Google Inc (NASDAQ:GOOG)’s most recent attempt to settle accusations of anti-competitive behavior was rejected by EU Competition Commissioner Joaquin Almunia earlier today. Google’s proposal included labeling its own services within general search results and displaying more of its rivals’ services, Christopher Williams of the Telegraph reports.
“After an analysis of the market test that was concluded on June 27, I concluded that the proposals that Google sent to us are not enough to overcome our concerns,” he said.
In August, Mohnish Pabrai took part in Brown University's Value Investing Speaker Series, answering a series of questions from students. Q3 2021 hedge fund letters, conferences and more One of the topics he covered was the issue of finding cheap equities, a process the value investor has plenty of experience with. Cheap Stocks In the Read More
Google accused of anti-competitive behavior
Google Inc (NASDAQ:GOOG), which controls around two-thirds of the US and EU search market, is accused of anti-competitive behavior, such as placing its own services higher in its search rankings than would be warranted under a neutral system. Since Google does not label these links as advertisements many consumers then favor Google services.
Google Inc (NASDAQ:GOOG)’s approach would have included a number of steps meant to accommodate rivals: labeling its own services as advertisements, so that users knew they were different from normal search links; providing links to rival services in close proximity to its own; allow web sites and publishers to opt-out of specialized services without hurting their position among normal web searches; and giving websites more freedom in how they manage ad campaigns.
But FairSearch, special interest group formed by Microsoft Corporation (NASDAQ:MSFT), Oracle Corporation (NASDAQ:ORCL), Expedia Inc (NASDAQ:EXPE) and other attempting to get more search market share has argued that Google’s proposal would be ineffective, reports Ingrid Lunden at TechCrunch.
FairSearch points out that the proposal only affects google.com, not country-specific variants, and lacks detail on how many of the features would be implemented. They found that requiring users to click on an ‘Extra Links’ button was enough of a hurdle to create a significant disparity in user preference. Though considering the group is composed entirely of Google Inc (NASDAQ:GOOG)’s rivals, it seems unlikely they would have come up with any other conclusion.
Instead FairSearch would like to see a strict ban on Google Inc (NASDAQ:GOOG)’s ability to manipulate search results, forcing the company to adhere to its algorithm at all times. This rule would create its own difficulties as Google does not disclose the exact details of its search algorithm, and the issue of bias within the algorithm itself could become an issue further down the road.
It also raises the question of how far a successful company must go to allow its competitors to make market inroads, especially in the volatile IT sector. Even without government intervention, Google’s market share has slipped in recent months as Bing gains a wider base.
Google Inc (NASDAQ:GOOG) has not yet responded to the request for more concessions, but it still has a strong incentive to avoid going to court, where losing could mean billions of dollars in fines.