Consumer Watchdog Welcomes EU’s Antitrust Warning To Google, But Says Internet Giant Unlikely To Settle — Strong Measures Including Breakup Must Be Considered

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SANTA MONICA, CA – Consumer Watchdog today welcomed the European Commission’s finding that Google’s business practices may violate antitrust law, but predicted that the Internet giant will not offer meaningful remedies voluntarily.  The nonpartisan, nonpartisan group said antitrust officials on both sides of the Atlantic should consider breaking up the company.

The European Commission said it was concerned that Google was favoring its own services in search, copying material from websites of competitors without permission, shutting out advertising competition and placing restrictions on the portability of online search advertising campaigns from its platform AdWords to the platforms of competitors.

Consumer Watchdog expressed deep concern about Google’s dominance of the mobile market, where Google has 95 percent of the search market.

Joaquín Almunia, Vice President of the European Commission responsible for Competition Policy, offered Google the possibility of proposing remedies to the Commision's four concerns “in a matter of weeks.” Otherwise he said the Commission would file a formal list of objections, which could make Google liable for fines of up to 10 percent of its revenue.  Revenue last year was $38 billion.

“Google has a history of stonewalling and foot-dragging,” said John M. Simpson, Consumer Watchdog’s Privacy Project director. “They’ve already started, saying they disagree with the Commission’s findings, but are happy to talk.  Regulators on both sides of the Atlantic need to take strong measures including considering breaking Google into separate companies.”

Consumer Watchdog first called for the U.S. Department of Justice to launch a broad antitrust probe of Google and consider breaking it into separate companies in April 2010. The following November the European Commission announced its investigation. Last summer the U.S. Federal Trade Commission launched a probe and in a sign of the Commission’s seriousness announced in April that it would hire a prominent outside attorney, Beth Wilkinson, to led the investigation.

“With 65 percent of search in the U.S. and over 90 percent in Europe, Google clearly has monopoly power and they abuse it,” said Simpson.  “The Europeans expressed concern that Google is stealing content from competitors. It’s time for meaningful action from the regulators.”

Consumer Watchdog said regulators on both sides of the Atlantic could seek a variety of remedies:

— One possibility would be to break Google into different companies devoted to different lines of business.  Search could be separated from DoubleClick, its display-advertising unit.  Gmail could be spun off as a separate entity as could YouTube, a Google acquisition that should have been denied at the time of merger. Enterprise applications could be another separate business and mobile yet another.

— Google’s importance as a gateway to cyberspace requires a maximum degree of openness and transparency with the potential for government regulation. Arguably Google’s monopoly position and importance to the Internet means that the company should be regarded as a public utility and regulated.  Regulations could be designed to open up Google’s ad platform to enable other competitors to compete.  Rules could be crafted to create greater transparency in the operation of Google’s ad platform to enable parties to negotiate more effectively – for example: by providing greater visibility into the maximum amount of the highest bid, how many search terms are shown per page, and how Google’s “quality score” is derived and applied.  Little, if any, of this information is currently public and openness would contribute to consumer choice and options as well as foster competition.

— Another remedy would be to force Google to disgorge its monopolistic gains through the imposition of financial penalties.  The payment would have to be significant enough to impact Google’s future behavior. Perhaps the amount could be tied to paying back consumers for monetizing their private information and content without compensating them.

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John M. Simpson
John M. Simpson
John M. Simpson is an American consumer rights advocate and former journalist. Since 2005, he has worked for Consumer Watchdog, a nonpartisan nonprofit public interest group, as the lead researcher on Inside Google, the group's effort to educate the public about Google's dominance over the internet and the need for greater online privacy.

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