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FairSearch Letter to Google’s Eric Schmidt about false claims in Berlin speech

Lieber Herr Schmidt,

We found the speech you held yesterday in Berlin very enlightening. It is indeed of interest that you try to win over Germans concerned with Google’s privacy and competition conduct with your overly rosy picture of Google and a dive into German stereotypes of Bratwurst, Cuckoo clocks and cars. With regard to your employee and investment numbers in Germany, we would respectfully point out that they are far overshadowed by the German employment and investment figures of those companies which have lodged complaints or are supporting complaints regarding Google’s unfair competitive practices.

But be this as it may. The main issue that FairSearch has with your speech relates of course to your statements regarding the competition concerns about Google in Europe. So let’s take a look at them.

Your main line remains: Google is not dominant, we have done nothing wrong, there is no case. As Europe awaits possibly yet another settlement proposal in the ongoing antitrust case in Brussels, this point of view does little to spark hope for a quick and effective settlement. What you, Mr. Schmidt, are actually saying about the competition investigations that span over four continents is: There is nothing to see here, please move on.

Some of your key arguments to dismiss antitrust concerns are the following:

  • Google is not dominant, because, in all the markets in which it operates, there is formidable competition from the likes of Facebook and Amazon, which are dominant players in their own right.
  • Some big specialised search engines remain successful despite Google.
  • The amount of data Google collects is of minimal importance to its strength in the market compared to the quality of its search technology and should not play a role in the antitrust case.
  • And Google is not a gatekeeper to the internet in the first place, because there are still users who type Url addresses into their browser, and because nobody is forced to access the Web through Google.

Let me remark on your speech in detail, and correct some of the misperceptions you have created through it.

  • First of all, what is of interest is what you fail to include in your speech. You acknowledge in no way the four main reasons for why the European Commission is investigating Google. Instead, you construct a case that misrepresents the ongoing investigation, but for which you have answers.
  • A key point which you ignore is the accusation that Google uses the dominance of its general search service to promote its specialised search services unfairly, by displaying them in the most prominent spot in the Google search results. Your audience, definitely your ‘remote’ audience in Brussels, which you clearly wanted to address with your speech, would have liked to get more facts and clarity about this.
  • Rather, you would appear to prefer to talk about those companies you see as your competitors: Amazon or Facebook. But the basic question remains: Are you using your power in general search to promote your specialised search services, such as Google Shopping, your travel services, Google maps, and your insurance price comparison service, over equally good services or even better services from competitors? If so, you break European antitrust rules. It is irrelevant whether you have a formidable competitor with Amazon when it comes to consumers looking for and purchasing goods. The fact remains that as long as you remain dominant in general search, you must not abuse this power by using it to unfairly promote your products in different markets. You must compete on the merits, just like others who in the past have been held to breach European antitrust law.
  • The case you construct however circles around 10 blue links and the abolition of direct answers, which complainants apparently want. Let me reassure you, Mr. Schmidt, that no one has asked to return to the 10 blue links, or challenged the proposition that direct answers are a good thing to a search query. Complainants simply do not want Google to be the sole source of direct answers and remaining links on your monopoly search engine, especially if the answers of Google’s competitors are more relevant. A simple and sensible request, we believe.
  • Instead of addressing the real issues in the cases being investigated by antirust enforcers in Europe and elsewhere across the globe, you seek to deflect attention from one of the core issues at the heart of those cases, namely the  significance of scale in data to the ability to offer a competitive search service. Google has a dramatic advantage in the scale of data it obtains from users via its search engine.  It is this vast advantage in the scale of user data – not any superior technology – that ensures Google a powerful dominant position (indeed a virtual monopoly) in the search markets.  Google has an insatiable appetite for user data, which as the incoming European Commissioner for Competition essentially calls the “currency” of the Internet.  It goes to huge lengths to ensure that it, and it alone, controls the vast majority of user data generated in search, and to deprive others of the necessary scale in data to really compete effectively.  This, at bottom, is what the antitrust cases are really about.   Yet you say that “Our experience is that you don’t need data to compete online”. Why, then, before the antitrust investigations started, did you and fellow engineers at Google made it very clear that data scale is indeed the killer factor in search. You may want to re-read your statements here: /general/fact-checking-google-scale-is-a-barrier-to-entry-in-search.

Last but not least, I’d like to address your denial of being a gatekeeper of the web. You are being overly modest. Over 90% of Europeans use Google to find content on the web. Even if they remember some established brands, like bild.de and type their Url into their internet browser, it would have been interesting to hear what happens in this respect for fresh innovative companies that have not been able to build a brand pre-Google? What about the thousands of less-known German SMEs? You may only guard the side door of big brands, but for the multitude of content providers on the Web, you are guarding the front gate.

We believe it would be appropriate to hold a formal hearing in this case, to drill down on the key misunderstandings that clearly still remain in this four-year-old matter.

We would also love to hear from the real decision maker at Google, Larry Page. As recently as last week in an interview (A Master Class in Google by Steven Levy), you admitted that you, Mr. Schmidt, and Sergey Brin are no longer part of the decision-making process at Google. So we believe it is time for Mr. Page to show his hand in this case. You, Mr. Schmidt, had four years to solve this case, and from reading your speech, we seem to be stuck at square one.

Yours sincerely,

Thomas Vinje
Legal Counsel and Spokesman for FairSearch