Google could face a $9B EU fine for rigging search results in its favour | Hacker News Reader

Google could face a $9B EU fine for rigging search results in its favour

independent.co.uk

68 pointsJerry296 comments

How is it that Google search results are considered a public service that must run in any particular way other than their own whim?

Is it simply a matter of scale?

Compare that to three banks who were fined only a sum of 485m euros. Laughable.

Source: https://www.theguardian.com/business/2016/dec/07/hsbc-jpmorg...

Google is a monopoly in the search engine market and monopolies are heavily regulated.

This isn't really a regulated monopoly in the sense of a utility. It more has to do with the illegal practice of using a monopoly in one market (search) to gain advantage in another (translation, etc.). Right or wrong, that's where the line is often drawn.

Is it some form of tying? https://en.m.wikipedia.org/wiki/Tying_(commerce)

Yes and no - it's using a competitive advantage in one market to drive anti-competitive / unfair practices in another market. In Google's case, they're not quite _requiring_ you to use a service they prioritize ahead of others.

Hypothetical example: company A has such a large market share and super wide margins in the market for widgets, so they decide to enter the market for books and undercut all of the competition on prices. They can fund that undercutting strategy with the margin from their widget business, but it's not quite fair / competitive because of the "moat" that they've built.

For the search market, it's a little less clean-cut, but I can see both sides. I am old enough to remember MapQuest back in the day as the primary mapping tool most people used, but there was a big hoopla/outcry that Google was possibly prioritizing an inferior product (Google Maps at the time) in its search rankings so that the tool could get more usage and get better, at the expense of MapQuest. At the time it was virtually impossible to prove, so it didn't go anywhere.

On the other side, Google has argued that super-low switching costs exist in the search engine market, so Google doesn't _really_ have a monopoly. This is where my knowledge of anti-competitive / monopolistic law breaks down (as well as where I ethically stand as a user,) as I'm not quite sure what should determine a monopoly: the market share _alone_, or the switching costs with competitors for the consumer?

What normally determines a monopoly is market or pricing power—the ability to raise prices in some range without losing customers to competitors.

It's plausible that Google has market/pricing power in search advertising. It's less plausible that they have that in search.

Market dominance is not the same as a monopoly.

Eric Schmidt gave an interesting answer to Senator Herb Kohl during antitrust hearings.

Senator Kohl: "But you do recognize that in the words that are used in antitrust kind of oversight, your market share constitutes monopoly, dominant--special power, dominant firm, monopoly firm? Do you recognize you're in that area?"

Mr. Schmidt: "I would agree, Senator, that we're in that area. Again, with apologies because I'm not a lawyer, my understanding of monopoly findings is it's actually a judicial process..."

https://www.gpo.gov/fdsys/pkg/CHRG-112shrg71471/html/CHRG-11...

Google doesn't have the "durable market power" described here: https://www.ftc.gov/tips-advice/competition-guidance/guide-a...

They can't raise prices and exclude competitors long term.

This internal FTC report that was leaked: http://graphics.wsj.com/google-ftc-report/

Has this conclusion: "Google has unlawfully maintained its monopoly over general search and search advertising"

The report ended up being buried, but it at least shows that credible people with lots of experience in the area believe strongly they are a monopoly.

That's a really great source. Though they do note that Google's market power isn't all that durable (because they don't charge, and competitors exist), they obviously conclude that they have unlawfully obtained monopolistic status.

You don't think Chrome's new ad blocker is an example of excluding their competitors in advertising?

> They can't raise prices and exclude competitors long term.

Of course they can–remember: they get paid by advertisers, but it's the users that make the decision to use them.

For many businesses, search is the only online ad channel that actually works, and it's not straightforward to see how any competitor could catch up to their technological advantage in search.

Technological advantage is a legal means to become a monopoly, according to the SEC link above.

But it's not. I never use Google for searching and I do a lot of searching. It's merely the largest search engine.

"It's the largest search engine, but I never use it, so it must not be a monopoly" :slow-clap:

The lack of a viable alternative is the pretty much definition of monopoly. Just because lots of people use something doesn't mean there is a monopoly.

Def: "the exclusive possession or control of the supply or trade in a commodity or service."

Google has a very nice search engine but I personally fail to see how they control the supply enough to be considered a monopoly. Sure most people use them, but that is by choice. There are viable alternatives.

Standard Oil only maxed out at 90% market share. US Steel only reached 60% of the steel market. There were banks other than JP Morgan. A more nuanced view of monopoly has to do with how much power they can wield in the markets.

And of those which ones had successful antitrust litigation against them? Just Standard Oil I believe.

Microsoft was declared a monopoly when every computer in my school was a Mac. Internet Explorer was considered a monopoly when everyone I knew was running Netscape/Firefox. It's obvious that the US federal government and the EU disagrees with you. You don't have to have 100% control over a market in order to be considered a monopoly.

"Courts do not require a literal monopoly before applying rules for single firm conduct; that term is used as shorthand for a firm with significant and durable market power"

It's not just the EU that thinks Google has a monopoly in search. The FTC investigators from the US that looked into thought so as well. Their bosses decided not to act on it though, for reasons unknown.

The 160 page document[1] is very comprehensive, and worth a read. There's a few surprising things in there. The way they manually adjusted the algorithm several times specifically to demote "comparison shopping engines" (CSE) is very telling. Their manual testers liked CSE properties, and found the results relevant and useful. Google kept changing the criteria and questions until they found a combination that justified demoting them...so that their own CSE would get more traffic.

One of the conclusions: "Google has unlawfully maintained its monopoly over general search and search advertising"

[1]http://graphics.wsj.com/google-ftc-report/

The reason the FTC investigation was never going to go anywhere is because Google lacked durable market power. The reason they can't be accused of a monopoly is because they can't "raise prices" using their market dominance. Monopolies are not illegal in the US. Utilizing monopolies to harm consumers is.

I suggest you look into the former FTC Commissioner, Joshua Wright, which should give you some idea where the interests of the FTC's leadership has been, and likely will continue to be: https://theintercept.com/2016/11/15/google-gets-a-seat-on-th...

This says a lot more about why the FTC didn't go forward with its staff's recommendations to go forward with charges than anything else.

I don't know how definitive that is. Search may not have "prices", but they can use their monopoly in search to manipulate consumers for products they sell that do have prices. The CSE situation I mentioned is specifically something that does involve prices.

I can't find anything that says that's the reason action wasn't taken either.

You somehow managed to contradict yourself in just a couple of sentences.

Not sure how it works in the EU, but in the US antitrust law really kicks in once you monopolize an industry. So yes, at the very least relative scale matters.

Because in Europe, Google owns 90% of search. It's pretty much a monopoly. And one reason for that, probably the prime reason, is that they got in very early and in localized searches they're light years ahead of competition.

> probably the prime reason, is that they got in very early

What? Altavista, Lycos, Yahoo, ...

The reason is that they were just a little bit better than those three competitors. And the market was still small, and thus the market could still converge on another contender. So time played a role.

None of them is/was as good as Google in localized results.

Just write "translate" and you will get 1) Google's translate service inlined 2) Google Translate Website and then everything else...

What are you suggesting they show first? Most people would argue that Google's translation service is the best of the free/ad-supported options out there.

Even Bing shows Google's translator first (after their own inline version).

At the beginning there were other, better options but Google Translate was still on top... Like IE on Windows: other were better, but IE was preinstalled...

But you are on Google's site, it's a company, not a public service.

There are different rules when you use a dominant position in one market to gain share in another.

This is equivalent to the Microsoft/IE thing.

https://en.wikipedia.org/wiki/Competition_law

They're not challenging Google's dominance of search or projecting responsibilities on them as a service due to that monopoly.

They're simply objecting to Google using its dominance in search to gain dominance in, for instance, digital translation.

https://en.wikipedia.org/wiki/United_States_v._Microsoft_Cor....

There are laws about what companies can do. And using a dominant market position in one market to help them in other markets can be an anti-trust violation (see Microsoft and the browser wars).

As a European I think it's sad how we spend our efforts fining startups instead of creating an ecosystem that fosters the creation of break out companies.

  fining startups

does google really still count as a startup (18 years old, 50k+ employees)?

Certainly not, the Alphabet company is a multinational corporation.

> creating an ecosystem that fosters the creation of break out companies

I think that the fine imposed here is doing exactly that. How is Google in any way a startup?

The EU fining a company and collecting are two very different things. I expect whatever fine they decide to be litigated until a favourable outcome is agreed upon.

That's simply not true. See, for example, http://ec.europa.eu/competition/cartels/statistics/statistic... Chart 1.2 (fines), compared to Chart 1.4 (Fines adjusted for court rulings)

From 1990 to 2017, they collected 24.4 billion Euro of 26.7 that were imposed:

    Year            Imposed Fine  Adjusted for Court rulings
    1990 - 1994       539 691 550      344 282 550,00
    1995 - 1999       292 838 000      270 963 500,00
    2000 - 2004     3 462 664 100    3 157 348 710,00
    2005 – 2009     9 414 012 500    7 920 497 226,50
    2010 – 2014     7 921 947 674    7 608 375 579,00
    2015 - 2017.    5 091 156 000    5 091 156 000,00
    total          26 722 309 824   24 392 623 565,50

Of course it is.

>Intel Wins Latest Round in Battle Over $1.17 Billion EU antitrust Fine. Intel Corp.’s fight to overturn a record 1.06 billion-euro ($1.17 billion) European Union antitrust fine received a boost from an adviser to the bloc’s top court in a case that could have ramifications for a growing list of disputes involving U.S. tech giants from Google to Apple Inc.

https://www.bloomberg.com/news/articles/2016-10-20/intel-sho...

Are you aware that your link doesn't prove your point?

> If Intel ultimately prevails, it would be the commission’s first defeat in a case concerning so-called abuse of dominance by a company for “very many years,” said Trevor Soames, a competition lawyer in Brussels.

I believe it does. My point was that fining a company and collecting are two different things. The EU has yet to collect a dime from Intel.

I have been thinking of a standard for example for how much space these results can take on the screen.

Do they have proof of that?

What is needed but AFAIK is never discussed is an objective index of what is on the www.

(Not a cache of the entire www, and not a full-text search engine. Rather, an index, similar to what is in the Yellow Pages (subject, alphabetical), but going a little further. For example, each site might submit a list of say 5 selected "permanent" URLs where a user could retrieve site information.)

This is not an insurmountable task. And it need not be conducted by a private company. A significant amount of the work is already done with respect to sites that register domain names, via zone files. But this is only start and is not comprehensive.

Back in the day, early search engines required operators to submit www sites to the search engine. That active involvement of www site operators seems to have been lost.

There could well be a publicly-run directory service for the www. Operators could submit their site to a public agency instead of a private company. Or at least make it easy for a very simple crawler to retrieve a sitemap.xml or some file with a standard format for disclosing site information.

Private companies have difficulty policing overzealous marketing and fraud in such situations. Today we have one company using "secret algorithms" that supposedly address the situation. But if a site is submitting information to a governmental agency instead of a private company maybe it becomes a little less easy for marketers to bend the truth. There is more opportunity and incentive to enforce the consumer protection laws. Better for consumers.

Users could still access Google to determine popularity of a given www site (or "relevance" if you believe that popularity has some bearing on relevance).

Keeping in mind that Google is a private company that encourages a bidding war between advertisers for a spot to the right of the top popularity ranking for a given search query. The behind the scenes of the auction process is opaque. Google has no incentive to be wholly objective.

Give users more choice how to look up www sites. (Note this is a little different than full text search. It is far less complex.)

Site discovery: This is a fundamental problem that is occasionally discussed. Site discovery. All those sites users never learn about because of search engine schemes like "PageRank". We see the same phenomenon in an "App Store". Top 10 are promoted excessively. All the rest are never discovered by the vast majority of users. Perhaps the only reason someone can make large sums through selling an app is because if they can get into the top 10, then all other apps are effectively hidden from most users. This dynamic creates a certain hype and draws in more contributors all trying to get into the top 10. Each paying fees to the company behind the "App Store". Can we apply a similar analysis to Google search and the sale of AdWords? What might fuel demand for ads? The lure of a #1 rank or an ad to the right of it?

Getting back to the issue: Let user/developers work with a free, objective index not produced or manipulated by a private company. I can think of many ways to build efficient search i.e., www site discovery, using such an index. I believe others would have even better ideas.

We already have a privately-held cache of the entire www.

What we still need is a publicly-accesible index into that cache so that users can discover www sites by means other that popularity.

At some point it seems like the US government needs to step in and somehow mediate these things. I'm sure it's incredibly popular to fine US companies huge sums of money in Europe, but this is starting to get out of hand.

Like US is not doing it...

Google broke EU laws on purpose - their revenue is huge from European markets, thus they should pay a huge fine. As simple as that.

No, it's not "as simple as that". Deciding that a company owes 10% of its worldwide revenue because of something like this is not simple.

> Like US is not doing it...

They're not.

The US fined Deutsche Bank $14B & BNP $8B. That's how these things work at the moment.

Got it. Moving billions of dollars through the US between illicit governments and banned groups is totally the same as tweaking search results and should be fined in equivalent amounts.

Looking at this completely coldly and amorally... The governments aren't considered 'illicit' under French law. Perhaps search result manipulation isn't illegal under US law (I don't know). That's irrelevant as the laws of the land where the acts took place were broken. The companies breaking the laws must have known that and taken the risk anyway. They lost. They got fined. The more fines that happen the bigger the incentive for the other party to reciprocate.

One of them is about stealing money while the other one is about controlling your sources for information, products, and services that you apply to your everyday life. If anything, Google should pay more. They can either play by the rules the people give them or give up their monopoly on web search voluntarily. There is a reason we have antitrust laws.

The US only fined 5 billion to Goldman for the financial worldwide crisis.

That's peanuts

Ps. http://fortune.com/2016/04/11/goldman-sachs-doj-settlement/

In the case of BNP, deals were made by a french bank (not US jurisdiction) in its swiss branch (where stuff was legal, also not US jurisdiction).

The bank was not judged guilty, but entered a plea, specifically because of the way the US justice system is structured. The jurisdiction claim was therefore not evaluated.

What do you mean? If you don't want to be subject to EU judgement, don't do business in the EU. It's the same everywhere, European countries that enter the US have to follow US laws and obey US courts.

In the US a company wouldn't be fined $9 billion for "antitrust violations" simply because they may have tweaked their search results to favor their own products.

The US fined VW $2.8 billion for falsifying their emissions testing, a far more serious thing. That's less than 2% of global revenue.

The fine is not $9 billion, that was a complete guess by Reuters. It's the classic "the max penalty in theory could be this", like reporting that a criminal "could face" life in prison even though in reality they'll get a couple years.

I don't understand your comparison to the US. Obviously EU courts do not follow US laws, they follow EU laws. If the laws are unfair, don't open a business there. For example, I think the blasphemy laws in Iran are unfair. The logical conclusion is to not go to Iran or at least not commit blasphemy there, not to go break the law and then complain that "this would never happen in America".

Sounds like the US should fine companies more for doing bad things, too, then. That sounds like a pretty straightforward solution to this terrible injustice.

(And besides: Google isn't an "American company" any more than any multinational. The EU is fining the European-incorporated arm of the company.)

The US already does this (one could say the US justice system is tailored for this, as foreign companies fall under jurisdiction without representation). There were calls for the EU to boost its fines as a consequence of this.

I was being a touch sarcastic. Everyone does this to enforce the laws in their jurisdiction.

Let's see if GM will be fined as well after latest findings... Destroying many other businesses with "antitrust violations" is also serious for many people loosing their jobs...

That's simply not true. See http://ec.europa.eu/competition/cartels/statistics/statistic... point 1.6. Of the companies hit with the 10 largest fines, none were from the US:

    Year     Undertaking**      Case                  Amount in €*
    2016     Daimler            Trucks               1 008 766 000
    2016     DAF                Trucks                 752 679 000
    2008     Saint Gobain       Carglass               715 000 000
    2012     Philips            monitor tubes          705 296 000
    2012     LG Electronics     monitor tubes          687 537 000
    2016     Volvo/Renault      Trucks                 670 448 000
    2016     Iveco              Trucks                 494 606 000
    2013     Deutsche Bank     (EIRD)                  465 861 000
    2001     Hoffmann-La Roche Vitamins                462 000 000
    2007     Siemens           insulated switchgear    396 562 500

Would you say the same thing if America fined China for its companies taking advantage of US citizens? Or is it selective sovereignty?

If they levied a $9 billion fine because of how a Chinese tech firm possibly manipulated search results? First, that wouldn't happen. Second, yes, I would.

The US would be fining the US arm of a Chinese company, and has already done so multiple times.

Similarly, China has fined a bunch of Chinese arms of foreign auto companies for monopoly issues around spare parts.

Fining companies heavily is something the EU learned from the US. Examples given : BNP $8bn fine a few years ago, WV just recently, etc.

What ground would the US have to defend their companies, when every time an euro country has tried to weight on these issues, the answer has been: "The justice system is separated from the executive" ?

VW's fine is equivalent to less than 2% of global revenue for a far more serious act.

BNP (which must be at the top of the search results when people are googling this) violated criminal law while illegally helping Sudan transfer vast sums to illicit and blacklisted groups through the US financial system.

Again, that was $9 billion for something far more serious than tweaking search results.

Google makes money in Europe, just like they do in the US. That's what this fine is about. If they don't like it, they can leave. Like they did with China, back in the day.

Markets have rules. Don't like the rules? Leave the market.

If Google were unreachable in Europe, this fine would not have existed.

Conspiracy theories would probably tell you that it's the retaliation of a string of Deutsche Bank's fines by the Fed in the last two years.

[1]: https://www.google.com/search?q=deutsche-bank+fine

[2]: http://www.telegraph.co.uk/business/2016/09/27/like-dodgy-pl...

What do you propose the US government actually do?

A multilateral treaty with Europe (you might call it a "Transatlantic Trade and Investment Partnership") would be one way to establish a process for dealing with such things. Those seem to be unpopular these days, what with them always putting America second and forever subjugating the sovereignty of the US to some poorly negotiated deal.

(Well, actually, they have for the last 70 years served American interests and had exit provisions that preserved sovereignty well enough)

I'm in favor of TTIP, so if that would help create a process to address this, then great.

A process to let US companies get away with abusing their monopoly position? No thanks.

I don't think Google is a US company for legal purposes. These violations, if there were any, were done by the European subsidy of Google.

It's also incredibly popular in the US to fine European companies, so to me this looks like tit for tat.

Do you have statistics to back this claim?

What claim did I make that would require statistical backing?

> I'm sure it's incredibly popular to fine US companies huge sums of money in Europe, but this is starting to get out of hand. reply

This claim

$9 billion is out of hand. I'm talking about the article.

First, no fine has been done.

Second, you're not answering what I have asked.

Do you have statistics about the EU fining more US companies than other companies?

> You're free to google that for yourself. I'm not your research service

So you don't have any source. Thanks, is what I thought.

By the way, I have done my research, and you're the one making a claim, you're the one that has to proof it

Why would you get downvoted for this exchange is beyond me. Believing that the European administration or courts act based on fashion is ridiculous.

I suppose that is information bias, only information about the EU fining US companies reaches USA

You're free to google that for yourself. I'm not your research service.

Google's motto is 'don't do bad things' so I highly doubt there's any merit to these accusations.

How about a similar fine for rigging search results during the US election?

http://aibrt.org/downloads/EPSTEIN_et_al_2017-SUMMARY-WPA-A_...

FYI the person who wrote this paper has a long standing hatred of google ever since they warned people his website had malware. His motives might not be entirely academic.

I'm curious about how he measured bias and maybe I missed it in the paper. Anyway he threw out people who communicated via Gmail because they didn't show the same bias, which seems sketchy methodologically. Also his findings could be pretty easily explained without Google doing anything purposefully on their end.

For all the good it did...

"But your honor, I only tried to kill my wife - I didn't succeed!"

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