The European Commission investigation of Google should not become "The Song That Never Ends" of lamb chops origin, regardless of how badly Google's competitors may want that outcome. The verse started with Google proposing a settlement, then the European Commission market tested it, Google's competitors put pressure on the European Commission to reject it, and the verse repeats. We are now on the third repeat of the chorus. At this point it seems like some of the actors are losing track of the melody -- the goal of the investigation is to help consumers, not to drag the investigation on forever in order to hurt Google or to handicap Google's ability to compete to the extent competitors can grab market share without actually innovating.
Joaquín Almunia, the European Union's competition commissioner, has negotiated one of the harshest penalties in the world and significantly more far-reaching relative to recent major settlements with other companies. For example, Microsoft's commitment to present a browser ballot screen only appears the first time a consumer installs his or her machine. Google's remedy on the other hand is far more intrusive and a persistent choice that will be presented to consumers every time they use Google search. Just when we all thought the song was finally over Google's competitors again try and force another repeat.
The main concern of the investigation is visibility for Google's rivals and consumer choice -- this has been confirmed many times by the Commission itself. To that end, Almunia has negotiated a settlement that will give valuable real estate on Google's search results to competitors looking to convince consumers their search is better. When a search returns sponsored results competitors receive significant amounts of the sponsored space on both desktops and mobile devices. Competitors will participate in an auction to determine the allocation of this valuable and scarce space efficiently. If the competitors are not seeking to appear in sponsored results, then competitors get to occupy the reserved space for free.
This investigation is not about Google's search algorithm. Commissioner Almunia has said "it is neither possible nor desirable to regulate Google's ranking algorithm. With what means and which objective in mind would a competition authority do that?" Google's algorithm is a valuable trade secret that changes constantly to meet consumer demands in a rapidly evolving internet. It is manifest that chaining down this algorithm would not benefit consumers -- it would only benefit competitors who would not have to deal with bureaucratic involvement in their core features and would not have to compete against an unconstrained Google.
Commissioner Almunia is wise to resolve the European Commission's concerns through a settlement process that has proved to be rigorous and thorough rather than pursue a court process under Article 7. Such a process would be expensive and the outcome uncertain. The United States Federal Trade Commission dropped its investigation on the same matter stating that Google did not violate antitrust or anti-competition statutes in the way it arranges its Web search results, instead concluding that changes made to Google's algorithms were intended to help users, not harm competitors.
The European investigation has been going on since 2010 and has been incredibly thorough. Google's concessions are structured to fully address the preliminary concerns the European Commission has actually voiced. An end to the investigation will benefit consumers and allow companies to return to innovation and competition instead of focusing their efforts on a song that may never end.
David Balto is a former policy director of the Federal Trade Commission, attorney-adviser to Chairman Robert Pitofsky, and antitrust lawyer at the U.S. Department of Justice. He has been a senior fellow at the Center for American Progress and has worked with the International Center on Law and Economics, both of which receive funding from many organizations including Google. Balto has also published research and authored scholarship for Google on technology policy topics.
Joaquín Almunia, the European Union's competition commissioner, has negotiated one of the harshest penalties in the world and significantly more far-reaching relative to recent major settlements with other companies. For example, Microsoft's commitment to present a browser ballot screen only appears the first time a consumer installs his or her machine. Google's remedy on the other hand is far more intrusive and a persistent choice that will be presented to consumers every time they use Google search. Just when we all thought the song was finally over Google's competitors again try and force another repeat.
The main concern of the investigation is visibility for Google's rivals and consumer choice -- this has been confirmed many times by the Commission itself. To that end, Almunia has negotiated a settlement that will give valuable real estate on Google's search results to competitors looking to convince consumers their search is better. When a search returns sponsored results competitors receive significant amounts of the sponsored space on both desktops and mobile devices. Competitors will participate in an auction to determine the allocation of this valuable and scarce space efficiently. If the competitors are not seeking to appear in sponsored results, then competitors get to occupy the reserved space for free.
This investigation is not about Google's search algorithm. Commissioner Almunia has said "it is neither possible nor desirable to regulate Google's ranking algorithm. With what means and which objective in mind would a competition authority do that?" Google's algorithm is a valuable trade secret that changes constantly to meet consumer demands in a rapidly evolving internet. It is manifest that chaining down this algorithm would not benefit consumers -- it would only benefit competitors who would not have to deal with bureaucratic involvement in their core features and would not have to compete against an unconstrained Google.
Commissioner Almunia is wise to resolve the European Commission's concerns through a settlement process that has proved to be rigorous and thorough rather than pursue a court process under Article 7. Such a process would be expensive and the outcome uncertain. The United States Federal Trade Commission dropped its investigation on the same matter stating that Google did not violate antitrust or anti-competition statutes in the way it arranges its Web search results, instead concluding that changes made to Google's algorithms were intended to help users, not harm competitors.
The European investigation has been going on since 2010 and has been incredibly thorough. Google's concessions are structured to fully address the preliminary concerns the European Commission has actually voiced. An end to the investigation will benefit consumers and allow companies to return to innovation and competition instead of focusing their efforts on a song that may never end.
David Balto is a former policy director of the Federal Trade Commission, attorney-adviser to Chairman Robert Pitofsky, and antitrust lawyer at the U.S. Department of Justice. He has been a senior fellow at the Center for American Progress and has worked with the International Center on Law and Economics, both of which receive funding from many organizations including Google. Balto has also published research and authored scholarship for Google on technology policy topics.