Google is rolling out changes to how it shows shopping search results across Europe in a bid to avoid further fines from a seven-year antitrust probe.
Slapped with a record-breaking €2.4bil (RM11.91bil) penalty in June, Google was also ordered by the European Commission to stop its illegal conduct and offer equal treatment to rival price-comparison sites by a Sept 28 deadline. It risks daily fines of up to 5% of its global daily revenue if it fails to comply.
From Sept 27, Google is offering space in an ad panel at the top of its search page to shopping-search services that can bid via an online auction for a slot to show a photo and a link to a retailer. These slots are currently sold by the company’s own Google Shopping service to retailers. The Google Shopping unit will operate independently from its parent and must bid against rivals from its own revenues, without financial aid from Alphabet Inc’s Google.
”We’re giving comparison shopping services the same opportunity to show shopping ads from merchants on Google’s Search results pages as we give to Google Shopping,” said Al Verney, a spokesman for Google in Brussels. “Google Shopping will compete on equal terms and will operate as if it were a separate business, participating in the auction in the same way as everyone else.”
European Union regulators said it’s too soon to say whether the offer is good enough to resolve their concerns. The ball lies in Google’s court, EU Competition Commissioner Margrethe Vestager told reporters on Wednesday, saying it’s up to the company “to show that they live up to the decision” to grant equal treatment to comparison-shopping services.
The EU will “actively monitor” how Google complies with the order, she said. The company will have to report to the EU every four months, with a first report likely to come in early 2018, she said. KPMG and Mavens, a search-engine consultancy, signed a contract this week to provide technical help to the EU to evaluate whether Google’s offer is effective.
Price-comparison sites will bid for ad slots in an auction similar to the AdWords interface. Each slot shows a photo, a link to a retailer and a label to show whether it was provided “By Google” or another site. The ad panel will appear to users across the 28-nation EU, Norway and Iceland. It may also show up to users outside Europe if their language or location preferences make Google software think they’re in Europe.
”This will be watched with great interest also from market participants,” Vestager said, mentioning consumer advocacy group BEUC, which wrote to her last week. “It is very important to take very seriously how the market participants look at this, what they see in the market and to use that also in our monitoring.”
Some shopping search sites have been very critical of the auction.
Kelkoo.com has said such an offer is unlikely to resolve problems in the market while Foundem, a UK shopping site, said the auction creates “an additional anti-competitive barrier” that sees companies pay for placement instead of getting traffic for free from relevant search results.
Google Shopping has grown quickly since 2009 to account for as much as a fifth of the highly profitable ad revenue Google generates, according to industry estimates. Andreas Reiffen, chief executive officer of search firm Crealytics, estimated earlier this year that the format accounts for roughly a quarter of ad revenue in Europe.
Alphabet reported sales in Europe, the Middle East and Africa of US$8.5bil (RM35.95bil) during the second quarter – a third of all company revenue. — Bloomberg