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Google issues formal answer to EU’s antitrust charges

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Google has been having it hard of late. The company has come under a lot of  scrutiny from regulatory bodies across the world. Amongst these, the European Union in particular appears to be very keen to make Google pay for all the times it has stepped a toe over regulations. Google has finally issued a formal reply to all the allegations against it.

According to Europe’s Competition Commission, Google has allegedly been exploiting the popularity of its search engine for its personal gains. As per the commission, Google Shopping and AdSense, which deal with price comparison and ad-placement respectively, have both been profiting from the search engine giant’s near monopoly in the sector.

EU says that Google search — which is undoubtedly the most used search engine on the planet — has been favoring the companies own Google Shopping results — resulting in customers being kept from the most relevant results. The EU also alleges that Google hinders the ability of its competitors to place search advertisements on third party websites, through its Adsense platform “which stifles consumer choice and innovation.”

Both of these allegations are pretty serious and may result in serious penalties for Google, if proved.

The company has issued a formal statement on the topic, and has also published a long drawn blog post, explaining its stand on the topic.

We remain confident that these claims lack evidence and are wrong on the facts, the law, and the economics. The surest signs of dynamic competition in any market are low prices, abundant choices, and constant innovation — and that’s a great description of shopping on the internet today.

In its blog post suggestively titled Improving Quality isn’t competitive, Google says that the company’s sole aim is to provide users with the highest quality of information possible. The company goes on to say that its engineers are constantly experimenting to improve the quality of the searches and provide users with direct answers to their questions.

The company goes on to say that publishing the best search results and advertisements is beneficial to Google, its advertisers and to the end users. Which is why, it would be foolish to expect the company to do anything apart from showing the best possible search results.

That’s why we disagree with the European Commission’s argument that our improved Google Shopping results are harming competition. As we said last year in our response to the Commission’s original Statement of Objections (SO), we believe these claims are wrong as a matter of fact, law, and economics.

The company also said that the EU’s complaints were flawed and that it failed to take the “competitive significance” of companies like Amazon, and the “broader dynamics” of online shopping into account. The company further said that what the EU took to be favoring, was actually listening to customers.

Our response demonstrated that online shopping is robustly competitive, with lots of evidence supporting the common-sense conclusion that Google and many other websites are chasing Amazon, by far the largest player on the field.

Google also says that the commission’s arguments that sites like Amazon can’t also be considered rivals just because they sometimes pay price comparison aggregator sites for referred traffic, is flawed. According to the search engine giant, while collaboration between price comparison websites and the likes of Amazon is a fact, the latter often get a major potion of their traffic from other sources — which often include dedicated applications.

The company also says that all of these services, including search engines, price comparison sites, merchant platforms, and merchants, compete with each other in online shopping. And that is why, according to the search engine giant, online shopping is so dynamic and has grown so much in recent years.

The whole argument is pretty convoluted. The European Union is also unhappy with Google’s new search algorithms that apparently favor websites like Amazon, over price comparison websites. While it is the Union’s belief that these price comparison websites are disregarded even in cases when they could prove to be of greater use to the customer, Google begs to differ.

According to the company, not only has traffic to price comparison websites gone down since the introduction of Amazon and its peers to Europe, but forcing it to deploy algorithms that offer more traffic to site comparison websites would be unfair to consumers, as well as against fair business practices.

EU officials have taken Google’s response into account and have promised to take it into account during the course of their investigation.

In each case, we will carefully consider Google’s response before taking any decision on how to proceed and cannot at this stage prejudge the final outcome of the investigation.

Meanwhile, the long and short is that Google disagrees with EU and believes the regulatory body’s arguments to be flawed in the extreme and based upon theories rather than concrete evidence.

Ultimately, we can’t agree with a case that lacks evidence and would limit our ability to serve our users, just to satisfy the interests of a small number of websites.  But we remain committed to working with the Commission in hopes of resolving the issues raised, and we look forward to continuing our discussions.

That said though, it will be more important to see if the company can actually prove its point to the Union. It should be borne in mind that the Union — if not satisfied with Google’s answers — can fine it up to 10 percent of its total global revenue, which in Google’s case will run into billions of dollars.

A bibliophile and a business enthusiast.

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