THE INTERNET HAS become so important to modern life that it’s hard to imagine it working much differently from the way it does. If you want to know something, you “Google it,” for free, presumably knowing you’ll be served targeted advertising. But today’s online world isn’t only a product of technological progress; it’s also the result of any number of legal cases and policy decisions that could easily have gone another way.
“Microsoft could have killed Google in the cradle,” says prominent Silicon Valley antitrust lawyer Gary Reback. Back in the 1990s, Reback spent years helping to convince the Justice Department to file charges against Microsoft, which was then using its dominance of the personal-computer software market to give Internet Explorer an advantage over other browsers. If not for the scrutiny Microsoft faced in antitrust cases in both the United States and Europe, Reback says — if the government hadn’t stepped in to stop the company from disadvantaging competitors — Google might never have become popular enough to be a verb.
Or, for that matter, the subject of its own antitrust controversy.
[On June 27], the European Commission announced that Google has breached antitrust rules by manipulating search results to favor its own vertical search services. In a landmark decision, the EU antitrust enforcement body hit Google with a record fine of €2.42 billion and gave Google a deadline of 90 days to end all discrimination against rival services. We applaud the European Commission’s dedication to the issue and commitment to restoring competition in online search to the benefit of consumers.
Google ordered to cease anticompetitive practices
Google has been found guilty of engaging in illegal conduct with the aim of promoting its vertical search services. Although the decision addresses comparison shopping services, the European Commission has also recognized that the same illegal behavior applies to other verticals, including local search. To this end, Google has been ordered to cease abusing its dominant general search engine to give advantages to its own specialized search products. A similar order has the potential to neutralize the harm Google has inflicted to online search and to effectively address anticompetitive concerns over local search.
Why local search matters
Local search is one of the most important human behaviors on the internet. It is the bridge between online research and offline commerce. Local searches – people looking for a pediatrician in Munich, a hotel in Barcelona or a Thai restaurant in Copenhagen – comprise the largest single category of search, representing roughly one third of total desktop search volume, and over one half of smartphone search volume. Between the defaults on iOS Safari and Android’s pre-installed Chrome, Google enjoys a 98% market share on smartphones.
The European Commission has been investigating Google for seven years following a number of complaints by both European and US companies, as well as consumer groups. Yelp has been a complainant in the case and we have been engaging with the EU authorities providing evidence of consumer harm in the market of local search.
[Editor Charlie sez: Chris wrote this post in 2015 and it is worth reconsidering in light of the European Commission’s ruling that Google is an out of control monopoly.]
Anyone in the music business has felt Google’s boot on their throat in a host of ways. Set aside the millions of take down notices and the absurd YouTube ContentID system. Set aside how Google hides advertising revenue from its YouTube cash cow that should rightly go to the artists and songwriters. The Europeans are focused on a much simpler issue.
Google favors YouTube in video search results. We all know they do it and they’ve been doing it for years. Now there may be a chance to actually do something about it, at least in Europe.
As MTP readers will recall, the European Commission has pursued antitrust complaints against Google in Europe on behalf of price comparison sites and others that Google steals content from. Anyone in the music business is very familiar with Google stealing content in their various business lines–they do it to us all the time when they’re not driving traffic to pirate sites.
According to the New York Times:
[Google] may be the target of a series of new civil lawsuits that claim Google abused its market dominance to favor its own services over those of its rivals.
On Tuesday, Hausfeld, an international law firm [and US-based class action specialist] with connections to companies affected by Google’s activities in Europe, and Avisa, a European public affairs company that has represented complainants in the antitrust case, will announce that they have created an online platform [the Google Redress & Integrity Platform (GRIP)], to help companies sue Google for financial damages in European courts….
“So far, the focus has been on public enforcement,” said Laurent Geelhand, managing partner at Hausfeld, in Brussels, who declined to comment on the size of any potential civil damages. “But what’s still missing is how this has financially affected the victims.”
According to Reuters:
[T]he [GRIP] platform would build on the European Commission’s April charge sheet, which accuses Google of unfairly promoting its own shopping service to the disadvantage of rivals.
“GRIP offers corporations, consumers and other entities harmed by Google’s anti-competitive business practices in Europe a mechanism to evaluate their potential claims,” Michael Hausfeld, chairman of Hausfeld, said in a statement.
“It has been five years between the first complaint against Google and the EC’s statement of objections, which is about three times longer than the groundbreaking Microsoft case,” Jacques Lafitte, founder of Avisa Partners, said in a statement. “Google’s president, lawyers and publicists have worked well to create this delay. But Google has not been able to stop the inevitable: It finally faces justice.”
Yeah. What he said.
IMPALA have brought their own complaint with the European Commission which, as far as I know, is still in the hopper and has not been acted on as yet, although I’m sure it will be. Even so, artists and labels may wish to consider investigating the Hausfeld online platform to see if it would make sense for them to participate in any civil action against Google.
While Google’s potential exposure to a ruling against the company would start with a staggering $6 billion fine, that fine does not preclude civil lawsuits against Google by those it has harmed. While nobody takes paying a $6 billion fine lightly, does it really seem like it would be a lot of money to Google? And when you consider that Google have managed to drag out the adjudication for years already, it really seems rather like chump change. No pun intended.
We appear to have a law firm interested in at least helping potential plaintiffs bring these cases. Why not at least check it out?
U.S. music folk should be thinking that this may be their last chance to get justice from Google. The U.S. government has so far been unwilling to take action against Google, so this may be our only choice.
European antitrust officials are preparing to hit Google with a potentially record fine by the end of August over some of the Silicon Valley giant’s search services, according to two people with direct knowledge of the case.
Margrethe Vestager, the European Union’s competition chief, is in the final stages of ruling on the case, said the people, who spoke on the condition of anonymity because they were not authorized to talk publicly. Any financial penalty is expected to be larger than the fine of 1.06 billion euros, now about $1.2 billion, then about $1.4 billion — at the time the highest ever — that Intel was forced to fork out for antitrust abuses in Europe in 2009.
As well as the fine, European officials could also force Google to alter how it operates in the region, and potentially elsewhere, to give rivals a greater ability to compete.
The case, linked to claims that Google diverted traffic from competitors’ services to favor its own comparison shopping site, is one of three investigations that the European Union’s executive arm has opened against the search giant. The other two involve Android, the company’s mobile software, and some of Google’s advertising products.
Google’s unprecedented Obama Administration influence and its self-serving anti-employment, anti-property, and pro-regulatory policy agenda, are on a collision course with the job-creating, pro-property, deregulatory Trump Administration growth agenda.
Keep watch to see who adapts to whom and how.
I. Google’s Unprecedented Lobbying Influence
Current Alphabet-Google Chairman Eric Schmidt enjoys the privilege of being the onlycorporate leader of a publicly-traded company on the President’s nineteen member Council of Advisors on Science and Technology.
Coincidentally, former Google Senior Engineer from 2006-2013, Mikey Dickerson, is Deputy U.S. Chief Information Officer and Administrator of the U.S. Digital Service, a new organization and position.
Renata Hesse, Google’s former outside antitrust defense counsel, is coincidentally now Acting U.S. Assistant Attorney General for Antitrust, who coincidentally is the lead liaison with EU antitrust authorities concerning the EU’s three pending monopolization cases against Google.
Former Google Deputy General Counsel and head of patents and patent strategy from 2003-2012, Michelle Lee, is coincidentally now Under Secretary of Commerce for Intellectual Property and Director of the U.S. Patent & Trademark Office, who coincidentally joined the USPTO just when Google faced several new serious patent lawsuits.
And coincidentally yet again, the U.S. Register of Copyright, Maria Pallante, just got fired coincidentally after she disagreed with Renata Hesse and Google’s position on a music copyright consent decree and with the FCC-Google position that FCC authority should supersede copyright in the FCC’s Set-Top Box rulemaking.
Coincidentally, Google employees visited the Obama White House 427 times per White House Logs including 128 visits coincidentally by Google’s lobbyist Joanna Shelton alone, many more times than any other special interest.
And a final coincidence, Google also has generated the most “revolving door” moves of any company with this Administration with 251 Google employees either entering the government or government employees joining Google, according to the Google Transparency Project.
[Look over there, look over there! It’s Amazon!]
Google has sought to blunt the European Commission’s three-prong inquiry into its business practices – by claiming the Eurocrats don’t understand antitrust law.
Writing on Google’s corporate blog, senior VP and general counsel Kent Walker disclosed that Google has responded to the Commission’s shopping and advertising concerns, and will soon file its response to the Android portion.
Walker says the historic shopping investigation – that’s the one Commissioner Almunia tried to settle mutually but couldn’t – failed to take into account the market power of Amazon.
What does it tell us that no company ultimately bid to buy Twitter over the last month despite several reported brand-name interested buyers?
Twitter is the eighth-most-visited Internet site in the world; the best site in the world for real-time content; and is one of the few public companies in the marketplace that is growing revenue at a 20% annual rate – and no one even submitted a low-ball bid for Twitter? What is going on here?
Apparently, it tells us that there are only two companies in the world that could grow, leverage and monetize Twitter to make it worth roughly $20b under current circumstances – Alphabet-Google and Facebook — and they both practically can’t buy Twitter for antitrust reasons.
Let’s analyze why.