Part of the debate – in Westminster Hall at 4:00 pm on 5 April 2011.
It is a privilege to secure my first Adjournment debate and to hold it under your chairmanship, Mr Gale. I wish to raise the increasingly important topic of protection of competition in the online marketplace and the neutrality of search engines. Free markets require the rule of law and space for robust competition, but they offer no place for monopolistic or cartel abuse, which is as true for the online market as it is for any other. The EU Competition Commissioner, Joaquin Almunia, has stated:
“I believe that the principles of competition must be maintained in the digital economy with the same intensity that they are imposed in the brick and mortar world.”
At both national and European levels, rules exist to prevent dominant undertakings resorting to anti-competitive practices to reinforce their position. Those rules do not prohibit or deter success in the global online marketplace. Businesses can hold, secure or maintain a dominant position, but not abuse it, and there is growing evidence that that is exactly what Google is doing.
Search engines are the gateways to the internet. With a 95% share of the search market in Europe, Google is in a uniquely powerful position. It is the most visited website in 25 of the 27 EU member states.
Foundem, a UK-based price comparison website, has complained to the European Commission that it, among others, has fallen foul of anti-competitive abuses by Google. The complaint is threefold. First, it was unfairly penalised by the mechanism Google uses to rank search results, especially the exclusionary automated penalty that has been applied to it and other competitors. The effect was to suppress Foundem on Google’s search results. Until December 2009, when it was corrected, Foundem’s rankings on a typical product such as a motor bike helmet were: first by Yahoo, seventh by Bing and 144th by Google. As the top five recommendations on the first page of results account for 88% of hits, Foundem effectively disappeared from the Google landscape. The day after the penalty was lifted, Foundem immediately rose to sixth place on Google’s rankings, so the impact is clear.
Secondly, Foundem’s complaints concern the review procedure at Google. It took Foundem more than three years to secure the lifting of the arbitrary penalty against it. For a small business in a fast-moving environment and marketplace, that could prove fatal. It did not in this case, but it certainly could for other small and medium-sized enterprises.
Thirdly, Foundem says Google distorts search results by imposing its own services in prominent positions. In the two years after Google started promoting its own price comparison website, Google Product Search, UK visitors to that site increased by 125%. Over the same period, visitors to the UK’s leading price-comparison websites fell by an average of 41%, so the discrepancy is stark. The fact that the European Commission has decided formally to investigate Google shows that these complaints are serious and that they require an answer.
Let us be clear about an important distinction that underpins competition law. It is one thing to sell space, ranking or priority online, but it is another thing altogether deliberately to stack the deck against potential rivals while at the same time pretending to be operating and offering a neutral service. Google is trying to bury the competition.
I understand that the Minister may feel tempted to defer to the European Commission inquiry, but Britain must also ask whether enough is being done to prevent such abuse and why we have to wait for the cumbersome, clumping, clumsy conclusions of the European Commission to preserve our own free market at home. I would welcome the Minister’s views on this vital area of policy.
As a matter of domestic policy, there might be a prescriptive solution. I am not one to call for extra regulation or legislation, but one of the points that Foundem makes is that it champions the principle of search neutrality. That states that search engines should be transparent about the rationale and mechanism behind their online results rankings and that affected sites should have access to a timely appeals process.
The second principle advanced by Foundem is that search engines should not be allowed to discriminate in favour of their own services while maintaining the guise of neutrality. If their own products are inserted into search results, they could be identified in the same way as sponsored links. There is no reason for Google not to advertise its own wares, but it is something of a fraud to dress it up for the consumer under the ostensible impartiality of ordinary search engine results.
The proposals could be considered on a voluntary or industry-wide code basis or under legislation. I am fairly open-minded about that. An alternative solution is to focus on the more rigorous enforcement of the existing powers that domestic authorities have to preserve competition. After all, the Office of Fair Trading and Ofcom have the necessary authority under the Competition Act 1998 and EU law to issue directions and hand out fines.
I recognise that purists will say that we should resist any intervention in the online search market. Some will argue that the internet is a fast-moving and changing world and that we must be wary of trying to prejudge or predetermine its future development. Unless competition is safeguarded, a flourishing river of competition could become a stagnant pond. Does the Minister agree that far from being incompatible with a robust and rambunctious marketplace, this principle of search neutrality could bolster competition and consumer choice?
Our regulators can already take action, but they have so far proved unwilling to take a proper look at Google. The chief executive of Ofcom talks about the need to avoid suppressing reward for innovation and risk—we can all agree on that along with motherhood and apple pie. With more than a hint of complacency, the chief executive of the OFT has said that most complaints come from
“competitors who are not best pleased that Google makes a better offering to their customers.”
Mr Fingleton says that the OFT would like to see complaints coming from customers themselves. That is all very well, but customers may be oblivious to what Google is surreptitiously doing.
Another argument that Google advances against intervention is that competition is just a click away. In other words, an open internet allows consumers to use any search engine they want. This theoretical defence misses the practical point. It is precisely the scope for competition that Google is killing off. If Google’s policy means that businesses cannot access potential consumers, they will be choked out of the marketplace.
In his Budget statement, the Chancellor highlighted the importance of promoting high-technology growth in small businesses. He called for Britain to become a “home of innovation”. He is absolutely right. I hope that the Minister will recognise that there is a risk of that vision being jeopardised by anti-competitive abuse online and that the market must remain an enabling environment for businesses of all kinds, small and large, and not one that is condensed and conditioned to preserve the status quo.
Google is one of a handful of companies that has transformed our understanding of the internet’s potential. I have no doubt that it will continue to do so in the future, but it must not be allowed to pull up the ladder. We must preserve the space and scope for innovators and entrepreneurs to mirror, and even surpass, Google’s astonishing and outstanding success.
Annotations
Francis Higgins
Posted on 6 Apr 2011 5:20 pm (Report this annotation)
Our Local UK/Ireland search network http://www.gasta.com has been penalised in exactly the same way as Foundem. The appeal procedure to regain entry to Googles index is a long stonewall,Meanwhile revenues are witheld, accounts are closed with no redress to even inspect accounts (which is an infringement of human rights). Our Local MP has been ignored, despite continous efforts to try and communicate with Google on our behalf, no phone service available, no email contact, the only redress Google offer anybody in this situation is the Google help forum were 'tough Luck' and ' you agreed that Google Adsense could terminate your services at any time for any reason in the terms and conditions'.
Here is how Google put it on : https://www.google.com/adsense/localized-terms
This Agreement shall be governed by the laws of California, except for its conflicts of laws principles. Any dispute or claim arising out of or in connection with this Agreement shall be adjudicated in Santa Clara County, California. The parties specifically exclude from application to the Agreement the United Nations Convention on Contracts for the International Sale of Goods and the Uniform Computer Information Transactions Act. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof. Any modifications to this Agreement must be made in a writing executed by both parties, by Your online acceptance of updated terms, or after Your continued participation in the Program after such terms have been updated by Google. The failure to require performance of any provision shall not affect a party's right to require performance at any time thereafter, nor shall a waiver of any breach or default of this Agreement constitute a waiver of any subsequent breach or default or a waiver of the provision itself. If any provision herein is held unenforceable, then such provision will be modified to reflect the parties' intention, and the remaining provisions of this Agreement will remain in full force and effect. You may not resell, assign, or transfer any of Your rights hereunder. Any such attempt may result in termination of this Agreement, without liability to Google. Notwithstanding the foregoing, Google may assign this Agreement to any affiliate at any time without notice. The relationship between Google and You is not one of a legal partnership relationship, but is one of independent contractors.
I rest my case, no partnership, no liability.