It ain’t over until Google says it’s over

Joaquin Almunia, Vice-President of the European Commission- responcible for Competition

The deadline EU Commissioner Joaquin Almunia set to Google to answer the Commission’s investigation expired yesterday and, since no answer had been filled, people in the DG Competition decided to throw a party. They thought that these would be the easiest €4 billion the European Commission had ever made. Mr. Almunia even rushed to brag about the way he cornered Google by stating the day before yesterday “today is the 30th and tomorrow is the 31st, so I can imagine the proposals are flying in…”.

It ain’t over until the fat lady sings

It is official, though, that Google sent their reply yesterday just in time. However, silence reigns in the European Commission’s kingdom concerning the content of the text the Internet giant filled in. Besides, there is no deadline binding the EC to open their cards. We believe that it will take quite some time until the DG Competition makes any announcement on this complex issue because they need to do their homework and study a lot. And we all know how long it takes for Eurocrats to turn a page. But this time, the delay can be justified for many reasons.

A couple of months ago the Sting wrote about the Commission’s intention to challenge Google. That dates back to November 2010 when the European Commission launched the antitrust investigation into allegation that the world’s biggest Search Engine had abused a dominant market position. Two years later, in May 2012, Mr. Almunia stated the following four competition concerns:

“First, in its general search results on the web, Google displays links to its own vertical search services…differently than it does for links to competitors.
Our second concern relates to the way Google copies content from competing vertical search services and uses it in its own offerings… This practice may impact for instance travel sites or sites providing restaurant guides.
Our third concern relates to agreements between Google and partners on the websites of which Google delivers search advertisements…The agreements result in de facto exclusivity requiring them to obtain all or most of their requirements of search advertisements from Google…
Our fourth concern relates to restrictions that Google puts to the portability of online search advertising campaigns from its platform AdWords to the platforms of competitors.”

Nobody really knows what Google is suggesting to the European Commission in the document delivered today in the offices of DG Comp. According to the Sting’s sources, Google will try to explain the principles of their operations as search engine, trying to clarify with technical and legal arguments that the allegations are not truthful. But little is the importance of what the Google reply document contains compared to the importance of finding out what is really hidden behind DG Competition’s manic urge to fight Google.

It is true that you can always spot the fire if you follow the smoke. The smoke in this case is iComp, the lobbying group that has been producing much publicity about the issue, of course, always against Google. And why do the folks in iComp express regularly so much hatred against Google? The answer can be found if one digs up enough to see who is lurking behind them.

A corporate fight and not a fight for the European consumer

iComp, the lobbyist group that was the protagonist in the anti Google campaign in 2010, is substantially backed by another Tech giant, Microsoft. The question then is why a Software giant like Microsoft needs to convince the Commission that Google is evil? The answer is rather simple: Microsoft had no other way to penetrate the Search Engine market than to undermine the market leader, Google.

It was only in 2009 that the world’s biggest Software company, Microsoft, decided to expand with Bing their business in the search engine field, that was and still is a one man show. “Google it” is a common phrase that is widely used today and that even Cambridge English Dictionary had to include as term: “to search for something on the Internet using the Google search engine (=computer program that finds information)”. That says pretty much everything. Google is the king in the search engine markets and it has reached the marketing promise land, more or less what Coca Cola has accomplished in a different industry, to inherently link the brand name with the product category.

In this landmine where whoever foolishly tried to enter was eaten alive by Google, Microsoft had the nerves to challenge the sheriff in a duel at El Paso, namely Brussels on this occasion. So, Microsoft and their big Brussels offices, considerably bigger than the ones of Google in the capital of Europe, started a huge campaign against Google by putting iComp and other people in the front line to take the first bullets, hoping that they convince the European Commission that Google is evil. But even if Google is evil in the end of the day, what really astonishes the editorial team of the European Sting is the fact that each of the four Almunia’s concerns is a strategic attack against the four unique selling propositions of Google’s Adsense and Adwords, the two advertising programs that made Google a €40 billion company.

It is evident that the way Google has taken over the search engine market is monopolistic. But this is not the issue at the moment. The issue is that it is basically Microsoft that is filing this investigation, having failed to gain market share on a straight market battle. It is as if Mr. Almunia is working for Microsoft or Microsoft is working for the European Commission! No matter which of the two cases is true, one thing is for sure: this kind of investigations has limited benefit for the European consumer. Instead, they open a new era where the European Commission is working for multinational giants and play the role of the corrupted referee in the fierce competition game of the markets.

The Sting will keep following closely this case and is committed to uncover what is really in for the European consumer during this corporate war of Internet giants.