Major Setback for Google in EU Antitrust Settlement and a Big Oops for YouTube
Look, forget the myths the media’s created about the White House–the truth is, these are not very bright guys, and things got out of hand.
All the Presidents Men
According to a host of press reports, embattled lame duck EU-Commissioner for Competition Joaquín Almunia is giving Google yet another opportunity to revise their settlement proposal before his term runs out in a matter of weeks. Almunia has been roundly criticized by dozens, if not hundreds, of stake holders from consumers to small and medium sized businesses in Europe for the proposal itself. Now he’s also getting scorn for the unprecedented number of times he’s allowed Google to amend its hugely unsatisfactory and one-sided “settlement” proposal to keep from getting sued by the European Union for antitrust violations from its dominant position in the search vertical alone. Google controls about 90% of search in the EU. 90%.
Is this the European tradition of letting tax avoiding American multinationals use their dominant market power to run roughshod over the European Commission? Not so familiar with that tradition.
The choice before Mr. Almunia is whether to settle with Google or whether to effectively sue Google using what’s called a Statement of Objections that could result in significant fines after a yummy administrative law hearing where there’d be lots and lots of discovery in the public record. And judging by the measures that Google has taken to block the release of 4,000,000 documents in the Google Drugs grand jury in Rhode Island–a release that would have been entirely reasonable in the lawsuit by their stockholders for converting $500,000,000 of the stockholders’ money, among other things–the idea of a Statement of Objections would no doubt drive Google right around the bend.
MTP readers will not be surprised to learn that Eric “Uncle Sugar” Schmidt has become BFFs with Almunia as part of Google’s charm offensive to get away with it. But Google has managed to twist this process so far in its favor it’s beginning to look like…how you say in your language…la corrupción.
As the always perceptive Kelly Fiveash writes in The Register (“Mr Almunia, exactly how many chances does Google get to revise its search biz offer?“):
On 30 November 2014, the European Commission will have been probing Google’s search business practices for a whopping four years.
Formal proceedings were opened against the ad giant in late 2010.
The date is significant, given that by then we should also know who will replace antitrust boss Joaquin Almunia in Brussels.
As the Spanish politician’s term as chief competition prober comes to a close, the DG Comp office appears to have somewhat shifted its position on the lengthy case.
The EC has expressed major concerns that Google may have abused its dominant position in web search – where it commands around 90 per cent of the market within the European Union.
However, at the same time, Almunia has been steadfast on his promise to reach a settlement deal with Google that stops far short of sanctions or demanding up to 10 per cent of the company’s annual turnover.
Google has been given three separate chances to revise its concessions on search, in part, because Almunia has stuck so firmly to favouring such an outcome that, he argues, will restore competition more swiftly than forcing the multinational down a so-called Statement of Objections route.
And yet, it now appears that the case could drag on way beyond Almunia’s mandate if the commission decides to chuck out Google’s most recent offer and press for a fourth settlement deal.
My bet is that Google thought they’d be able to run out the clock and settle right before Mr. Almunia’s term expired. Which reminds me of an old football coach who used to say that if you [expletive]s are going to run out the freaking clock, make sure you [expletive]s keep the freaking points. Or something like that. Because right now it does not seem like Google’s got the points and this deal is beginning to reek to high heaven.
If you ever wondered just how arrogant the YouTube negotiators really are, realize that these geniuses decided that it would be a good time to alienate the WIN and Merlin labels–based in…where was that again…oh yes…Europe…right in the middle of what is rapidly becoming Almunia’s mess. And how did they alienate the indies? By doing pretty much the EXACT SAME THING that Google was accused of doing in search–abusing their dominant position to benefit themselves.
I frankly think that the indie complaint against Google was the last straw for a lot of people, and it almost assures that Google’s antitrust investigations are going to be far more wide ranging and last much longer than anything the embattled Mr. Almunia has done to date on Google’s search business.
Plus we now know what Google’s strategy will be in defending against the indie label claims. The next competition commissioner will be watched very closely to make sure that the commissioner is not led astray by the charms of Uncle Sugar. No, thanks to YouTube, Google is going to have a very, very rough time for the foreseeable future.
In fact, even if Almunia calls an audible and lets Google settle after another bite at the apple, getting that settlement approved in the Commission is probably going to get pretty messy if not fall apart altogether. And it could all have been so easy if Google just took their medicine like big girls and boys. Was that really so very very difficult to anticipate? Are these folks just not that bright or are they simply consumed by that special Silicon Valley blend of arrogance and avarice?
Yes, I’d say that thanks to YouTube, the indie labels very likely provided that critical mass to tank Google’s entire EU settlement.
Or as we say in Texas, oops.