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19/01/2017

EU dithering on Google probe is costing jobs

Digital

EU dithering on Google probe is costing jobs

Google is accused of abusing its dominant position to divert traffic away from competitors' sites.

[Alexandra E Rust/Flickr]

The EU’s antitrust case against Google should be widened to cover the local search market. Lack of competition in this domain harms consumers, EU companies and the Digital Single Market, writes Kostas Rossoglou.

Kostas Rossoglou is head of EU public policy for Yelp.

The outcome of the EU antitrust probe into Google — a product of the European Commission’s commitment to restore competition in the online search market — is crucial to achieving the goals of the Digital Single Market strategy. Competition is fundamental to driving innovation and can help expand markets, create opportunities for new start-ups, and provide consumers with beneficial new services.

However, years of unproductive settlement discussions and procedural delays in the still-ongoing probe have left competitiveness in the online search market and adjacent vertical search markets severely damaged.

A recent example of the effect of this inaction is Yelp, which recently announced its plans to immediately scale back investment in the EU market. Despite Yelp’s efforts to maintain and grow its European operations, Google’s policy of diverting traffic away from its competitors forced Yelp to revise its business development strategy. The result: more than 175 people are left without a job and European consumers are without the same level of innovation as US consumers when it comes to finding great local businesses.

In its efforts to restore competition, the European Commission has focused almost exclusively on the market for online comparison shopping services. While this is necessary, it is important to address Google’s anticompetitive actions which extend beyond this and apply to all verticals, including local search.

The local search market is the bridge between online research and offline transactions, making it vitally important. SMEs in the offline world live and die according to how they are represented in the online world. Local-intent based queries make up the largest single category of search, representing roughly one-third of total desktop search volume and over one-half of mobile search. User-generated reviews and ratings have the potential to empower consumers by providing them with useful information to aid in how they spend their time and money. Additionally, feedback mechanisms are a critical component of the sharing economy, ensuring product and service improvement to meet consumer demand.

Consumers have come to expect Google to provide them with the most relevant results from across the web when searching for something as important as a paediatrician in Brussels, a bicycle repair shop in Copenhagen, or a hotel in Madrid. However, instead of showing the best information available, Google predominantly relies on its own restricted ecosystem to respond to users’ local queries, deliberately sacrificing the quality of its service to exclude rivals. For consumers, this yields a reduction in search quality, with fewer reviews and less relevant answers.

Furthermore, this negatively impacts competing platforms’ abilities to innovate. They can’t expect to generate a sufficient volume of user traffic to compete with Google’s user-generated review service, and thus, lack the incentive they need to improve their current services and develop new products.

The task of competition enforcers is to ensure that the Digital Single Market remains open and competitive. Currently, the local search market has been monopolised by Google, harming competing platforms and consumers alike. Europe stands to benefit from an open and competitive Digital Single Market where all players, large and small, can compete on the merits of their products and their services to the benefit of consumers.