Google Offers Sale of Shopping Links to Appease EU

Updated on
  • Offer is similar to failed settlement bid in EU shopping probe
  • Search giant was fined 2.4 billion euros, told to make changes

Vesatager: EU Could Back Date Fines Against Google

Google is offering to sell space on its shopping search service to rivals in a bid to appease European Union regulators and avoid further antitrust fines, according to two people with knowledge of the case.

The offer mirrors what the Alphabet Inc. unit suggested to the European Commission in 2013 to unsuccessfully settle the investigation, the people said, speaking on condition of anonymity. Companies would have to bid against Google to place an ad in a box displaying pictures and links to shopping sites at the top of Google’s search results, one of the people said. That would squeeze tight margins for what they charge shops to send them traffic.

Google was ordered by regulators to stop promoting its own shopping search results over competitors’ and to make changes designed to give rivals fairer treatment by Sept. 28, the EU said in June when it fined the company 2.4 billion euros ($2.9 billion). The company could be fined up to 5 percent of daily revenue if it fails to comply.

"It’s Google’s sole responsibility to ensure compliance with the commission antitrust decision and it is for Google to explain how it intends to do so," the commission said in an emailed statement. The search engine is required "to stop its illegal conduct within 90 days of the decision." Google declined to comment.

The EU was forced to abandon earlier attempts to strike a deal with Google after an outcry from companies that depend on search for web traffic claimed it would drive up the costs. Under the current offer, Google could bid for every slot up to a pre-defined cap, which will likely force smaller rivals to outbid it, raising their costs without gaining much more traffic, one person said.

Foundem, a U.K. shopping search service that complained to the EU about Google, criticized the idea of an offer including auctions.

It said auctions would “simply create an additional anti-competitive barrier -- one that would formalize the transformation of free, relevance-based traffic into paid, pay-for-placement traffic for all services but Google’s own.”

An auction won’t aid consumers because they won’t see the most relevant results "and could result in higher prices to consumers for goods and services they find through online search," said Agustin Reyna of the European consumers’ organization BEUC.

As shopping search services must pay to be visible "there is a high risk that they will no longer place their cheapest offers at the top of the list for consumers but rather the ones which secure the biggest revenue margin," he said.

— With assistance by Stephanie Bodoni

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