“We are writing to express our common views on the European Commission’s ongoing settlement negotiations with Google (NASDAQ:GOOG),” begins a letter to Joaquin Alumnia, the European Union’s top anti-trust official. “The Commission opened proceedings more than two years ago, and we are becoming increasingly concerned that effective and future-proof remedies might not emerge through settlement discussions alone.”
Nearly three years ago EU officials opened an antitrust probe against Google based on concerns that the search giant — with more than 80 percent of the market share in the region — was abusing its position by placing results for its own services ahead of the results for competitors. The group that wrote the letter, led by British shopping-comparison website Foundem, claims that the practice is harmful to their web-based businesses.
“In addition to materially degrading the user experience and limiting consumer choice,” the letter states, “Google’s search manipulation practices lay waste to entire classes of competitors in every sector where Google chooses to deploy them.”
The practice — and criticism of it — is nothing new. A similar case was brought in the United States not too long ago, but was recently thrown out after antitrust regulators could not discern any negative impact to consumers. Reports indicate that regulators in the EU want to close the case — now in its third year — as quickly as possible. This may mean settling with Google without pursuing strict legal action or seeking a penalty.
Understandably, critics are looking for more than just a slap on the wrist.
Notable signatures on the letter include Brent Thompson, who is senior vice president of corporate affairs at Expedia (NASDAQ:EXPE), and Seth Kalvert, who is a senior vice president and general council for TripAdvisor (TRIP). The real point of the letter is not necessarily to call attention to this practice — the suit has been floating in the legal ether for more than two years — but to urge a particular vector of action…
Specifically, the group wants the European Commission to issue a Statement of Objections, which brings the probe deeper into the legal fold and can be used as leverage against the company if it does not act. New legislation in the region means that Google could be fined up to 5 percent of its 2012 revenue, or $10 billion.
The Foundem-led consortium is not alone in this fight. Having faced huge penalties of its own in the EU, Microsoft (NASDAQ:MSFT) isn’t letting a chance to see Google get slammed by regulators pass it by. Susan Athey, a professor of economics and a long-time Microsoft consultant, published a blog post on Tuesday that supports the anti-Google cause.
They conducted a study that showed how the simple act of moving a search result up or down in the results page dramatically changed the amount of traffic it received. This may be intuitive to regular Internet users, but demonstrating the phenomenon provides a strong foundation for the anti-Google camp, and the research has been submitted to the European Commission for review.
“The data spoke very clearly about the impact of the treatments: A search engine can divert traffic from one website to another by manipulating the order of search results. In particular, moving the best result down just two positions (from first to third) reduced traffic to that site by half,” she wrote.
This reduction in traffic is a key part of the damage that Foundem and its partners claim Google’s practices have caused them.