Google gets caught in the antitrust net
Being a global business has its advantages. There is a lot of money to be made abroad. But America’s biggest tech companies are finding there’s a downside too: Every country you make money from is a country that could try to regulate you.
It’s hard to keep up with all the tech-related antitrust litigation going on around the world, in part because it doesn’t always seem worth paying close attention. In Europe, long home to the world’s most aggressive regulators, Google alone was fined $ 2.7 billion in 2017, fined $ 5 billion in 2018, and fined $ 1. , $ 7 billion in 2019. These amounts would be devastating for most businesses. , but these are little more than rounding errors for a company that reported $ 61.9 billion of sales in the last quarter.
Increasingly, however, foreign countries are going beyond imposed fines. Instead, they’re forcing tech companies to change the way they do business. In February, Australia passed a law giving news publishers the right to negotiate payments from dominant internet platforms, in fact Facebook and Google. In August, South Korea became the first country to pass a law forcing Apple and Google to open their mobile app stores to other payment systems, threatening their grip on the 30% commission they charge developers. And in a case with potentially huge ramifications, Google will soon have to respond to the Turkish competition authority’s request. demand stop promoting its own properties in local search results.
The consequences of cases like these can spread far beyond the borders of the country imposing the new rule, creating natural experiences that regulators in other countries could emulate. The fact that Google and Facebook have agreed to Australia’s media bargaining code, for example, could accelerate similar efforts in other countries, notably Taiwan, Canada, and even United States. Luther Lowe, who as Yelp’s senior vice president of public policy has spent more than a decade lobbying for antitrust action against Google, calls the phenomenon, with approval, a “creeping cure.”
In other cases, companies forced to change their business model overseas might decide to embrace the change globally before they are forced to. After settling an investigation by the Japanese Fair Trade Commission, Apple decided to implement the solution—Allowing audio, video and playback applications to connect to their own websites to accept payment – globally.
“Sometimes it’s the market that drives it: companies decide it’s too expensive to develop different compliance strategies in different markets,” said Anu Bradford, professor of international and antitrust law at the University. Columbia. “Or, sometimes it’s in anticipation of mock regulation: they know it’s out there, and they won’t wait for the Russians or the Turks to do their own thing.”
While it hasn’t received the same level of media attention as Australia and South Korea, Turkey’s case could end up being the biggest issue. This is because it goes to the heart of how Google uses its power as the gatekeeper of most Internet traffic.
The case involves something called local search, such as when you search for “restaurants near me” or “hardware”. This is a huge category of search traffic—nearly half of all Google searches, according to some analysts. Critics and Google’s competitors have long complained that Google is unfairly using its dominance to steer local search results towards its own offerings, even when that may not be the most useful outcome. Think about how, if you google for “chinese restaurant,” the top of the results page will likely have a widget that Google calls the OneBox. It will include a section of Google Maps and some Google reviews of Chinese restaurants near you. You’ll need to scroll down to find the top organic results, which may come from Yelp or TripAdvisor.
This dynamic has infuriated Google’s critics and competitors for years. One of those aggrieved competitors, Yelp, started the case in Turkey by filing a complaint with the country’s competition authority. Google maintains that its local search results are designed to be of maximum benefit to users, not to improve its own results. But Turkish regulators disagreed, concluding that Google “violated Section 6 of Turkey’s competition law by abusing its dominant position in the general search services market to promote its local search services. and price comparison of accommodation so as to exclude its competitors “. (I am quoting a translation provided by a Turkish lawyer.) In April, they fined of about $ 36 million. That’s less than Google was making every two hours, on average, in 2020. But while the fine was insignificant, the rest of the decision wasn’t. The authority issued a preliminary ruling ordering Google to offer a display method for local search results that does not favor itself over its competitors.
For now, the case is in limbo. The competition authority has yet to issue a “reasoned opinion” specifying its conclusions. Then Google will have the opportunity to submit its proposal to comply with the decision. It will be up to the competition authority to decide whether this proposal is sufficient or not.
This is not Google’s first rodeo in Ankara. In 2018, the competition authority issued a similar decision on Google Shopping, believing that Google was favored over other price comparison sites. This follows a similar case of the European Union, but with one important difference: in this case, the EU accepted Google’s solution, even though its competitors argued that it was inadequate. The Turkish authorities did not. This gave Google a choice: come back with a solution that regulators would agree to, or unplug Google Shopping in Turkey. The company chose the latter option, simply shutting down its price comparison module in the country.
Google could do the same in the current case. But the stakes would be much higher. Local search is a much bigger part of the global search pie, and Turkey, with a population of 85 million, is a big place. Giving up local search would be like removing a feature commonly used in a large market. This means that the company has more incentive to propose a remedy that will not be rejected by the competition authority. But this in turn raises an additional risk: any solution adopted in Turkey could be demanded elsewhere.
“If you are one of those globally dominant companies, the downside is that if one of these jurisdictions becomes a living example in the nature of an antitrust remedy, there is a huge risk of domino effect, ”said Luther Lowe of Yelp. “Because suddenly Amy Klobuchar can wave her smartphone at a Senate hearing where Sundar Pichai is testifying and say,” Mr. Pichai, I have activated my Turkish VPN right now, and it looks like Turkish consumers are getting a better deal than Minnesota consumers. ‘”
What can it look like? Google has not published any proposed remedy; Emily Clarke, a spokesperson, said the company is waiting for the full notice to be released before it can determine what its legal obligations are. Yelp argues that whoever wins organic search results should also earn the right to have their API to power OneBox results, on the theory that Google’s own algorithm has already deemed them the most relevant result. In other words, if a search currently leads to a Google Maps result in the OneBox, but the first link below is from Yelp, then Yelp should populate the OneBox instead, which means you would see them first. Yelp reviews, not Google reviews. , trying to find where to dine.
Such a change, if widely adopted, could dramatically reshape the flow of much Internet traffic. As analyst Rand Fishkin Noted in 2019, more than 50% of Google searches end without the user clicking on another site. This is partly because, like the Markup documented last year, Google’s own properties or “direct responses” accounted for well over half of the first page a user sees in a mobile search.
“If this jurisdiction requires them to behave in an interoperable and non-discriminatory manner, that fundamentally turns Google’s original mechanism into a kind of turnstile,” Lowe said. “You just get a huge torrent of traffic to third party services.”
It’s easy to see why a business like Yelp wants to get # 1. The question is whether Turkish regulators will force Google to give it to them and, if so, whether Google will follow or return Turkish users to the original 10 blue links. Either way, the consequences are unlikely to remain confined to Turkey’s borders. American tech companies have taken the world by storm. Now the world wants to win back.
This story originally appeared on wired.com.