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Hey Google! The EU Says Don’t Be Evil

Posted on December 3, 2010 by Suzanne

Google’s unofficial slogan is seemingly being dragged through the mud lately with some pretty serious allegations from three competitors. The complaints caused the European Union to announce on Tuesday that it would be launching an investigation to find out if the search engine giant was guilty of manipulating search results in its favor. The Washington Post is reporting that the E.U. will be focusing on the following areas:

1) Rankings: Google allegedly lowered the ranking of unpaid search results of competitors that specialize in services such as price comparisons. The firm has also allegedly given preferential placement of its own search services in order to shut out competitors.

2) Sponsored Advertising: Google allegedly lowered the 'Quality Score' for sponsored links of competing vertical search services. The Quality Score is one of the factors that determine the price paid to Google by advertisers.

3) Advertising Obligations: Google allegedly forced exclusivity obligations on advertising partners, preventing them from placing certain types of competing ads on their Web sites, as well as on computer and software vendors, with the aim of shutting out competing search tools.

4) Data Portability: Google allegedly restricted services from transporting advertising campaign data to competing online advertising platforms.

In the SF Gate on Tuesday, Microsoft, who went through their own E.U. investigation offered up some advice on what Google should expect.   Here are the highlights:

* The EU will listen to your competitors, but not to you. In the digital media case, the EU seemed to believe what RealNetworks and other competitors told it: that there was a dynamic market for software-based digital media players, if only Microsoft would stop shutting them out. When Microsoft tried to respond by explaining the realities of the market--for instance, PC makers don't want to give customers too many choices of default software because it raises support and manufacturing costs--the EU didn't listen.

* You're dealing with regulators, not techies. The EU seemed to believe that removing the Windows Media Player was as easy as uninstalling any other application. When Microsoft tried to explain that the Player had deep ties within the guts of the OS, and asked specific questions like "which DLLs would you like us to remove?" they were met with meaningless answers or silence.

* The EU will impose a remedy to save face. The order to ship a version of Windows without the Media Player was never going to work--and this employee suspects the EU knew it. The regulators weren't stupid. But after spending years and millions of dollars of taxpayers' money, the EU couldn't just say "pay a big fine and nothing else has to change." It had to impose a behavioral changing remedy, even if it turned out to be ineffective.

* Don't take your eye off the competition. The EU investigation did change how Microsoft does business in some critical ways--the rulings gave the company certain new rules which it now abides by, such as "you must offer consumers a way to remove Windows features" and "no integrating formerly separate products (like Bing search) with Windows without talking to the lawyers." It also showed Microsoft that it needs lobbying power with governments, and couldn't afford the faux-naive "we're just a little technology company" stance that it took in the 1990s. But in the end, competition in the digital media market was restored by competitors, not the EU. One big competitor in particular: Apple. As this employee said "we didn't stop doing PlaysForSure because the EU made us, we did it because we kind of got our butt handed to us.”

Google may want to take that last point to heart since at least two of the complainants have direct ties to Microsoft. You be the judge. Is this just two of the biggest competitors in the tech world using the E.U. to jockey for the coveted top spot in search, or is Google really just being evil?


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