European Union Competition Commissioner Joaquín Almunia held a news conference this morning during which he said Google will need to offer further concessions to avoid antitrust fines.
According to the NY Times, Almunia said that Google needs to “improve” its current proposal: “I concluded that the proposals that Google sent to us months ago are not enough to overcome our concerns.” Almunia has reportedly asked Google’s Eric Schmidt “to present better proposals, or improved proposals.”
As I’ve previously indicated, Almunia’s position is strange, given my understanding that he was directly involved in negotiating the current proposal with Google. Nonetheless, Google will apparently need to modify the proposal, which relies chiefly on labeling its own properties and offering “rival links” to competitors in search results.
Almost immediately, competitors condemned the rival links approach and said it did nothing to bolster or safeguard competition. Thomas Vinje, the European spokesman for FairSearch, also previously dismissed Google’s plan to label its results: “Google’s proposed commitments across the board retard rather than promote competition; they do more harm than good.”
Today, anti-Google lobbying group FairSearch.org produced research that purports to show the rival links proposal is totally ineffective. The study (embedded below) was conducted by two US academics and funded by a FairSearch advisor. Given the agenda of FairSearch, the research is vulnerable to claims of bias.
The main conclusion of the study is that the rival links presentation did little to drive traffic to competitor websites. In the related press release, the academics — University of Illinois professor David Hyman and University of San Francisco professor David Franklyn — said, “We conclude that the ‘three rival’ links remedy proposed by Google would not draw consumer attention to rival websites.”
The study was based on a survey and an interactive presentation in which consumers in the UK had to search and then click on search results. The survey had 1,888 responses from UK adults. It was conducted in June of this year.
Below is a description of the research design:
The survey began with a series of questions designed to measure participants’ knowledge of the layout and labeling of search results. We then asked respondents how they would go about obtaining information if they were interested in purchasing a Nikon camera or finding an Italian restaurant in Madrid . . . We found that a Google search was the most common response to both questions.Survey respondents were then asked to run three sets of searches – one for “Nikon camera,” one for “flights to Madrid,” and one for “Italian restaurants in Madrid.” We chose these three searches in order to test a sample product . . . a sample flight search, a hypothetical trip to Madrid . . . and a sample restaurant search. Respondents were asked to click on the link they would have selected if they were trying to buy a Nikon camera, find a flight to Madrid, or trying to find an Italian restaurant at which to eat in Madrid. For each set of searches, respondents first viewed a “native” page of search results (i.e., the search results that would have appeared if an actual Google search had been run) followed by a series of modified search results.
I won’t summarize all the detailed findings, which can be reviewed in their entirety in the complete report below. But the following is an abbreviated list of the report’s high-level conclusions:
Google search dominates all other sources for obtaining information on products, flights, and locations.
We found no material click-through on any of the proposed rival links specified in the EC Commitments for Google Shopping and Google Places. Based on these findings, we do not believe that the EC Commitments are likely to command consumer attention or improve competition for either Google Shopping or Google Places.
Modifications that do not materially affect page layout are unlikely to change preexisting competitive dynamics in search
We find that the proposed disclosure statement does not effectively communicate the necessary information (i.e., whether the region in question is paid v. unpaid, and the location and significance of the “rival links.”)
The intention of the report is to totally undermine the credibility of the core of Google’s antitrust proposals. Because there was a “political” agenda behind the study, there is an inherent bias in the research that must be acknowledged. However, the results aren’t fabricated and may have some validity regarding the impact of rival links on consumer behavior.
The most important statement/finding in the list above is the following: “Modifications that do not materially affect page layout are unlikely to change preexisting competitive dynamics in search.” This has been and will continue to be the thrust of FairSearch’s lobbying: change the page layout and prevent Google from including “its own properties” at the top of results.
To assess the legitimacy of the findings in the report, a true third-party study would need to be done, which is unlikely. Asked for a comment on the research, Google declined but offered the following general statement:
Our proposal to the European Commission clearly addresses their four areas of concern. We continue to work with the Commission to settle this case.
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