“It’s Our Web”: Is Google Too Big to Govern?

Google’s latest lobbying effort makeover (“It’s Our Web”) comes on the eve of what will either be a hard jerk on the reins at the European Commission or a lobbying first–a company that is too big to govern no matter what it does.

One always has to wonder how certain stories get written in the press, but one today caught my eye on the Dow Jones News Service.

Deal over change of business practice more likely than full-blown legal proceedings.

The European Commission, Europe’s antitrust regulator, will decide this month on the next steps in its probe into the dominance of search giant Google Inc.– and some kind of agreement over a change of business practice looks more likely than full-blown legal proceedings against the company, according to lawyers.

“A settlement is an attractive route,” said Becket McGrath, a partner at Edwards Wildman who worked at the U.K.’s Office of Fair Trading on cases in the technology sector, who doesn’t act for any of the parties involved.”Google is very well resourced and the allegations go to the heart of what it does. This would therefore be a hard case for the Commission to fight all the way.”

The commission’s antitrust office began investigating Google’s dominance in online search back in December 2010, after complaints from companies including other search engines that it is abusing its search monopoly to thwart competition by demoting competitors when ranking search results. Position in a Google search result can make or break an online business….Google was used for 95% of searches, and 98% of searches made from mobile devices in Europe in the year to March 2012….”

Let’s be clear–if the Commission does not move to protect Google’s competitors from the kinds of hostile business practices that put Google in what will be a landmark investigation, these businesses will likely go out of business and in short order.

And as much as Google would like to make the investigation about people who can’t compete asking government to give them an advantage in search results, that issue is a red herring being drug around the stage.  The main issue is not how search ranks results relative to each other, it is how Google ranks its own products in its search results–the same issue that came up at a recent hearing of the U.S. Senate Antitrust Subcommittee.

After examining these issues at a hearing of the Antitrust Subcommittee (The Power of Google: Serving Consumers or Threatening Competition? Before the Subcomm.on Antitrust, Competition Policy and Consumer Rights of  S. Comm. on the Judiciary, 112th Cong., 1st  Sess. (September 21, 2011)),  Subcommittee Chairman Herb Kohl and Ranking Member Senator Mike Lee wrote an interesting letter to the Federal Trade Commission that called on the FTC to continue its investigation of Google with vigor.

Senators Kohl and Lee commended to the FTC as evidence of the need for a deep investigation into Google this exchange before their subcommittee regarding statements made by a senior Google executive in the video below (which you can watch in context):

“As discussed at our Subcommittee hearing, Marissa Mayer, Google’s Vice President of Local, Maps, and Location Services, admitted in a 2007 speech that Google did in fact preference its own websites. She acknowledged that, in the past, Google ranked links ‘based on popularity … but when we roll[ed] out Google Finance, we did put the Google link first. It seems only fair, right? We do all the work for the search page and all these other things, so we do put it first … That has actually been our policy, since then … So for Google Maps again, it’s the first link, so on and so forth. And after that it’s ranked usually by popularity.’ In response to written follow-up questions asking whether her statement was an accurate statement of Google policy, Eric Schmidt stated that ‘it is my understanding that she was referring to the placement of links within a one box … and her description was accurate.’

While the basis for Mr. Schmidt’s “understanding” is not clear, even if her statement was in fact limited to the “one box” result, this is a clear admission of preferencing Google results. As consumer surveys show that 88 percent of consumers click on one of the first three links, these statements appear significant when analyzing Google’s potentially anti-competitive practices.”

At the same hearing, Senators Blumenthal and Franken drove the point home:

Senator Richard Blumenthal from Connecticut [told Google’s Eric Schmidt:] “You run the racetrack, own the racetrack, you didn’t have horses for a while but now you do and your horses seem to be winning.” To which his colleague from Minnesota, Al Franken, joked: “Google might be doping the horses.”

But almost more importantly in the grand scheme of things, if the reason that the European Commission does not challenge Google is because it is “very well resourced” and “[t]his would therefore be a hard case for the Commission to fight all the way” something very fundamental has changed in the role of government.

A vast, clearly dominant multinational corporation can run roughshod over European businesses because it is too big to govern.  This is the point of concern to the local European companies and associations who filed complaints with the EC, including the German associations for newspaper and magazine publishers as well as the Spanish association of newspaper publishers.

The European Union can manage to screw up their currency, send shudders through the world financial markets because of grossly irresponsible monetary policy, but the European Commission folds its tents when it comes to governing Google?

Let’s hope this is not the case.

It’s not our web, it’s their web.  And don’t you forget it.