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European concern about Google hardens as European Commission investigation continues

The front-page banner headline in the French newspaper Le Monde on December 17, 2014, captured the spirit of what is going on in Europe: “Le front anti-Google se durcit en Europe,” (“Anti-Google front hardens in Europe”).

Google is confronting Member States, companies, and citizens, spurred by Google’s growing dominance across geographic lines and business sectors, which are raising questions under competition, privacy and copyright laws.

The frustration of those who feel they’ve been treated unfairly has been expressed in many ways, most recently in a Spanish law requiring payments to publishers for use of news snippets in Google News.

Google’s reaction to the Spanish law was to shut down Google News soon after its passage.

“Sadly, as a result of a new Spanish law, we’ll shortly have to close Google News in Spain,” Richard Gingas, head of Google News, wrote in a blog. Gingas lamented that the new approach was not “sustainable” because “Google News itself makes no money…”

But Gingas wasn’t telling us everything. As along ago as 2008, Marissa Mayer, then a Google vice president, reportedly said Google News was worth $100 million to the company, presumably by generating that much in annual advertising on other Google sites to which users are led via Google News.

“How does she put a value on a product that doesn’t directly make money?” reported John Fortt, who covered the “Brainstorm Tech” conference where Mayer spoke. “The online giant figures that Google News funnels readers over to the main Google search engine, where they do searches that do produce ads.”  And that helps Google’s revenues, which this year will likely exceed $55 billion.

Google News employs not a single journalist nor are there any working journalists in the larger Google family of 55,030 employees. Google’s advertising revenues go up as that of the Spanish publishers goes down, and the publishers must bear the costs of reporters and editors. Their frustration boiled over and resulted in the new law (Spanish officials have left the door open to further changes in the law.)

Such expressions of concern make it all the more vital that the European Commission in Brussels continue on its five-year-old path of investigating Google. At least some of the problems can be dealt with through antitrust law.

Newly appointed European Competition Commissioner Margaret Vestager began meeting with antitrust complainants in December, 2014, and has sent out requests for information, due by early in January, 2015, to help her assess the need for formal charges against Google. Robust and careful action by the Commission can help check actions by Google which cross the line marking abuse of dominance.