Google Search/Shopping (closed)

specialized search services and constitute another relevant market because there is limited substitutability between the service and other specialized search ones and the online search advertising market. The service allow users to compare prices and characteristics of different products, providing links for each product that redirect to the website of the online retailer or merchant platform that sells that product. Retailers and merchants have to give Google access to the information on product, prices and data in order to be listed in Google Shopping service: there is also limited substitutability between merchant platforms – like Amazon Marketplace – and comparison shopping market since the latter act as intermediary between users and merchant platforms and compares different products from different platforms, so they are not competitors but rather partners. Moreover, Google allows merchant platform to participate in Google Shopping service, but not competing comparison shopping services and the two services are remunerated in different ways: while comparison shopping is based on a pay-for-click model, merchant platforms get money from commissions or users’ purchases. The relevant geographic market for general search services and comparison shopping services are national in scope.

4.4.1.2 Abuse of a dominant position

The Commission states that Google has a dominant position in each national market of general search services since 2008, as: analyzing 2016 data Google hold more than 90% of market share in each european country except for Czech Republic, Norway and United Kingdom (being anyway the market leader); there are high barriers of entry in the market; users that use Google as primary search engine are not likely to multi-home since they trust Google’s brand, and they wouldn’t switch easily even if Google lowered the quality of his search service.

Image 4.1 Google abuses its dominant position . [41]

The abuse conduct is described as the more favorable position and better design format of Google’s comparison shopping service in Google’s general search result page: it is positioned above the normal results as it is shown in Image 3.1. the conduct is anti-competitive because

decrease traffic from Google’s general search page to competitive comparative shopping websites, favoring the traffic to Google Shopping. Moreover, competitive comparative shopping websites are ranked in a very low position and this happens since the introduction in 2011 of the Panda algorithm: to support this theory, various researches conducted by European countries shows that from the beginning of 2011 their visibility on Google’s search result page has decreased substantially. Otherwise, Google own comparison shopping service is not affected by the same ranking mechanism but instead it occupy the first place in the page.

As Table 4.1 shows, the majority of clicks on the product listed redirect to Google Product Search website instead of to merchants’ website. Anyway, Google benefits also from the clicks that lead to merchants’ websites since these were the one that subscribed the agreement to be in the Google Shopping ranking. Both link of products listed in Google’s search result page and the ones in the standalone Google Shopping website lead to the merchants’ website triggering the payment to Google.

Table 4.1 Portion of clicks that led to Google Product Search website and to merchants’ website in United Kingdom, Germany, France and Netherlands. [41]

The conclusion that Google is abusing of its dominant position is supported by the analysis of users’ behaviour, evidence of the impact of the conduct on the traffic to the competitive comparison shopping websites and on the one of Google’s own Google Shopping.

The analysis of users’ behaviour shows that they typically look at the first three to five generic results and pay little attention to the following ones. The first ten results correspond to the 95% of users’ clicks, and from Table 4.2 we can understand how the results’ ranking impact on the traffic to a website.

Table 4.2 Average click rate for rankings from 1 to 12 on Google’s search result page. [41]

Moreover, the Commission provides a study that indicates that such results are not depending by

1 2 3 4 5 6 7 8 9 10 11 12

34,35

%

16,96

%

11,42

%

7,73

%

6,19

%

5,05

%

4,02

%

3,47

%

2,85

%

2,71

%

1,11

%

<1

%

Clicks that led to the Google Product Search website

Clicks that led to merchants’

website

United Kingdom 50% to 55% 45% to 50%

Germany 55% to 60% 45% to 50%

France 60% to 65% 35% to 40%

Netherlands 65% to 70% 30% to 35%

In fact, moving a first-rank page to the third rank reduce the traffic to it by 50%, and moving it to the tenth rank about 85%, proving that users’ decision to click on a link only depend from its position in the search results page. The traffic to the competitive comparison shopping websites has consistently lowered, notably after the introduction of Panda algorithm, but also over the longer run.

On the other hand, evidence shows that the contrary occurred to Google’s own comparison shopping website.

Google claims that the change in traffic should be accounted more to the develop and growth of market platforms like Amazon than to its conduct. The Commission states that if this is the case, then also traffic to Google Shopping should have decreased.

4.4.1.3 Final decision

The Commission concludes that the anti-competitive conduct have effects on the national markets of comparison shopping services and general search services. Google exploits its dominant position in the market of general search services by giving illegal advantage to its comparison shopping service. It has anti-competitive effects to the market of comparison shopping because it has the potential to foreclose competition and this may lead to higher fees imposed to merchants by Google once the competitors are eliminated, that would cause higher products’ prices for consumers.

Moreover, the conduct can reduce both innovation of comparative shopping market and improvement of Google Shopping quality since it would remain the only choice. Consumers could not be able to access easily to competitors’ webpage without being aware of the fact that Google Shopping has a favourable ranking and position.

The Commission concludes that Google should bring to an end the anti-competitive conduct within 90 days from the notification of the decision. The fine imposed to Alphabet Inc. and Google Inc. for the abusive conduct is € 2,424,495,000. [41]