How to stop Google self-preferencing? Europe may not be the model

After a wide-ranging 16-month investigation, a congressional subcommittee examining dominance in the technology industry last week recommended more than two dozen updates to the U.S. antitrust system, including implementing nondiscrimination rules that would limit “preferential or discriminatory treatment” by dominant platforms.

But such rules can be hard to enforce, experts said, and attempts by the European Union to spur competition with Google through measures of this sort have fallen short.

“We’re thrilled with the report. We think now the question is, What are they going to do about it?” said Kamyl Bazbaz, vice president of communications at DuckDuckGo, a competing search engine. (Full disclosure: DuckDuckGo has donated to The Markup.)

The week before the antitrust committee released its report, DuckDuckGo complained that Google had shut it out as a potential default search engine for Android phones in most of Europe during a process meant to improve competition. That process was developed by Google in response to findings by the European Commission that Google had been abusing its dominance by requiring Android phone manufacturers to pre-install the Google search app and Chrome browser with Google set as the default search engine.

Google’s solutions

Google appealed the decision but also introduced a menu of four search providers that users can choose from when they set up their phones. Search providers had to bid to be included. Privacy-protecting DuckDuckGo lost the September auction in all but four countries, and Ecosia, a nonprofit search engine that puts revenues toward planting trees, won a single spot.

“It is possible to do a good thing the wrong way, and that’s what happened here,” Bazbaz said.

Similar complaints emerged last year, about Google’s solution to level the playing field for comparison shopping sites.

The European Commission had fined Google in 2017 for promoting Google Shopping at the top of search results while demoting competing shopping services. Google appealed the decision, which ordered the company to provide “equal treatment” to all shopping sites, including its own, but left the implementation up to the company. Google’s solution was to auction off slots inside the Google Shopping unit.

Two years later, 41 comparison shopping sites wrote an open letter saying that Google’s solution does not amount to equal treatment and has failed to restore competition. Even Margrethe Vestager, the EU commissioner for competition, acknowledged that “we still do not see much traffic for rival competitors.”

Earlier this year, Google told The Markup that it “invested in making the remedy as effective as possible” in the Google Shopping case and that 600 comparison shopping sites are participating. When asked about DuckDuckGo’s allegations, spokesperson Julie Tarallo McAlister pointed to Google’s blog post explaining the auction.

“In developing the choice screen for Europe, we carefully balanced providing users with yet more choice while ensuring that we can continue to invest in developing and maintaining the open-source Android platform for the long-term,” she said in an email. “The goal is to give all search providers equal opportunity to bid; not to give certain rivals special treatment.”

Steering traffic to itself

The subcommittee found multiple instances of harmful self-preferencing by the dominant platforms, including evidence that Google systematically steers traffic to itself “even when its content was inferior or less relevant for users.” The report also cited a Markup investigation that found that Google devotes 41 percent of the first page of search results on mobile devices to its own properties and information copied from other sources, sometimes without their knowledge or consent.

Google declined to comment on the subcommittee report and directed The Markup to an online statement that said the findings “feature outdated and inaccurate allegations from commercial rivals about Search and other services.”

In addition to the nondiscrimination rules, the committee’s recommendations included breaking up the dominant firms; prohibiting them from operating in certain lines of business; unwinding past acquisitions and raising the standards for approving new ones; and eliminating obstacles to private antitrust lawsuits.

Most of the recommendations would depend on Congress passing new laws or amendments, but the principles could be implemented by regulatory agencies. “We intend these recommendations to serve as a complement to vigorous antitrust enforcement,” the report says.

A response to the report, authored by the subcommittee’s Republican minority members, pushed back against some of the recommendations, including nondiscrimination rules.

“Unfortunately, calling for the government to write the rules governing equal terms for equal service will only increase harmful regulations on small and medium-sized tech firms while reducing capital and innovation in the marketplace,” they wrote.

“I support the idea that monopolies need to provide 3rd parties access to their platforms on the same terms as their own products,” Chris Cummings, CEO of the company that owns translation website SpanishDict.com, said in an email. He has been frustrated to see Google Translate at the top of many translation searches, reducing his traffic considerably in those searches in favor of what he says is an inferior, automated product. “For the upstarts of our society to have any chance of prevailing, it needs to be a fair fight.”

Joe Saveri, an antitrust attorney based in Silicon Valley who has brought cases against Google, said implementing nondiscrimination rules to prevent self-preferencing is one of the more practical of the antitrust committee report’s recommendations.

A historical precedent

Such rules would require “equal terms for equal service,” meaning any company that relies on a dominant platform to reach customers should have the same access. In other words, SpanishDict and Google Translate would have equal opportunity to appear at the top of Google search results.

“It’s got historical precedent, which is a positive,” Saveri said. Nondiscrimination rules were famously applied to railroads and telecommunications networks.

Even after nondiscrimination rules are implemented—if indeed they are—lawyers would still have to argue about what constitutes unequal treatment and how to remedy it.

The Sherman Anti-Trust Act—the backbone of U.S. antitrust law—would require proving not only that self-preferencing was happening but that it was also increasing monopoly power in a specific market, said Eleanor Fox, a professor at New York University who has been working in antitrust for 40 years and was asked to submit recommendations to the subcommittee. She said it would be difficult to establish that Google’s placing its products in the search results is illegal self-preferencing under current law.

It’s also difficult to show harm to consumers, which has become the standard in the courts. “Google will say, ‘Well, just scroll down a little bit. The consumer still has lots of choices,’ ” she said. “Google will also say the consumer already gets things for free and is paying zero.”

Still, both she and Saveri said remedies could be designed to ensure, for example, that Google doesn’t boost its own interests in search results.

“I do not think it would be so hard,” Fox said.

Saveri said potential remedies could tweak the inputs in the search algorithm, require the company to add disclosures about why certain results appear at the top, or set out how much of the screen could be covered by Google content.

There are plenty of other recommendations for how Google Search could change, both from critics, like Yelp (which has released code that would show competing directories at the top of the search results page), and official sources, like the U.K. Competition and Markets Authority, which in July recommended making Google’s user “click and query” data available to other search engines.

Gene Kimmelman, a former chief counsel with the U.S. Department of Justice’s Antitrust Division who testified before the committee, wrote that it can be complicated to distinguish between products competing on a platform and features of that platform.

“For example, an app store may be an essential part of a smartphone operating system, so preferencing the operating system’s own app store by having it pre-loaded on the phone may not be appropriately understood as ‘discrimination,’ ” he wrote. “On the other hand, a grocery store is probably not an inseparable part of an e-commerce platform, so preferencing Whole Foods over a competing grocery retailer on the Amazon Marketplace might be a good example of discrimination that would be subject to the rule.”

What about enforcement?

Fox, of NYU, also recommends another solution: strengthening the antitrust authority of the Federal Trade Commission, which is charged with regulating “unfair methods of competition.” In 2012, FTC staff found that “Google’s conduct has resulted—and will result—in real harm to consumers and to innovation in online search and advertising markets,” but the commission voted unanimously against filing a case.

The antitrust subcommittee report concluded that the FTC has “neglected” its role in antitrust enforcement and recommended ways that Congress could beef up the agency, including increasing its budget and adding civil penalties for unfair methods of competition.

“The Federal Trade Commission actually has more power,” Fox said, “if they want to use it.”

This article was originally published on The Markup by Adrianne Jeffries and was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license.