Google wins battle in Europe, but not the war

Tuesday, April 16th, 2013 by Steve Masters

Google Non!Google has arguably won a battle in Europe, but it is still fighting anti-trust fires on the continent. Responding to criticisms about its dominance over search results, the search giant has agreed to flag its own results more clearly, so users know when they are looking at Google’s data compared with independent data. I’ll examine that in a moment.

Browser wars, monopolies and fighting for land

Those of us old enough to have worked on the internet in the mid-90s will remember the browser wars that took place between Netscape Navigator and Internet Explorer. In those days, many users were still locked behind the walled gardens of AOL and Compuserve and people demanded the freedom that was offered by IE and Netscape.

The browser war was all about market share. Netscape (the forerunner of today’s Firefox) was the best browser on the market, but IE had the benefit of being the default browser on 90% of the world’s computers. Microsoft won that war and promptly launched into another one with Sun Microsystems. So scared was Bill Gates of Java that Microsoft seriously considered whether to boycott it or embrace it. (They did the latter.)

In those days, Yahoo! and AOL were the big portals, Google was just a word no one had heard of, Freeserve had not yet launched ‘free’ internet. Soon, though, Microsoft’s dominance with IE was tested in court and the company had to stop forcing IE on Windows users.

In all of these cases, the rumpus has turned legal when it becomes apparent that one dominant player’s position appears to be insurmountable. Is it fair that 90% of the world should have a computer with IE as the default browser and MSN as the default home page? Is it fair that one company controlling 80% of the search market should be able to dictate what appears above the fold on page one?

Google, the French, the competition and the users

You probably remember France recently tried to tax Google €1bn for “lost” revenues. Initially France – yes, the country, with President Hollande leading the charge – tried to make Google pay for linking to French news articles. French news organisations have lost revenue thanks to Google, so Google must pay.

Google refused and so France went after Google for tax, saying that revenue generated in France was routed through Google Ireland. Instead of paying the €1bn tax demand, Google settled in February by paying €60m into a fund for innovation in French journalism.

In this latest announcement, reported in the New York Times, Google has reportedly agreed to signpost the difference between its own results and results from independent parties.

Now, if you have read my brief history of internet wars above, you will appreciate this irony. Microsoft, the one-time monopoly, is now in a position to complain about Google. The company, and others like Foundem, has complained about the way Google has been conducting operations in verticals like shopping and flights. It says Google has exploited its dominance as a search company to gain an advantage in these verticals for services it is selling.

There are some key questions here:

  • Do users care if they get their flight data from Google or from another provider?
  • Should users be made aware that there are more options available, if Google is doing a good job?
  • If Microsoft, TripAdvisor, Foundem or any other competitor wants to get more business, why shouldn’t they just work harder?

The assumption is that monopoly is always bad. We may blindly use Google for everything but that may lead to a path of conformity and the death of competition, which results in poor service and high prices.

What’s interesting about the latest news is that Google has already won a similar anti-trust battle in the US, where the courts found in Google’s favour. So, what is acceptable in the US is not acceptable in Europe.

By agreeing to change the way it presents search results, and agreeing to be monitored, Google avoids further financial penalties over the issue. But this is only a battle won, not the war.

Europe is in the middle of a financial crisis. France is traditionally a protectionist state and the country is struggling to reduce national debt. One way to do that is to target companies that avoid paying tax within the country and another way is to target monopolies that damage French industry. Google has become a target on both counts, but the bigger danger is that other EU countries could develop an appetite to take on Google.

What do you think?

What do you think about Google’s monopoly? Should the company be allowed to trade freely? Is it unfair for EU countries, and the EU as a whole, to attack Google with fines and sanctions?

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About the author

Steve Masters

Steve Masters

Steve is Services Director for Vertical Leap. He started professional life as a magazine journalist, working on music magazines and women's titles before becoming a web editor in 1997, then joining MSN to work purely in online publishing. Since 1999 he has worked for and consulted to a broad range of businesses about their digital marketing. Follow on Google Plus and Twitter