Google being fined as much as $3 billion in EU Antitrust case

[Ryuzaki]

We all know that Google favors it's own products in the SERPs, from Youtube to Shopping stuff. The European Union ain't playing that game. They recently enforced the rule that Google has to allow individuals to request negative stories about themselves to be removed from the SERPs.

Now they are going at them for leveraging their own products for their own gain, which sounds fine until you realize every single bit of their content is user-generated, from the SERPs to YouTube to Google+ to Blogger, etc. They're in trouble for two things:

1. Giving their own products a rankings boost in the SERPs
2. Abusing the reach of the Android mobile OS by imposing tough restrictions on Android device makers.

I don't have any details about that second point, but I'm sure it has something to do with concepts like "if you want to build phones and tablets for us, you can't do it for others."

The starting point for the fine is the percentage of the company's annual sales of the product concerned in the infringement (up to 30 percent). This is then multiplied by the number of years and months the infringement lasted.

The fine can be increased (e.g. repeat offender) or decreased (e.g. limited involvement). The maximum level of fine is capped at 10 percent of the overall annual turnover of the company.
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It's interesting... I'm not generally for governmental interference in the market but there are times when it's a positive move (most of the time it's corruption paid for by self-interest and lobbying). In this case, you've got a company that thrives off the backs, money, energy, and time of individuals. Even the act of ranking sites requires placing huge bandwidth loads across the entire internet non-stop.

Not only are they going to pay what's going to end up as the largest fine on record, but they aren't going to be allowed to continue these deceptive practices, at least in the EU. That's going to make a huge difference in their bottom line, which will trickle out to all of their non-search products and projects as well.

How do you guys feel about this type of thing?

 

[CCarter]

I'm a believer that you own 100% of your website. So in essence Google can do whatever it wants with Google.com, Google.co.uk, and whatever other domain they own. It's their property they created and gain popularity cause they were and continue to be the best.

But then Google is KNOWN for destroying the competition with it's weight. There is a little know anti-trust FTC inquiry regarding their Adwords platform. For a long time they stated that if you create Adwords tools you cannot allow the tool to create ads within Adwords and "copy" it to another platform (Facebook or Yahoo), cause it will "cause confusion". So basically it required a ton of people to do extra work if you wanted versions of your ADs to run on multiple networks. But Google got caught with their hand in the cookie jar, cause in the FTC investigation it show in EMAILs that they realized if they imposed that limit, users will simple stick to Adwords since it has the biggest market share therefore reducing potential money to Facebook, Yahoo, or these other smaller PPC outfits.

LOL, talk about Money Over Ethics, that's why for long time the PPC tools out on the market before 2012 were only for Adwords or specifically for individual PPC platforms and nothing was allowed to cross promote.

Ads: In separate letter of commitment to the FTC (PDF), Google agreed to make changes to its AdWords platform that will allow advertisers to more freely use competing advertising services. “Advertisers can already export their ad campaigns from Google AdWords,” wrote David Drummond, Google Senior Vice President and Chief Legal Officer, on the company blog. “They will now be able to mix and copy ad campaign data within third-party services that use our AdWords API."

Sauce:http://www.digitaltrends.com/mobile/google-settles-with-ftc-over-antitrust-claims/
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Another sauce: http://searchengineland.com/google-updates-api-terms-to-comply-with-ftc-antitrust-settlement-149432

I wish I had the source for the exact email the FTC read from that Google employee, I'm recalling this from years back (Dec 2012).

You sit back and look at that and are like "Come on guys..." So yeah, maybe just maybe this $3 billion lawsuit is needed as a slap on the wrist for all the other real evil ideas that they execute - But my pure capitalism self says they can do whatever they want to crush their competition...

 

[dresden]

So yeah, maybe just maybe this $3 billion lawsuit is needed as a slap on the wrist for all the other real evil ideas that they execute - But my pure capitalism self says they can do whatever they want to crush their competition...

Google has always been about eating others lunch. If you look at Adwords itself, the auction system is architected around the premise of extracting maximum value from every niche on the internet. That's their core business.

As an illustration (vastly simplified, does not account for smart pricing or account history / performance fluctuations in bid pricing):

• Acme Inc launches an adwords campaign for hair brushes. They retail at $10 and net $5. They're paying $0.10 per click.
• NewCo LLC also has a hairbrush product to advertise. They start bidding and want to beat Acme Inc... so they're bidding $0.15 per click. (do note that many users click both, so now google is getting .25 or more per query)
• Third Wheel Industries takes note and clones both campaigns and since they're netting $5 on every sale too, they're into bidding up to $1.00

Rinse, repeat until (assuming a 100% conversion rate) these companies are paying $4.99 per click. At this point, we're watching Google's auction system extract almost the entire profit margin on a product without ever doing R&D, manufacturing, warehousing, selling, supporting, etc...

And then Acme looks at their numbers and identifies that brush sales generally lead to a fairly healthy LTV for customers. So now they're comfortable spending $11 per sale instead of $4.99 (i.e. a loss leader).

Now we're watching Google's auction system extract value above and beyond the intrinsic value of the sale. Many businesses (lead gen anyone?) operate under these circumstances and will continue the adwords spend on 1,000 products if a handful of those make up the cost (or fuck, maybe even not, you know, for 'exposure' and future wishes and dreams).

Take all of that and then tack on the fact that we're operating in a closed ecosystem - one where a significant amount of trust is placed in Google. It's their fucking close walled, super secret auction system. Who say's they're not shill bidding the shit up artificially? Who says any of this can be trusted? We already know that advertiser A can pay vastly different prices than advertiser B - how is that fair and still understood under the definition of an 'auction system'. It's all turtles all the way down, dudes.

 

[Andrewkar]

I'm with @CCarter on this one. At the end of the day, and how ruthless it might sound to some people, no one is forced to use Google services, that's a FACT. Yes, I know... Closed ecosystem etc. but - it's BS. Our ecosystem is not closed at all. It might actually become closed if we allow "govs" of any sorts to control this entire environment. That would mean the end of progress and evolution, welcome back dark ages.

 

[Stephen]

I agree with the above, to me it is like going into your local library in town and complaining about the colour of the walls inside.

 

[RomesFall]

The EU are an insane bunch of power drunk meddlers. Take it from someone inside the EU. They've even been talking about trying to ban the kettle and toasters. Why? Who knows.

They've also been given this kind of power, which in hindsight is a huge mistake... They can create any piece of law or legislature and impose it on any company they'd like. Such as Google. It's a dangerous precedent to set.

What's arguably worse is that there's this 'attitude' toward web / tech businesses, that they are 'everyones' property. Why is it that Google is treated differently to McDonalds? Ridiculous.

I'm with @CCarter it's their business, it's their property. If you don't like it lump it, because Google isn't a public service, it's a bloody business.

This quote comes to mind, minus the bit about intelligence:

“Yet across the gulf of space, minds that are to our minds as ours are to those of the beasts that perish, intellects vast and cool and unsympathetic, regarded this earth with envious eyes, and slowly and surely drew their plans against us.” - H.G Wells

 

[turbin3]

My opinion is conflicted. I'm ~50/50 right now. On the one hand, I am all for true capitalism, and feel that anything short is vastly inferior. Private business is private, and when government tries to increasingly determine the manner in which business is run, they inevitably ruin business. That being said, the history of the world is such that, when massive amounts of power is consolidated into the hands of the few, it often results in tyranny. Something, periodically, is necessary to keep unfettered tyranny in check.

 

[lion1978]

google can do what ever they want on google properties after all they own them, their house their rules as simple as that, it's not like you'd expect Taco bell to sell pizza hut pixxas in their restaurants, right.
the case with google is really no different than that.

A strange thought isn't EU by their lawsuit against google doing the exact same thing as they are suing google for, imposing their rules, they way in their house.

 

[SmokeTree]

it's not like you'd expect Taco bell to sell pizza hut pixxas in their restaurants, right.

I'll just leave this here in all its irony:

All jokes aside, I do agree that Google should be able to do what they want with their own site, regardless of how I feel about their business practices.

 

[CCarter]

Its funny cause in certain areas Yum! Brands consolidated their Pizza Huts into Taco Bells so you can only get Pizza Huts orders at Taco Bells. There are still standalone Pizza Huts BUT I've NEVER seen a Taco Bell WITHOUT a Pizza Hut on the inside in this one state.

 

[turbin3]

Google just needs to get it over with already, and iframe the entire internet from the SERPs, complete with content-locking AdWords ads. LOL You know they want to.

 

[contract]

Take all of that and then tack on the fact that we're operating in a closed ecosystem - one where a significant amount of trust is placed in Google. It's their fucking close walled, super secret auction system. Who say's they're not shill bidding the shit up artificially? Who says any of this can be trusted?

Same deal with Adsense.

Who's to say the rev share is correct? Who's determining what clicks are invalid, and which are report back to publishers or advertisers....

At G's level, even skimming 0.1% could be well beyond millions of dollars. And no one is investigating the numbers. I trust G more than FB though. FB is as shady as it gets...

Interestingly enough, I've noticed the suggested bid has always been inflated. There's no "current market price is", there's only "here's what we want you to pay".

FB does the same thing. But, they do it in a darker pattern. They say, you'll reach x number of people. (Oh but wait, you can potentially*, it's only an estimate). They will GLADY show you reaching 10,000 people and charge you a ludicrous $50 CPM to reach only 100.

At least Adwords shows you an estimate and the numbers are often pretty close for clicks/impressions. FB just lies straight to your face trying to temp you into forking over cash.

 

[Future State]

Absolute power corrupts absolutely. If the negative aspects of humanity weren't involved, then we could talk about true free market capitalism. But you'll never have that.

Some innovator could create something that could destroy Google. Accept Google would purchase it, run campaigns against it, sabotage it behind the scenes, or even flat out have people murdered. This is why the phrase "too big to punish" and "above the law" exist and not in good ways. Nobody uses those terms in good ways. They always have to do with corruption.

Unfortunately there has to be regulations, but they should be as minimal as possible. Google is different. It's not a public utility by any means, except for the fact that it's product is the ranking of other people's efforts. It's success is 50% it's own and 50% the internet's at large. In some way, it does owe fairness to the people, especially when it's product implies fairness and they are constantly fighting those who manipulate it's rankings. You can't stop everyone else from cheating and then cheat yourself, which is the dishonesty they are perpetuating by ranking their own properties higher. If they used up some Adwords slots for their own properties nobody would say a thing, but that's not what they are doing. It's a zero-sum game, and when they cheat EVERYONE else loses. Not just their competitors. The entire internet loses.

 

[Ryuzaki]

Google's having a hard time:
http://www.bbc.com/news/business-36370628

Google's Paris HQ raided in tax fraud probe
Google is accused of owing €1.6bn ($1.8bn; £1.3bn) in unpaid taxes.

The thing is, these are legal loopholes like the Panama Papers, for now. Looks like the world is trying to play catch up to the increased globalization of industry.

 

[lion1978]

The thing is, these are legal loopholes like the Panama Papers, for now. Looks like the world is trying to play catch up to the increased globalization of industry.

yeah they don't even have to travel that far their european H is in Ireland, which is indeed a tax haven, if my mind does not decieve me the coorperate tax rate in Ireland is at a whoopin 0%.

 

[Kurtz]

if my mind does not decieve me the coorperate tax rate in Ireland is at a whoopin 0%.

It's actually 12% officially but can get down to <1% with some tax magic aka profit shifting.

 

[lion1978]

It's actually 12% officially but can get down to <1% with some tax magic aka profit shifting

I stand erected, where I live most companies would kill for 12% tax, and tey'd kill even more for 1% LOL, but only the biggest of them do anything creative in the tax department, but there are lots of dreamers