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Google's 'power to switch off the lights in Europe' has 'chilling effect' - rivals

Competitors demand cosy negotiation texts from antitrust commish

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Google has the "chilling" ability to "switch off the lights" at web companies, claim rivals lobbying against the dominant search giant.

They highlighted Google's decision last week to suddenly yank adverts from a popular price-comparison website, and argued such moves stall online innovation.

And they want European competition watchdog Joaquin Almunia to pay them more attention rather than texting Google supremo Eric Schmidt all the time, and work out a "credible" plan to force Google to change its business practices in Europe.

Their demand came as Google offered to make users "clearly aware" when it was promoting its own services over those of its rivals in its search results. The proposal was included in a package of concessions submitted last week to the European Commission - which is investigating formal complaints about Google's alleged "abuse of dominance", and is mulling what action to take if it finds against the internet giant.

In an interview with The Register on Friday, a lobby group representing the complainants, which includes Microsoft and Foundem, repeated that flagging up biased search results is not good enough.

"We do not think that merely labelling the search results will have any impact on restoring effective competition and may make things worse," said David Wood, legal counsel at the lobby group, ICOMP.

He had previously argued that such a change would not tackle other concerns about Google's operations, such as the way it trawls its online rivals and the wider internet for information and indexes such info on its own sites.

Wood told us that he was expecting a "genuine market test" to take place, but admitted that at this stage the "least likely outcome" of the EU probe would be European vice-president Almunia's complete rejection of Google's offer to abide by "formal commitments" to change how its search engine operated in Europe.

He added it "could be a very damaging failure on part of the commission if Almunia doesn't do something credible in this case". And in a warning to the commission, Wood - referring to the fact that Almunia and Schmidt are in regular radio contact - said:

The big question now is the extent to which the complainants like members of ICOMP can expect to get access to the case team and the president himself for meaningful dialogue. It would not be very wise to say 'send in your comments and we'll look at them'. Many would think that would be unfair and disproportionate.

Given that Google - who the commission has said is in a dominant position and has special responsibilities not to harm competition further - has clearly had amazingly deep regular lengthy access with the commission, now is the time for the commissioner to do the right thing and spend as much time as is necessary with the third parties. And if he and his team don't do that it would be unfair.

But ICOMP is concerned about what might happen next, even if Almunia secures a deal with Google on the four main areas of concern the commissioner highlighted last year: the competition commissioner said it was likely Mountain View had abused its dominant position in web search in the EU, where it commands around 90 per cent of that market.

Wood argues that the complainants in the case, who have been pursuing competition concerns about Google for five years, now need "time and opportunity" to run their own tests and submit data to the commission before any settlement deal is struck. Failure to do that could "play deeply into the hands of Google", he claimed.

Power rangers

Last week, Google halted all of Moneysupermarket's pay-per-click ads in the UK without warning the price-comparison site that it was being punished for failing to adhere to the search giant's policies about payday loan adverts.

Wood told El Reg such a move showed Google's "ability to switch on and off the lights". He added: "If you're in a sector where Google has the power to switch off the lights, that in itself is an incredible chilling effect on people's willingness to invest and innovate."

One of the arguments about Google's dominant search biz in Europe has been for rivals to claim that its sway over that market has damaged innovation among other companies.

UK-based mapping outfit Streetmap, which is one of the complainants in the search dominance case, recently filed a lawsuit against Google in London's High Court. It said the move was defensive to protect its business.

Wood, speaking specifically about Streetmap, argued that Google had too much power over competitors who provide similar services to the company. He claimed:

Google - in operating a platform and running commercial services - can see exactly what is going on. In areas where it wants to be active it can take [rivals'] ideas, push them down the rankings and make it difficult for them to deal with their suppliers.

Might it be different, then, if Microsoft - with its Bing search engine - operated in the same way as Google, beating Mountain View at its own game?

"Microsoft has a diametrically different view about verticals than Google," Wood said. "Bing really does believe that more better verticals will make it a better search engine." He claimed that price-comparison sites and other verticals were "inside Bing's ecosystem" rather than being seen as competitors to Microsoft.

The Reg asked Almunia's office to comment on this story, but it hadn't got back to us at time of writing. ®

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