Consumer choice narrowing online
SPECIAL REPORT / Long seen in Europe as a space for free choices, the Internet may turn into a more controlled environment where consumer decisions are increasingly conditioned in opaque ways, from the very moment they access the web, to the way they surf it.
Internet users in Europe access the web at speeds that are consistently lower than what they have been offered by access providers. The average speed is 75% lower than promised, says the European Commission.
In the UK and in France the actual speed "can be as low as 45% of advertised speed," according to the EU Commission spokesperson for the digital agenda, Ryan Heath.
The average speed enjoyed by European users of broadband connections is around 50 megabits per second (mbps), a long way from the target of having at least 50% of households with online access above 100 mbps by 2020, set by digital agenda commissioner Neelie Kroes.
Yet the situation may even get worse with the reform of EU telecoms and Internet rules, voted last week (3 April) in the European Parliament, and to be finalised by EU governments in the coming months.
The Parliament has in fact strengthened the protection of so-called Net Neutrality in its review of the Commission proposal. However, member states are likely to revert MEPs’ position.
A possible outcome is that the Council of EU states will decide to increase the power of Internet access providers, usually telecoms or cable groups, to prioritise certain online services over others, further slowing down the online connections of users who pay less. This would ultimately reduce consumer choices over the Internet.
The risk in search
Similar limitations to free choices may arise from recent developments in online search.
Search engines, like Google or Microsoft’s Bing, are strengthening their role as gates to Internet services, and in so doing are conditioning users' choices with methods that go unnoticed to most consumers.
Google has obviously the highest potential of driving users' decisions, as it controls over 90% of online search in Europe.
Its expansion from online search to the market of price comparison services for all range of activities, from travel to restaurants, has raised concerns in Brussels and pushed the European Commission to start an antitrust investigation in November 2010 over a possible abuse of Google’s dominant position
The investigation is now at its latest stage, and is expected to be concluded by EU Antitrust commissioner Joaquin Almunia before the end of his mandate in October. The provisional settlement decision already adopted by Almunia in this case is however seen by competitors and consumer organisations as not satisfactory.
Ultimately, consumers stand to lose the most. Monique Goyens, the head of BEUC, the EU consumer organisation, is accusing Almunia of "falling far short of the aim of ensuring fair consumer choice in relation to online search in Europe."
BEUC passed from simple statements to action when at the end of March applied to be a formal complainant against Google.
“Users are given the impression their searches are neutrally decided and this problem is exacerbated in price comparison searches. European consumers deserve a better outcome, while the remedies currently proposed by Google do not meet users’ legitimate expectations,” Goyens made clear in a note announcing the legal decision.
Indeed, with the proposed settlement and the inclusion of a new paid box for sponsored links, neutral results will be pushed down in Google result pages, appearing only after a string of paid links.
Internet users usually focus on the first results of a search. The top three results receive 88% of the clicks, according to a study made by FairSearch, a lobbying group representing some of the complainants in the Google case.
With the proposed remedy, neutral search results will be much below the sight areas for average Internet users, the study concludes.
Competitors claim that “even if the new box was completely white, it would however create harm because pushes down organic, free results, thus damaging competitors but also consumers,” argues Christoph Klenner, secretary general of the European technology and travel services association (ETTSA), the group representing online travel agencies, including Opodo, Expedia and eDreams.
Concerns about consumer choices do not seem to fall on deaf ears. “I am ready to look at EU consumer legislation to see if it can address substantiated concerns that are not be covered by competition law,” said the EU commissioner in charge of consumer policy, Neven Mimica, before leaving on electoral leave. His successor is likely to take up the baton.
Despite cross-border limitations, e-commerce is slowly picking up in Europe and is expected to reach a total volume of over €260 billion by 2015, from €159 billion in 2011.
In a communication published in 2012, the European Commission has proposed to double the share of e-commerce in EU’s retail sales from 3.4% of total retail sales in 2012 to 7% by 2015.
Brussels also aims at increasing cross-border e-commerce, which is lagging behind national online shopping.
Some 41% of EU consumers shop online from national sellers compared to 11% of cross-border online shoppers, according to the 9th edition of the Consumer Conditions Scoreboard, published in 2013.
- July-September 2014: Commission to announce final decision on Google search case
- 1 Nov. 2014: Target date for new Commission to take office