The European Commission, a group that proves the UK is better off outside the EU, fined Google $2.7BN for EU Antitrust Violations Over Shopping Searches.

The EC claims

  • Google has systematically given prominent placement to its own comparison shopping service: when a consumer enters a query into the Google search engine in relation to which Google’s comparison shopping service wants to show results, these are displayed at or near the top of the search results.
  • Google has demoted rival comparison shopping services in its search results: rival comparison shopping services appear in Google’s search results on the basis of Google’s generic search algorithms. Google has included a number of criteria in these algorithms, as a result of which rival comparison shopping services are demoted.

According to the EC nannycrats, Google has an “unfair” advantage. Google has been instructed to “stop its illegal conduct within 90 days.”

The EC also has two outstanding formal investigations into Google’s Android phone business that “breach EU antitrust rules.”

Google Response

A  Google Blog post tells The Other Side of the Story.

When you shop online, you want to find the products you’re looking for quickly and easily. And advertisers want to promote those same products. That’s why Google shows shopping ads, connecting our users with thousands of advertisers, large and small, in ways that are useful for both.

We believe the European Commission’s online shopping decision underestimates the value of those kinds of fast and easy connections. While some comparison shopping sites naturally want Google to show them more prominently, our data shows that people usually prefer links that take them directly to the products they want, not to websites where they have to repeat their searches.

We think our current shopping results are useful and are a much-improved version of the text-only ads we showed a decade ago. Showing ads that include pictures, ratings, and prices benefits us, our advertisers, and most of all, our users. And we show them only when your feedback tells us they are relevant. Thousands of European merchants use these ads to compete with larger companies like Amazon and eBay.

Not About Competition

Writer Daniel Lacalle provided a better defense of Google in The EU Google Fine Is Not About Competition But Against US Tech Giants.

I read with surprise the report that the EU has provided to justify the largest fine ever, $2.7 billion, for alleged “unfair use of its search engine” and “abuse of dominant position”.

Does it have any merit? None whatsoever. The EU is showing a worrying lack of understanding of online sales and search engines and twists its arguments to make a dominant position and an abuse that simply do not exist.

Let us start from that unfair view of the abuse of dominant position. How does the EU arrive at such aggressive figures? By ignoring real competitors.

This is the first but crucial and puzzling part of this misguided action. The EU does not consider Amazon, eBay, or the more than 300 price comparison sites that have surfaced since 2005 as “competitors”.

The EU assumes that Google abuses its market position because it is the most widely used search engine. But it does not understand that the use of Google versus other alternatives, Bing, Yahoo etc… is a completely personal choice, not an imposition. No one opens their brand new laptop and finds themselves forced to use Google or Google shopping…. But to say that Amazon and eBay are not competitors of Google Shopping is simply a way of manipulating facts to arrive at a pre-designed conclusion: The evil of market abuse.

The EU is so entrenched in a view of competition that comes from the old economy, that it forgets that disruptive technology companies lead because they can immediately replace those inefficiencies of the market that oligopolies and monopolies create. By the way, they should know that no monopoly can exist without the explicit approval of the government.

Meanwhile, the EU continues to defend European national champions and state oligopolies and disguising thinly veiled taxation decisions with calls for competition.

There is a small problem. The EU will lose in its misguided battle against US tech giants. But there is something worse. It is losing the technology race.

What the EU should do is ask itself why there has been no Google, Amazon, Netflix or Facebook created in Europe. The answer is sad and simple. The EU itself would have prevented it with unfair regulation and fines in order to maintain its “national champion” dinosaur conglomerates.

Surprise Not

It’s a mystery how anyone could have been surprised by the EC’s response. Otherwise, Lacalle pretty much nails it.

Daniel Lacalle is Chief Economist at Tressis SV, has a PhD in Economics and is the author of “Escape from the Central Bank Trap”, “Life In The Financial Markets” and “The Energy World Is Flat”.

Heart of the Matter

The consumer is at the heart of the matter.

They have a choice. They freely chose Google over Yahoo! and Bing despite massive attempts by other search engines to compete.

If consumers did not like Google services, they would choose something else. It is that simple.

Any Edge is Unfair!

To socialists, any edge is unfair, and must be eliminated. Dominance in and of itself proves unfairness!

In the name of “competition”, customers will now have a model forced on them the customers do not want.

In France, the Booksellers’ Union sued Amazon and won. Amazon was ordered to stop free shipping of books.

The EU cannot compete in technology because the nannycrats don’t really want competition, they want social fairness and protection of weak dying industries like bookstores and internet models that customers don’t want.

Mike “Mish” Shedlock