Jaws, I think we're going to need a bigger popcorn machine. :)

Regards...jmcc

[masterjoe]

I contacted an EU commissioner and informed them about the zombie trend we are experiencing - seems they are quite intrigued with the phenomenon as I heard back today.