Helloooo Mr. Alumunia: Indies file formal complaint against Google with the European Commission

Google is now competing with Pandora for the title of Easter Bunny of Screwups.  YouTube had a window to negotiate a fair deal with the world wide network of indie labels and guess what?  They thought it would be a good idea to continue to strongarm the indies and try to jam the YouTube hillbilly deal down their throats.

But realize just how truly arrogant Google really is.  They knew that if they didn’t make this YouTube problem go away, the labels would be likely to file a complaint in Europe with the very European competition commissioner who has been “negotiating” (if you can call it that) a settlement with Google over very similar heavy handed dealings with its monopoly search engine.  Yes, the embattled EU-Commissioner for Competition Joaquín Almunia is watching his “settlement” with his texting buddy Eric Schmidt evaporate before his eyes.

YouTube’s low rent negotiators thought that the smart thing to do would be to play chicken with the indies to see if the labels would file an antitrust complaint–and guess what?  They did.  Here’s the five main points of the indies’ complaint according to excellent reporting by Andrew Orlowski in The Register:

The five areas where the group alleges Google breaches EU law are:

  1. tying distribution through the free service to distribution through the new premium service;

  2. leveraging a dominant position in video-streaming distribution into wholesale music-streaming distribution;

  3. imposing “unfair or disadvantageous” licensing conditions on the independents;

  4. terminating or threatening to terminate the supply of video-streaming distribution services to independent companies as well as potentially to UGC distribution and monetisation services in relation to the platform;

  5. and applying dissimilar conditions to equivalent transactions, which puts the independent companies at a competitive disadvantage vis-à-vis the majors.

So listen up schmucks:  Having another antitrust case land on Almunia’s desk is not what you want right now.   Google could have avoided it, you could have said “oops”, you could have backed down.  But no.  And why didn’t Google back down?  Because they are so arrogant that they don’t think they have a problem.  And you know, that’s just fine.

As we’ve noted many times, Almunia is desperately trying to close out the Google case before his term expires in November. Google thought they had a no lose strategy with Almunia–either run out the clock with no settlement before Almunia’s term expires and start over again with his successor, or get him to feel pressure to settle before he turns into a pumpkin.

What they did not anticipate was that there would be a huge backlash to the hillbilly settlement that they “negotiated” with Almunia, not the least of which is the embarrassing YouTube catastrophe.  Those idiots at YouTube just tied that one up with a bow.  All this means that Google’s “run out the clock” strategy is backfiring.

Realize that Almunia already has a lawsuit against Google drafted and ready to file according to The Economist.  So what happens now?   Google’s opponents just need to run out the clock, get Almunia out of office with no settlement, appoint a new competition commissioner which is going to happen in the coming days anyway, and–boom.  Why would the new commissioner taint himself with a predecessor’s crappy deal that nobody wants?  That new competition commissioner takes Almunia’s lawsuit, updates it, and drops it on Google, a company that is now on its way to being just another hated American multinational crassly violating European culture.

Natasha Tiku in Valleywag sums it up:

The EU officially began investigating whether Google abused its dominance in search and online advertising in 2010. Google is offering to settle because it wants to avoid a massive fine, as well as the bad rep that comes from breaking the law—a stigma that the corporation has managed to evade in the U.S., if you know what I mean. (I mean the Justice Department’s Antitrust division is for display only.)

Almunia’s term is set to expire in November and the commissioner is trying to close the case before he turns into a lame duck. According to the Times:

The letter [making excuses for the crap settlement written by Almunia and leaked to the press] represents a defensive maneuver by Mr. Almunia to quell the concern among some of his colleagues that he should have outlined far firmer action against Google by now.

Yep–I would imagine there’s a lot of scrambling going on in Mountain View right about now.  All courtesy of the extraordinarily arrogant YouTube negotiators.  Where do they get these ideas?