Consumer Watchdog During Brussels Visit Urges European Commission To Block Google’s Motorola Deal And File Formal Antitrust Complaint

Mon, Jan 23, 2012 at 12:35 pm

    Consumer Watchdog During Brussels Visit Urges European Commission To Block Google’s Motorola Deal And File Formal Antitrust Complaint

    BRUSSELS – Consumer Watchdog, a U.S.-based consumer advocacy group, today called for the EU’s antitrust regulators to block Google’s acquisition of Motorola Mobility and ultimately issue a formal antitrust complaint against the Internet giant’s ongoing business practices.

    “The Commission’s role in keeping Google’s abuses in check is essential. Its executives have close relationships with many U.S. officials and the company just spent a record $9.7 million in 2011 lobbying policymakers in Washington,” wrote John M. Simpson, the nonprofit, nonpartisan group’s Privacy Project Director in a letter to Competition Commissioner Joaquin Almunia. “We have faith the Commission will not succumb to such influence. The Internet is too important to allow an unregulated monopolist to dominate it. We call on you to take the steps necessary to prevent it: block the Motorola merger and file a formal antitrust complaint against Google.”

    Simpson is in Brussels this week to discuss standards for a Do Not Track mechanism that would increase users’ privacy on the Internet at a meeting of the World Wide Web Consortium (W3C) Tracking Protection Working Group.

    “Before the underlying substantial antitrust issues with Google’s ongoing business practices can be addressed and resolved, the Internet giant has yet another acquisition under scrutiny by regulatory authorities on both sides of the Atlantic. This proposal, to acquire Motorola Mobility, requires immediate attention. We urge the Commission to block the proposed $12.5 billion deal,” wrote Simpson.

    “Once the proposed Motorola acquisition is dealt with, we hope the Commission will turn back to the underlying issue: the way Google uses search to unfairly promote its own properties and damage competitors,” wrote Simpson. “The recent announcement of Google’s ‘Search, plus Your World’ is but the latest example of how Google uses its monopolistic position in an uncompetitive way to promote its own services.”

    Read Consumer Watchdog’s letter here: http://www.consumerwatchdog.org/resources/ltreuro012312.pdf

    “Some observers had hoped that Google’s arrogant anticompetitive behavior would change in the face of investigations by the Commission, the FTC and several U.S. state attorneys general. Clearly, as its recent linking of Google+ to search and favorable placement of Google+ social network in search results demonstrates, the Internet giant will continue its monopolistic abuses unless regulators act strongly,” wrote Simpson. “We urge you to file a formal antitrust complaint against Google as soon as possible.”

    A 2010 Consumer Watchdog study, Traffic Report: How Google is Squeezing out Competitors and Muscling Into New Markets (http://insidegoogle.com/2010/06/google-using-search-engine-to-muscle-int…), demonstrated how with the launch of Universal Search Google favored its own properties and services in search results to the detriment of its competitors. One stark example was the dramatic drop-off in traffic that occurred on Mapquest’s site after Google placed its Google Maps at the top of Universal Search.

    Simpson explained why the Motorola deal should be blocked:

    “Google’s Android smartphone operating system dominates the mobile market with a 38 percent share and is growing. Apple’s iPhone has 27 percent. Google controls 95 percent of the mobile search market. There

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    is evidence it is pressuring handset manufacturers to favor Google applications when using the Android operating system. Google’s earlier acquisition of AdMob gave the Internet Giant dominance in mobile ad sales. Allowing the Motorola Mobility deal would provide Google with unprecedented dominance in virtually all aspects of the mobile world – manufacturing, operating systems, search and advertising. It would be a virtually unstoppable juggernaut.”

    The Commission has indicated it will decide its position on the Motorola deal by mid-February. A decision on whether to file a formal antitrust complaint is expected by the end of March.

    The remedies Consumer Watchdog recommended to the Commission include:

    — Google’s acquisition of Motorola Mobility should be blocked,

    — Google could be broken into different companies devoted to different lines of business so there is no incentive to unfairly use search to promote other services. Search could be separated from advertising. Gmail and the new social networking service, Google +, could be spun off as a separate entity, as could YouTube, a Google acquisition that should have been denied at the time of merger. Enterprise applications could be another separate business.

    — Google’s search engine’s importance as a gateway to cyberspace requires a maximum degree of openness and transparency. Google’s monopoly position and importance to the Internet means that the company should be closely regulated. Regulations could be designed to open up Google’s ad platform to enable other competitors to compete. Rules could be crafted to create greater transparency in the operation of Google’s ad platform to enable parties to negotiate more effectively. For example: Providing greater visibility into the maximum amount of the highest bid, how many search terms are shown per page, and how Google’s “quality score” is derived and applied. Little, if any, of this information is currently public and openness would contribute to consumer choice and options as well as foster competition.

    — Another remedy could be to force Google to disgorge its monopolistic gains through the imposition of financial penalties. The payment would have to be significant enough to impact Google’s future behavior. Google hardly blinked when it paid half a billion dollars to the United States to settle an illegal drug sales case. Perhaps the amount could be tied to paying back consumers for monetizing their private information and content without asking them permission or compensating them.

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    Consumer Watchdog is a non-partisan U.S. public interest organization with offices in California and Washington, D.C. For more information, visit us on the web at http://www.ConsumerWatchdog.org

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    This post was written by:

    John M. Simpson

    - who has written 414 posts on Inside Google.


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