It Just Got Real in the EU

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It’s fair to say that a good number of folk in Europe just hate Google.

I was selling search to European web sites and portals back in the early 2000s. As I recall, we charged 65c per thousand queries answered. Back then, there was an upstart search company called Google that was powering Yahoo and had a web site with no ads on it. My then company was doing really well at selling search; so well, in fact, that Yahoo bought them for something over $100MM. Then Google came up with a new and remarkable sales strategy: they started giving search away for free. In addition, they said that they would pay the portals if they could run ads on their results pages. As you can imagine, it was a pretty successful offer.

I clearly remember having conversations with clients along the lines of, “If you go with Google, it will be cheaper initially. But people will quickly realize that they are behind your search, and they will go to Google directly. Their site is extremely fast and doesn’t have all those horrible, slow-to-load ads you slather all over your site.” My words fell on deaf ears, and now Google controls over 90% of the entire European market.

 

It’s this over-arching monopoly that sticks in the craw of many EU legislators, and they have been firing warning shots over Google’s bow for several years. Absent of a settlement, the EU ministers have now filed suit against Google for monopoly practices. To the American observer, this looks like something between sour grapes and silliness. If you don’t like Google, then use something else.

The suit alleges that Google favors its own shopping results over those of competitors. The EU has limited the scope of the argument to just that— partly because it’s blindingly clear that is exactly what Google is doing and partly to get the case done quickly. Europe takes a dim view of monopolistic behavior. Dominant companies have a duty to ensure that they don’t exploit their positions.

Google is a voracious competitor, entirely not the goofy-friendly company they try to position themselves as in the US. Their argument that the Internet is a big place and nobody forces you to use Google might seem fair enough to an American viewer, but likely won’t cut it in Europe.

If this goes all the way and Google loses, the company will likely find itself on the wrong side of a fine for six billion dollars (or more). Beyond just the fiscal pain, they will also likely have to make significant concessions to avoid further cases. Google hates that kind of situation. When the Spanish government tried to force Google to pay for news stories they indexed from newspaper sites, they shut down the Spanish news search entirely. It will be interesting to see where this ends up.

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