The main problem with the watermarking is that the images can be shown in product listings where an image like this wouldn't look nice and also the image can be used for a product that is sold by multiple merchants.
The main problem with the watermarking is that the images can be shown in product listings where an image like this wouldn't look nice and also the image can be used for a product that is sold by multiple merchants.
The reasoning is that they would then be using their market dominance to force merchants to forego their (IP) rights, which is in conflict with EU anti-trust regulations.
Clearly the merchant must be getting something out of the arrangement, or else they wouldn't be concerned about Google walking away from it.
This is the issue. There's no incentive for me to invest a huge amount of capital to create good product images if I'm forced to basically give them away to my competitors.
The end result for Google shopping will be lower image quality because you've created a disincentive for us to create better looking images.