Saw It Coming

Google saw this coming. On Tuesday tech news site Re/code published what it says is a leaked internal memo from Google that acknowledged the EU’s move and asked employees not to comment on the matter either internally or externally.
Google’s defense is that it’s facing increased competition both in search, from services ranging from Bing to Apple’s Siri, and in mobile, from iOS and from mobile apps created by companies such as Facebook. The memo includes four graphs showing increased traffic to competing shopping and travel search sites in Europe based on data from comScore.

“All told, consumers have a lot of choice — and they are exercising it,” the memo says.

The Federal Trade Commission’s Take

Federal Trade Commission staffers quite didn’t see it that way in 2012. Earlier this year the Wall Street Journal obtained a staff report by the FTC’s bureau of competition recommending that the agency bring a lawsuit against Google for unfair practices. The document was apparently released to the paper by mistake. The report lodged several complaints against Google, such as its practice of displaying content from sites such as Yelp and Amazon on its own competing services. “When competitors asked Google to stop taking their content, it threatened to remove them from its search engine,” the Journal reported.
The paper also reported that the staffers concluded that Google demoted or refused to display links to certain specialized search services, but recommended against an antitrust suit because Google had adequate pro-consumer justifications for its actions. And in a footnote, the staffers wrote that although Google had at one point sought to demote search results for all comparison shopping sites, the company had since tweaked its algorithm based on negative feedback from testers.
Ultimately, the FTC commissioners chose not to pursue a lawsuit and ended the investigation after Google elected to make a few changes to its practices. Most notably it agreed to allow competitors to opt-out of having their content used in its services.

Harsher Climates

Google might not be able to reach as favorable an agreement in the EU, which has been more aggressive in its dealings with the tech industry. Last November the EU’s legislative branch, the European Parliament, passed a resolution recommending that Google’s search engine be “unbundled” from the rest of its business.
The European Parliament doesn’t actually have the authority to force Google to split-up, according to the Financial Times. But it does illustrate how different the climate towards technology companies is in Europe, which has much more strict privacy laws than the U.S. Google was also recently hit with the so-called “Right to be Forgotten Law” that requires it to remove outdated search results that might unfairly damage individual reputations. The policy has already become a nightmare for the company.
Meanwhile six European countries are investigating Facebook’s privacy practices, such as how it uses “like” buttons to track browsing habits. And many European cities have banned Uber’s controversial car service. On the other hand, Google was fined only $189,000 in Germany in 2013 for inadvertently but illegally collecting data from private WiFi networks as part of its Street View scanning process, indicating that these cases don’t always result in hefty fines or increased regulatory oversight.
Google still has time to negotiate with the European Commission. But it will certainly face a harsher environment there than in the U.S.