Dive Brief:
- In a bid to calm EU antitrust waters, Google sent a proposal to the European Commission stating it will allow comparison shopping site competitors to bid for any spot in its Product Listing Ads shopping section, per a report from Reuters citing unnamed sources familiar with the matter.
- Sources told Reuters the proposal was criticized as inadequate, but EU competition chief Margrethe Vestager told reporters in Washington, “It is at this point in time of course impossible to say what will happen but obviously market reactions will be one of the things that we’ll be taking under consideration.”
- To date, Google has been fined 2.4 billion euros — a record amount — by the European Commission for over claims its business practices favor itself. The tech giant has until September 28 to end anti-competitive practices or Alphabet could be fined up to 5% of its average daily worldwide revenue which amounts to about $12 million a day based on its 2016 revenue.
Dive Insight:
Google's challenge is it needs positive feedback from competing shopping comparison engines to bolster its case with the European Commission, and according to the Reuters report that feedback, in this case, was overwhelmingly negative. Part of the challenge is those competitors are likely the same parties who filed complaints about Google’s business practices in the first place. One rival, U.K. price comparison site Foundem, filed the complaint that set this particular issue into motion back in 2010 and was quoted by Reuters as wanting nothing less than for Google to break its search into general- and specialized-search businesses.
Product Listing Ads are a popular format for the search giant, giving retailers a way to get shoppable ads for specific products in front of searchers. Opening these ads up to competing comparison shopping sites would provide consumers with greater variety. In the U.S., the space continues to heat up as social media sites and others ramp up their own shopping campaign offerings.
As an international company, Google has to play within the rules of the global region with the strictest and narrowest rules covering everything from data privacy to monopolistic business practices. Creating Alphabet placed different business units under separate umbrellas, but its core internet business from tools like Gmail to platforms like YouTube to the ad business that drives Alphabet’s revenue all remain under Google.