If those graphs are supposed to show that Google Shopping is an unpopular also-ran that users don't like or use, you have to wonder why they keep putting it in a big box with pictures at the top of search listings, like http://imgur.com/N3aGIVy
According to Google in the early days 'paid inclusion' was one of the original sins, and Google would never stoop that low. I personally think that paid inclusion is actually less evil than promoting your own crap products over the legitimate listings.
It's fascinating that their memo dismisses their search position so easily, but focuses on graphs for shopping and travel that shows them in a weak position in those areas, as either the memo is hiding their real arguments (which might not be unreasonable - given its audience and the odds it would leak), or they have not thought this through.
What the graphs show is that there are a number of strong competitors in the shopping space, which may create a strong public interest in ensuring Google is not being allowed to use it's perceived search monopoly position to muscle into the space and limit competition by giving itself better positions in results.
If the EU Commission finds that Google has a sufficient near monopoly on search and that their practices with respect to expanding their reach in shopping is anti-competitive, then Google's current weak position in shopping is entirely irrelevant unless they're hoping to show that being given such a prominent position in their search results does not give a business any advantages (their ad sales people ought to start hyperventilating if Google makes that argument).
And in fact the existence of a healthy, competitive eco-system in shopping would make any anti-competitive behaviour by a powerful monopolist far more damaging and important to curtail in the eyes of the EU Commission. It should not be something you'd want to draw attention to.
A much better argument would be to highlight far more the breadth of niche search engines, and how e.g. searches on Amazon and Ebay and others should also be included in any assessment of search market share, and that this would show that Google's market power is not as great as it would seem if you only look at "general purpose" search engines.
1. "Recode obtained an internal memo". If I were Google, I'd leak that on purpose. A polished internal memo that is leaked is more powerful than explicit PR, because of its supposed "internal" nature. "They didn't write it thinking others may read it, so it's probably honest and pure."
2. As I read, I thought exactly the same thing as your first paragraph: Search, making themselves look weak. I also remembered something Peter Thiel said in a PandoMonthly.. That non monopolistic companies try to look big and monopolistic, and that truly huge monopolistic companies downplay it to the point you worry about their survival.
He gave the example of Google, of course, and did the exact same thing as in the internal memo (talked about the other markets and how competition is so fierce, nothing is granted).
That was one of the best interviews I've seen, by the way..
That was exactly what I assumed when I wrote my comment.
The point is that the issue that is relevant to whether or not their behaviour falls afoul of EU anti-trust rules is whether or not they have a monopoly position for search, and whether or not they are using such a monopoly position to expand their reach in the shopping space, not whether or not Google Shopping faces competition or currently does well.
If anything, the fact that Google Shopping faces stiff competition makes their alleged attempt to leverage their search position to expand its reach more serious, as there is an existing market they may hurt through anti-competitive practices.
Google are not actually selling things, merely offering search of retailers (who pay for the priveledge). From the consumers point of you I think this is distinctly different from what Amazon do. On the Google I see they only push Google Shopping through ads and don't appear to alter normal search results. I suppose that they could have an advantage in terms of ads over competitors, but that is the benefit they are selling to retailers so it isn't that different to any other ads. IMHO it actually increases competition by surfacing alternatives to Amazon that would otherwise be the first result.
One of the stronger (in terms of product offering) competitors to google were shopping comparison sites. They dominated the search results. Then google pushed an update that pushed them down. However, the manual reviewers really liked them, so in the end, comparison sites resurfaced. Then google changed the manuals, which the reviewers used, so they had no option but to downgrade shopping comparison sites.
So, how is this not malicious altering of normal search results, so you can push out competition?
How about insurance? How about travel? How about google+ imposed on youtube? How about changing ToS of android for OEMs?
The competitors that are allegedly being hurt by their preferential treatment here are not selling things either - they are comparison shopping sites.
It is not the consumers this anti-trust action is intended to protect, but those competitors of Google Shopping. The presumption of a lot of anti-trust law is that protecting competition is in the long term public interest that outweigh short term impact on consumers. Some anti-trust actions are motivated by direct consumer interest, but most is motivated by preventing anti-competitive practices by a monopolist from harming competitors.
If competitors of Google Shopping are treated fairly in terms of search results, and can buy the same kind of position that Google Shopping can (I don't think they can), then there would be no issue.
My point in terms of Amazon is not that Amazon search isn't different to Google - clearly they are, though they too have paid third party results on their pages.
My point is that to Google it's their search dominance they need to downplay, not the relatively market position of Google Shopping. Giving their own business preferential treatment is perfectly legal if they're not in a monopoly position. The moment they're found to have a monopoly position, a lot of forms of preferential treatment becomes illegal anti-competitive practices.
They can beat this in two ways: By convincing the EU or EU courts that they do not have a search monopoly, or convincing the EU that they are not giving Google Shopping preferential treatment. The latter I think would be extremely hard given how Google Shopping results are positioned.
The way they can not beat this is by talking about how there's a lot of competition in comparison shopping. If anything, that gives the EU Commission a stronger reason to act on allegations of anti-competitive behaviour, as it means there are Google competitors that may be harmed by any anti-competitive behaviour that might be occurring.
> searches on Amazon and Ebay and others should also be included in any assessment of search market share
Thanks, this is an interesting point. Search users fit into different profiles based on context. Marketers have known this for a while, as different keywords target users in research mode, ready-to-purchase mode, review mode, etc. Buyers searching for "best blue widgets" have different intent than "cheap blue widgets" or "buy Acme blue widgets".
Specific engines like Yelp, ebay, Amazon target users in specific contexts, but google targets general contexts. Why should Google avoid improving searches for specific queries if it has the technical ability to do so?
I suppose the question is, did Google overstep boundaries in the way it improved search results for specific contexts? Did Google violate antitrust laws by scraping content from these context-specific engines, then effectively saying "if you don't like it, we'll stop, but you can't use our search engine" (Yelp). [0]
[0] http://bit.ly/1ILbpMb (non-paywalled WSJ article via Google search, ironically enough)
The graphs were a bit disingenuous as they were comparing the traffic and popularity of the vertical specific site instead of the click share from shopping queries and how many go to organic competitor listings vs. to Google powered listings (paid inclusion, etc.)
When your search query has commercial intent, Google shows their own shopping-powered results at the top and if you click on one of those products, it goes DIRECTLY to the advertiser. Unless someone clicks on "shop for x product on Google" then it doesn't count in their traffic graph.
The "internal" nature of the memo makes this even more perplexing as the argument seems almost tailored to convince an external audience who may not understand search as well as people within Google do.
I think vidarh makes a great point about Google losing share to apps and vertical specific search engines and many people now go directly to Amazon when they start shopping or directly to Yelp when they want restaurant reviews or Tripadvisor for hotel reviews. Mobile is also changing user behavior (at least on iOS) where I rely a lot more on task-specific apps that I know and trust vs. searching for the details on Google.
Those graphs are so sad. It's all American companies competing among themselves: Twitter, Bing, DuckDuckGo... Even on our home turf, even with natural advantage (not so much in search but definitely in shopping), local competition is at the bottom, far behind Amazon and Ebay.
And this doesn't seem to worry anyone here. We continue to tack on more regulation, tax rules detrimental to small businesses in their complexity, and now surveillance that would make Obama blush[1]. Oh, but we will show these evil monopolists with this formal complaint.
It's quite a common schtick among big businesses (including the aforementioned monopolists) to blame the lack of small business competition on tax rules.
The tax rules they refer to actually do nothing to small businesses, but they are usually detrimental to their own bottom line.
This is how Google/Microsoft/Amazon ended up reaping such huge profits and paying such pathetically low taxes. It didn't happen by accident, and it also didn't help any small businesses along the way. Quite the opposite.
As an American living in Italy, there really are more taxes and "death by a thousand cut" fees and rules here than in the US, from what I've seen.
Everyone treats their Fords and Fiats well, but for smaller companies, it's all the red tape and small stuff that's most annoying, not even the overall tax level.
As an American living in Italy, there really are more taxes and "death by a thousand cut" fees and rules here than in the US, from what I've seen.
I like to pay a little more tax and actually have a decent healthcare system, social security net, and retirement.
One of the problems is that many of the large US corporations legally avoid tax via one of the tax havens (including my country of origin, The Netherlands). It creates an uneven playing field.
There is no reason why European companies couldn't compete. Taxes may be higher, but wages are lower, and costs may be significantly lower if you are in east Europe.
I also don't completely agree with the sentiment that started this thread, there are also plenty of European startups/ex-startups doing well: Booking.com, Spotify, Rovio, Mojang (Swedish) was just bought by Microsoft for 2.5 billion, Skype was also a European before it was purchased by Microsoft.
* There are taxes and taxes. Pay a % every month, simply and easily? That's not such a big deal - everyone has different tollerances and preferences, but it is what it is. Italy has lots of little, annoying taxes and gotchas, though, which take a lot of time and are irritating. For businesses, a lot of these need to be paid even if the business is not profitable (like startups!).
* Healthcare is actually more expensive in the US as a % of GDP. "Europe" wins there in my personal experience. For businesses it's easier too: no shopping around for health insurance.
* Social security changes a lot from country to country. Italy's system does not really seem to be working that well to me, though.
* Retirement. I don't trust either the Italian or US systems. I hope yours works better.
My point was mostly that it's all the small - and constant - annoyances that make life harder for a small business here in Italy.
I agree that the taxation systems in Europe can be simplified and changed to benefit startups a little more.
I would suspect that things are better in the Nordic countries, and maybe the Netherlands too.
Definitely. I have my gripes about social security in The Netherlands and I think basic income would be better, but social security is pretty good: 75% of the last income for the first two months, 70% for the remainder of the year. After that, a single gets Euro 960.83 per month, a married couple Euro 1,372.62 per month, plus an extra amount quarterly per child (which IIRC everyone, including working people, gets).
With regards to retirements, everyone gets so-called 'AOW' (850,97 per month or 2 * 586,56). Normally when you work, you also collect money in a private pension, which gets added to the AOW. AOW is directly paid by taxes, the private pension is a fund.
Normally, when you work all your life, AOW + pension + home ownership gives you a royal retirement.
Agree. The european problem: non-entreprenurial culture resulting in startup-prohibiting red tape. Two factors where the US beats Europe. Now combine that advantage the Americans have with the economics of scale of Software: It eats the world.
Part of that cake: Pretty much any non-downtown store in Europe.
In some places red tape is a big issue, but I don't think it's the whole story. Starting a small business in Denmark nowadays is extremely streamlined: you can do the entire registration process for the Danish equivalent of an LLC online, and your business is registered within a day or so. It's so easy that it's become common for people to start a company even for small-scale side-business stuff. It's also fairly easy to hire and fire people (one prong of the "flexicurity" policy [1]).
I think a big problem has been the economics of scale you mention, because Europe has not really functioned as a common market. One part is language. This is changing a bit (at least here), and most Danish tech startups now make their products English-first, or even English-only, which greatly increases the odds of international adoption. Some is more cultural, though; we don't read French or Italian or German media, and nobody else reads Danish media, so things that get a "buzz" in one country travel fairly slowly cross-border, while American media spreads quickly. Probably a lot more factors of this sort.
One issue of incentives, though, is that it can still be in many cases an individually rational choice to target a more "provincial" market. If you're a Danish startup and identify a Danish-specific underserved market, you have less potential for growth, but may have higher probability of at least modest success, due to much less competition. So even if it's better for Europe as a whole for startups to target a broad, international market, it might be rational for individual startup founders to target smaller, country-specific markets. American startup founders to a large extent lack this choice, because there are not many tech market niches which are, say, Tennessee-specific.
Got to agree! Good points you made. I think Red Tape is a symptom of the culture.
The language barrier keeps economics of scale from coming into effect for founders. The abundance of investment capital is an important factor. If that factor increases you become less dependant from factors like "knowing the right people" and "got to having a superb idea".
Building upon your "provincial market" statement: Couldn't it be said, that those country-specific niches will lure the entrepreneurial folk into building dead-end, non-scalable products? :)
On the last point, I think that's a risk, but the dead-end can still be big enough to make a small company quite wealthy. For example one of the more successful niche-tech companies in Denmark makes a portal that many Danish doctor's offices use. They did a good job really digging into how their market worked and what it wanted, so it's very customized to the way Danish healthcare works. Although it has some benefits for patients too (if a doctor uses this portal, patients can book appointments online, etc.), the real selling point has been that they identified what administrative work produces a lot of the per-office overhead at small offices, and offload much of that, so the doctor saves more in administrative salaries than they pay for the PaaS. They also have a fairly "high-touch" sales process to convince doctors that their product really will help them out. This company is probably not going to grow outside of Denmark, but it makes a lot of money in Denmark (comparatively speaking), and its market is so specialized that it's somewhat protected from external competitors.
Being American, I've always quietly wondered literally what makes the US so startup and big tech company friendly.
Would you mind elaborating on what makes the EU not as good as the US for startups? From spending some time in Berlin, it reminded me of a smaller, cheaper, and overall much nicer San Francisco.
> Courts generally hear actual and not hypothetical controversies.
The relevant EU Commission is not a court, and this isn't an adversarial proceeding between Google and competitors, even for all that Google competitors lobbied the EU for action.
> If the competition can't yet show harm, there isn't a crime yet.
The issue here isn't crime, or something that competition has to show anything, and plenty of crimes do, in fact, exist when harm cannot be shown, anyway.
True, but the principle is a common one. And it is adversarial in that the Commission is prosecuting and Google is defending. This isn't a cooperative investigation.
To the extent that courts do not try hypothetical controversies, they also depend on actual proof and not unproven harm. How do you suppose a company would be found guilty of about-to-violate-antitrust-laws?
Its actually not as common as you might think; the principle in the US legal system that courts do not address hypothetical situations and issue advisory rulings distinguishes courts in the US system from courts in many non-US systems and many non-court adjudicative bodies (in the US and other systems.)
> And it is adversarial in that the Commission is prosecuting and Google is defending
Its more inquisitorial than adversarial, since there is not a separate prosecuting entity from the adjudicating entity, but the key point was that it wasn't between Google and its competitors, so its competition doesn't need to show anything, contrary to the suggestion made that the competition needs to show harm.
> To the extent that courts do not try hypothetical controversies, they also depend on actual proof and not unproven harm.
Only if the legal standard relevant to the controversy requires concrete harms. A prosecutor doesn't, for instance, have to show any harm when prosecuting attempted murder.
> How do you suppose a company would be found guilty of about-to-violate-antitrust-laws?
Antitrust laws very frequently prohibit conduct undertaken with the intent of monopolizing an industry, though the degree of actual harm is often relevant to the zeal with which antitrust authorities prosecute offenses, and the remedies imposed. Actual harm is often relevant in antitrust analysis, but may not be essential for a violation to occur -- just as the case for many other kinds of violations of law.
It ought to have been transparently obvious to Google execs from when Google became utterly dominant in the web search space that the risk of anti-trust violations was very high and if they wanted to avoid being censured they needed to consistently take the high road & avoid using that dominance to force entry into other fields at the expense of competitors. It has always looked to me that Google was consistently stepping over that line in search & advertising often enough that they were inviting anti-trust suits.
The agreements they force phone vendors to sign up to if they want to ship Google Play services with Android phones also stink to high heaven & are an anti-trust suit waiting to explode in Google’s face - that self-imposed banana skin appears to be next on the EU commission’s agenda.
Google can afford to pay any fine the EU is likely to impose of course. The greater cost may be in exec time & loss of face, plus the generalised malaise that seems to go along with losing an anti-trust suit.
More than the fines is the ability to impose changes on their business practices. Imagine if Google could no longer require OEMs to bundle various Google products in order to get the Play store.
And yet when they don't, people decry (accurately!) the crappiness of non-"Google Edition" phones. For years now, the only Android devices truly competitive with iPhones have been the various Nexus/Google Play Edition/etc. devices - ones where Google has taken a heavy hand and enforced a more integrated (one might say "Apple-y") experience.
Indeed, early on in Android's life, Google was much more hands-off with the OEMs, letting a thousand flowers bloom... we got fragmentation and subpar devices, developers and consumers complained, and Google set forth on tightening the reins and exerting more control such that when people buy an "Android" phone, it means a particular experience. (And of course there's nothing stopping OEMs from shipping AOSP-based devices and just not calling them Android - as in fact a number have done).
I agreed with you until this past year. If you play with a Nexus 5 or 6, and then you handle a Galaxy S6/Note4, LG3 or HTC M8/9, the user experience of all the of the non-Nexus devices is actually quite good and the OEMs are now allowing users to either disable or remove OEM apps & skins or skin elements they don't want. Frankly, the UX of stock Android is pretty crappy in several areas, and a lot of third party ROMs & skins improve it dramatically.
The issue I have is that if you're a non-techy user and you get accustomed the "The Samsung Way", then try to switch to a different brand device, it can be very disorienting. They practically feel like different OSes in some cases.
In addition, the current Nexus devices (5/6) are pieces of crap compared to the halo phones from the big OEMs.
I completely agree about the difference between OEM versions of Android. The home and back buttons on my HTC One M7 are on opposite sides to those of my wife's Galaxy phone. What I don't really know is at what point the OEMs have enough freedom to let Google be out of danger from the EU.
"Pieces of crap"? While they might have at least some features lacking, calling N5 and N6 a "piece of crap" is just wrong.
But I do agree, that OEM skins do improve some lacking features of the stock Android, they also bring in tons of dark patterns and just terrible UX design with them - TouchWiz (Lollipop) for example removes all timed audio profile functionality, brings confusing duplicated apps for pretty much all standard applications (Play Store, Google Fit, Calendar, Mail, Keep, etc.) with their own separate accounts, hides camera functionality in public API and several other problems. Not to mention a completely different design of the OS from the whole Material ecosystem.
And thats a tip of the iceberg considering the times of Android 2.3/4.0 when Google CTS tests weren't so strict and developing anything worthwhile was practically impossible since OEMs kept overwriting even default integrated themes - stuff like setting black text to be white, removing fonts and other fun stuff we had to deal with.
I disagree - as a longtime Verizon Wireless customer & former Android user (~~6 users), I constantly have seen crapware pushed down on Android phones. Phones like the Nexus series are not available on Verizon, and I happen to be on a legacy family plan ($40/month/line, unlimited data), so the only option for (relatively) crapware-free phones is the iPhone.
Samsung phones have been degrading in quality as well - screens have become more fragile, Samsung has focused on copying Apple in many ways, and probably most damning, the market has responded negatively to these more recent changes.
Give me a more spartan device like the Nexus 5 over that crap any day. Google had it right, but unfortunately has been blocked from bringing that experience over wholesale.
This is, to me, the big one. The OHA is a huge agreement across an entire market segment not to compete with Google on a ton of products and services. There's no way Google gets out of an investigation with that practice intact.
I disagree, and a large reason of that is the open source nature of Android coupled with the fact that Google services don't cost end users anything in most cases. Also, Google's goal in this is to commoditize an adjacent market (mobile hardware) - which is as good for consumers as it is for Google. There was an argument for antitrust when Google was making hardware under Motorola, and my hunch is that Google divested Motorola when they realized the EU was investigating them.
But without Motorola in the picture, it's an easy argument to make that if the EU wants to encourage a competitive handset market (Android) over a monolithic one (Apple), the core product feature set has to be centrally controlled. Too much fragmentation of the platform would lead to the emergence of a dominant vendor (likely Samsung) and actually decrease competition as their competitors will no longer be at sufficient scale to support a differentiated product in both hardware AND software.
that doesnt make sense. There is a midway between forcing google services and no google services allowed, which is optional google services. SO if samsung can become dominant vendor by creating their own services the others can still go with google. This is a win for consumers who now have no choice but to go with google services.
That's how it is now. If Samsung wanted to create its own ecosystem, Google isn't stopping them. Samsung would just need their own app store as well. I don't think they seriously had any intention of doing so, so they signed the agreement.
The thing is, the Google Play Store is more than just an app store, it's an entire ecosystem of apps and libraries that are guaranteed to be there and synchronized across the device. If you make Google services optional, then developers can't rely on their presence and would have to develop against multiple APIs. You'd get into a situation where an app would work on one manufacturer's device and not on another, and the platform would likely crumble over time as the user experience would pale in comparison to the tightly integrated iPhone.
They are stopping Samsung from making it's own ecosystem. By forcing Google apps on Samsung devices, Samsung isn't able to develop their own competing ecosystem without also marketing Google's ecosystem simultaneously. So unless Samsung can compete with all Google products all at once, Samsung can't compete.
Developers having to do real work is irrelevant, because developers are not the goal of antitrust law. Antitrust law is about protecting consumers, and if developers have to do more work because of it, so be it. If the EU's new limits on Google after this case causes their infrastructure to collapse or become unfeasible, that's Google's problem to solve. These are technical issues, not legal ones, and have no place in this discussion.
They are technical issues that become competitive issues because of the presence of a strong, vertically integrated competitor. And I highly doubt Samsung's ability to create a competitive ecosystem; they have had the chance across a number of product categories and failed.
Developers having to do work is absolutely a competitive issue: it's erecting a barrier to entry through regulation because it drives up the cost of developing an Android app. For many developers, it would likely drive the cost beyond the point of feasibility.
And the market is likely at the point where even if the restrictions were relaxed, companies wouldn't take advantage of them because the market has already settled on Google and Apple. But if they were relaxed, it would likely be the end of Google's support of AOSP, which would further hamper the ability of OEMs to develop their own platforms / ecosystems.
If those restrictions were removed, Samsung would likely remove most Google Apps from their ROMs in the next update. They'd keep the Play Store and Maps. Maybe YouTube.
Most other OEMs would take longer to set up their own apps, but they'd all follow suit.
But it's not a competitive handset market. Google has gotten all of them agreed not to compete with Google on OS, apps, and services, which they've all fallen in line with, and barely if at all compete with each other. (You'll notice they all do anti-Apple marketing, but no other Android OEM has ever done an ad against Samsung, for instance.)
The market would be even less competitive without Google. It would just be Apple and Samsung. Having multiple OEMs selling similar products is definitely a good thing: if Samsung starts to ship terrible products, another OEM can step in and users don't face a huge learning curve. We already have one vertically-integrated vendor in Apple, the market needs an "open" option as well if we want a healthy marketplace.
And they absolutely compete against each other. They just don't do it in public because there are more effective ways of competing.
I disagree. We have no idea how HTC, Motorola, Sony, LG, and others would've approached the market without Google. It's nearly impossible to say with any degree of accuracy.
We can look at their past smartphone efforts: a bunch of lackluster Windows Mobile phones. These companies are not good at developing software, and they would have been crushed by Apple. Google was only successful because they were able to leverage their existing infrastructure to provide a portfolio of advanced services.
And if they were crushed by Apple, Apple would be under the same scrutiny Google is now. And again, Google was only successful because they leveraged an illegal agreement over a major portion of the tech industry.
It was a hell of a good deal for them, too. I believe a HN article informed me to great detail about how the approximately $12B pricetag ended up closer to $4B.
The bundling issue on Android is basically what Microsoft were censured for with IE and Media Player. The real question is what happens when the competition authorities question the market for iOS apps (which is subject to arbitary veto and 30% fees).
Anti-trust issues with iOS at the moment are less likely in the EU, due to lack of market share. Most antitrust offenses are about misusing a dominant market position, but iOS is only about 20% of the EU smartphone market (vs. ~50% of the American one), which isn't really a dominant market position.
If they did have a dominant market position, there is all sorts of tying going on between OSX and iOS lately.
Compare Android with iOS. Android is open-source but if you want to ship any Google apps, the company making these apps makes you sign an agreement that forces you to ship a certain set of their apps. iOS is closed source, and you just plain can't use it on your hardware at all. How is Android worse?
There is no such thing as an internal memo anymore. Especially on matters relevant to the public in general. It's a outdated practice of reporters to call it "leaked" but these days it's just to draw some attention. It was probably sent by their legal team themselves to send a message to the EU commission.
The way safari runs on iOS compared to other browser is very similar to how Microsoft shipped explorer with windows. Except windows did not prevent other browser from using the full API and your app didn't have to go through a approval process.
There's nothing wrong with refusing to interoperate with competitors. The market often works to take care of that to some extent.
However, when you have one player which is manifestly more powerful than the competition, you don't have a fair market. The whole reason we have anti-trust legislation is the recognition that this isn't desirable, and that businesses with too much pressure can exert influence which is harmful to the market in the long term.
> So anti-competitive actions/feature/function is only a problem once you reach a certain market share?
Yes, the effect of laws that are about constraining harmful uses of market power depend, among other things, on whether or not an actor has market power in the market at issue.
Didn't we already do this dance back in the Microsoft anti-trust days? Market share makes all the difference.
That's the whole point of these rules, any company can do whatever they want on their own platform except when the become so dominant competition no longer happens.
Please stop comparing actions when it's context that matters here.
Seems to me that Google suffers from the same cognitive dissonance that plagued Microsoft in the past: it still sees itself as the small innovative start-up, when in fact it has become the 800 pound gorilla that crushes the competition.
And is that a fault of Google or a terrible system for software innovation? Google was created while students in a very successful university collaborated with the means to actually make their vision a reality. Excluding GB, how many schools in the EU fit that bill? I can think of ETH Zurich and that's it.
The caliber of the schools don't matter anymore. Nobody is capable of accumulating the quantities of data/processing power Google has access too. So search innovation more or less just lies in their hands and hasn't really gone anywhere beyond where they want it to go from lack of competition. Besides ofcourse in China and Russia where local alternatives have the breathing room to exist.
>Mobile is changing everything — with the explosion of apps taking people directly to the information they want. Today 7 out of every 8 minutes on mobile devices is spent within apps.
How is that any different from people using websites directly? I don't see any change here, except that now 1 out of 8 minutes is apparently spent away from content?
>Apps that compete directly with Google such as [...] are easily available to Android users
They forgot to mention how you are not allowed to distribute alternative app stores over Google Play and can only be installed after changing the phone settings.
Today 7 out of every 8 minutes on mobile devices is spent within apps.
That's the most interesting thing here. I'm interpreting it as meaning only 1 out of 8 minutes is spent browsing the internet or using the native SMS app.
I kind of wonder if they're counting "Chrome" as an app, and the 8th minute is actually SMS + phone (quaint, I know). I'd believe it either way, to be sure.
I applaud the EU not because I love regulations but because Google is tasting its own medicine.
Any country or group of countries with a shared legislation can be seen as a platform. Yes, like the software platforms we are discussing here in HN. You must obey their rules. People who wants 100% market freedom forget that when companies like Google has an incredible market share THEY ARE THE MARKET, and they impose their own rules (imposing agreements, modifying and limiting APIs, etc) just like the EU is doing now.
There is only one thing that leaves a bitter taste in my mouth, nobody is innovating enough to really compete with Google in some important fronts such as search. This can't be solved with regulations.
In the software space, how much tangible benefit has antitrust actually provided to consumers?
Microsoft's power was reduced more by market shifts, failure to adapt, and unanticipated new tech than it was by monopoly sanctions.
I do believe absolute free markets are not practical, as evidenced by the fact they mostly don't exist.
However, the minimum force principle applies. For every government constraint on tech I thing it's fair to ask, is there no way the market can fix itself in 5 years? How many disruptive shifts will happen during that time?
Maybe government could help more by starting first with stronger patent reform?
I don't understand how an entity can force Google to change their algorithms. They are a private company and with their own hard work they managed to get as many clients as they currently have. So because so many people are using Google as a search engine, they are now supposed to promote competitors of their services because "so many people are using it"?
It's like saying "so many people are driving BMW, it's not fair for Audi, BMW should include an Audi advertisement now and then. If they don't, they will have to pay us a big fine!". Isn't Europe a free market?
I don't think Google should be allowed to get away with clauses like this one from their developer agreement:
4.5 Non-Compete.
You may not use the Market to distribute or make available any
Product whose primary purpose is to facilitate the distribution
of software applications and games for use on Android devices
outside of the Market.
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[ 5.8 ms ] story [ 167 ms ] threadWhat the graphs show is that there are a number of strong competitors in the shopping space, which may create a strong public interest in ensuring Google is not being allowed to use it's perceived search monopoly position to muscle into the space and limit competition by giving itself better positions in results.
If the EU Commission finds that Google has a sufficient near monopoly on search and that their practices with respect to expanding their reach in shopping is anti-competitive, then Google's current weak position in shopping is entirely irrelevant unless they're hoping to show that being given such a prominent position in their search results does not give a business any advantages (their ad sales people ought to start hyperventilating if Google makes that argument).
And in fact the existence of a healthy, competitive eco-system in shopping would make any anti-competitive behaviour by a powerful monopolist far more damaging and important to curtail in the eyes of the EU Commission. It should not be something you'd want to draw attention to.
A much better argument would be to highlight far more the breadth of niche search engines, and how e.g. searches on Amazon and Ebay and others should also be included in any assessment of search market share, and that this would show that Google's market power is not as great as it would seem if you only look at "general purpose" search engines.
There are two points:
1. "Recode obtained an internal memo". If I were Google, I'd leak that on purpose. A polished internal memo that is leaked is more powerful than explicit PR, because of its supposed "internal" nature. "They didn't write it thinking others may read it, so it's probably honest and pure."
2. As I read, I thought exactly the same thing as your first paragraph: Search, making themselves look weak. I also remembered something Peter Thiel said in a PandoMonthly.. That non monopolistic companies try to look big and monopolistic, and that truly huge monopolistic companies downplay it to the point you worry about their survival.
He gave the example of Google, of course, and did the exact same thing as in the internal memo (talked about the other markets and how competition is so fierce, nothing is granted).
That was one of the best interviews I've seen, by the way..
The (current) EU charges only target Google Shopping and the placement of Googles own products in relation to competitors.
The point is that the issue that is relevant to whether or not their behaviour falls afoul of EU anti-trust rules is whether or not they have a monopoly position for search, and whether or not they are using such a monopoly position to expand their reach in the shopping space, not whether or not Google Shopping faces competition or currently does well.
If anything, the fact that Google Shopping faces stiff competition makes their alleged attempt to leverage their search position to expand its reach more serious, as there is an existing market they may hurt through anti-competitive practices.
So, how is this not malicious altering of normal search results, so you can push out competition?
How about insurance? How about travel? How about google+ imposed on youtube? How about changing ToS of android for OEMs?
It is not the consumers this anti-trust action is intended to protect, but those competitors of Google Shopping. The presumption of a lot of anti-trust law is that protecting competition is in the long term public interest that outweigh short term impact on consumers. Some anti-trust actions are motivated by direct consumer interest, but most is motivated by preventing anti-competitive practices by a monopolist from harming competitors.
If competitors of Google Shopping are treated fairly in terms of search results, and can buy the same kind of position that Google Shopping can (I don't think they can), then there would be no issue.
My point in terms of Amazon is not that Amazon search isn't different to Google - clearly they are, though they too have paid third party results on their pages.
My point is that to Google it's their search dominance they need to downplay, not the relatively market position of Google Shopping. Giving their own business preferential treatment is perfectly legal if they're not in a monopoly position. The moment they're found to have a monopoly position, a lot of forms of preferential treatment becomes illegal anti-competitive practices.
They can beat this in two ways: By convincing the EU or EU courts that they do not have a search monopoly, or convincing the EU that they are not giving Google Shopping preferential treatment. The latter I think would be extremely hard given how Google Shopping results are positioned.
The way they can not beat this is by talking about how there's a lot of competition in comparison shopping. If anything, that gives the EU Commission a stronger reason to act on allegations of anti-competitive behaviour, as it means there are Google competitors that may be harmed by any anti-competitive behaviour that might be occurring.
Thanks, this is an interesting point. Search users fit into different profiles based on context. Marketers have known this for a while, as different keywords target users in research mode, ready-to-purchase mode, review mode, etc. Buyers searching for "best blue widgets" have different intent than "cheap blue widgets" or "buy Acme blue widgets".
Specific engines like Yelp, ebay, Amazon target users in specific contexts, but google targets general contexts. Why should Google avoid improving searches for specific queries if it has the technical ability to do so?
I suppose the question is, did Google overstep boundaries in the way it improved search results for specific contexts? Did Google violate antitrust laws by scraping content from these context-specific engines, then effectively saying "if you don't like it, we'll stop, but you can't use our search engine" (Yelp). [0]
[0] http://bit.ly/1ILbpMb (non-paywalled WSJ article via Google search, ironically enough)
When your search query has commercial intent, Google shows their own shopping-powered results at the top and if you click on one of those products, it goes DIRECTLY to the advertiser. Unless someone clicks on "shop for x product on Google" then it doesn't count in their traffic graph.
The "internal" nature of the memo makes this even more perplexing as the argument seems almost tailored to convince an external audience who may not understand search as well as people within Google do.
I think vidarh makes a great point about Google losing share to apps and vertical specific search engines and many people now go directly to Amazon when they start shopping or directly to Yelp when they want restaurant reviews or Tripadvisor for hotel reviews. Mobile is also changing user behavior (at least on iOS) where I rely a lot more on task-specific apps that I know and trust vs. searching for the details on Google.
And this doesn't seem to worry anyone here. We continue to tack on more regulation, tax rules detrimental to small businesses in their complexity, and now surveillance that would make Obama blush[1]. Oh, but we will show these evil monopolists with this formal complaint.
[1] https://news.ycombinator.com/item?id=9379299
It's quite a common schtick among big businesses (including the aforementioned monopolists) to blame the lack of small business competition on tax rules.
The tax rules they refer to actually do nothing to small businesses, but they are usually detrimental to their own bottom line.
This is how Google/Microsoft/Amazon ended up reaping such huge profits and paying such pathetically low taxes. It didn't happen by accident, and it also didn't help any small businesses along the way. Quite the opposite.
Everyone treats their Fords and Fiats well, but for smaller companies, it's all the red tape and small stuff that's most annoying, not even the overall tax level.
I like to pay a little more tax and actually have a decent healthcare system, social security net, and retirement.
One of the problems is that many of the large US corporations legally avoid tax via one of the tax havens (including my country of origin, The Netherlands). It creates an uneven playing field.
There is no reason why European companies couldn't compete. Taxes may be higher, but wages are lower, and costs may be significantly lower if you are in east Europe.
I also don't completely agree with the sentiment that started this thread, there are also plenty of European startups/ex-startups doing well: Booking.com, Spotify, Rovio, Mojang (Swedish) was just bought by Microsoft for 2.5 billion, Skype was also a European before it was purchased by Microsoft.
* There are taxes and taxes. Pay a % every month, simply and easily? That's not such a big deal - everyone has different tollerances and preferences, but it is what it is. Italy has lots of little, annoying taxes and gotchas, though, which take a lot of time and are irritating. For businesses, a lot of these need to be paid even if the business is not profitable (like startups!).
* Healthcare is actually more expensive in the US as a % of GDP. "Europe" wins there in my personal experience. For businesses it's easier too: no shopping around for health insurance.
* Social security changes a lot from country to country. Italy's system does not really seem to be working that well to me, though.
* Retirement. I don't trust either the Italian or US systems. I hope yours works better.
My point was mostly that it's all the small - and constant - annoyances that make life harder for a small business here in Italy.
http://www.economist.com/news/united-states/21606293-small-b... - this kind of backs up what I said - it's not the overall level of taxation so much as the 'hassle' factor.
I would suspect that things are better in the Nordic countries, and maybe the Netherlands too.
I would suspect that things are better in the Nordic countries, and maybe the Netherlands too.
Definitely. I have my gripes about social security in The Netherlands and I think basic income would be better, but social security is pretty good: 75% of the last income for the first two months, 70% for the remainder of the year. After that, a single gets Euro 960.83 per month, a married couple Euro 1,372.62 per month, plus an extra amount quarterly per child (which IIRC everyone, including working people, gets).
With regards to retirements, everyone gets so-called 'AOW' (850,97 per month or 2 * 586,56). Normally when you work, you also collect money in a private pension, which gets added to the AOW. AOW is directly paid by taxes, the private pension is a fund.
Normally, when you work all your life, AOW + pension + home ownership gives you a royal retirement.
Regulations also set the minimal viable size of a business. Small manufacturing businesses of all kinds are beset by the CE compliance requirements.
Part of that cake: Pretty much any non-downtown store in Europe.
I think a big problem has been the economics of scale you mention, because Europe has not really functioned as a common market. One part is language. This is changing a bit (at least here), and most Danish tech startups now make their products English-first, or even English-only, which greatly increases the odds of international adoption. Some is more cultural, though; we don't read French or Italian or German media, and nobody else reads Danish media, so things that get a "buzz" in one country travel fairly slowly cross-border, while American media spreads quickly. Probably a lot more factors of this sort.
One issue of incentives, though, is that it can still be in many cases an individually rational choice to target a more "provincial" market. If you're a Danish startup and identify a Danish-specific underserved market, you have less potential for growth, but may have higher probability of at least modest success, due to much less competition. So even if it's better for Europe as a whole for startups to target a broad, international market, it might be rational for individual startup founders to target smaller, country-specific markets. American startup founders to a large extent lack this choice, because there are not many tech market niches which are, say, Tennessee-specific.
[1] https://en.wikipedia.org/wiki/Flexicurity
The language barrier keeps economics of scale from coming into effect for founders. The abundance of investment capital is an important factor. If that factor increases you become less dependant from factors like "knowing the right people" and "got to having a superb idea".
Building upon your "provincial market" statement: Couldn't it be said, that those country-specific niches will lure the entrepreneurial folk into building dead-end, non-scalable products? :)
Would you mind elaborating on what makes the EU not as good as the US for startups? From spending some time in Berlin, it reminded me of a smaller, cheaper, and overall much nicer San Francisco.
Google: "But look, we still haven't destroyed all the competition. Why don't you please wait until we do?"
The relevant EU Commission is not a court, and this isn't an adversarial proceeding between Google and competitors, even for all that Google competitors lobbied the EU for action.
> If the competition can't yet show harm, there isn't a crime yet.
The issue here isn't crime, or something that competition has to show anything, and plenty of crimes do, in fact, exist when harm cannot be shown, anyway.
True, but the principle is a common one. And it is adversarial in that the Commission is prosecuting and Google is defending. This isn't a cooperative investigation.
To the extent that courts do not try hypothetical controversies, they also depend on actual proof and not unproven harm. How do you suppose a company would be found guilty of about-to-violate-antitrust-laws?
Its actually not as common as you might think; the principle in the US legal system that courts do not address hypothetical situations and issue advisory rulings distinguishes courts in the US system from courts in many non-US systems and many non-court adjudicative bodies (in the US and other systems.)
> And it is adversarial in that the Commission is prosecuting and Google is defending
Its more inquisitorial than adversarial, since there is not a separate prosecuting entity from the adjudicating entity, but the key point was that it wasn't between Google and its competitors, so its competition doesn't need to show anything, contrary to the suggestion made that the competition needs to show harm.
> To the extent that courts do not try hypothetical controversies, they also depend on actual proof and not unproven harm.
Only if the legal standard relevant to the controversy requires concrete harms. A prosecutor doesn't, for instance, have to show any harm when prosecuting attempted murder.
> How do you suppose a company would be found guilty of about-to-violate-antitrust-laws?
Antitrust laws very frequently prohibit conduct undertaken with the intent of monopolizing an industry, though the degree of actual harm is often relevant to the zeal with which antitrust authorities prosecute offenses, and the remedies imposed. Actual harm is often relevant in antitrust analysis, but may not be essential for a violation to occur -- just as the case for many other kinds of violations of law.
The agreements they force phone vendors to sign up to if they want to ship Google Play services with Android phones also stink to high heaven & are an anti-trust suit waiting to explode in Google’s face - that self-imposed banana skin appears to be next on the EU commission’s agenda.
Google can afford to pay any fine the EU is likely to impose of course. The greater cost may be in exec time & loss of face, plus the generalised malaise that seems to go along with losing an anti-trust suit.
Indeed, early on in Android's life, Google was much more hands-off with the OEMs, letting a thousand flowers bloom... we got fragmentation and subpar devices, developers and consumers complained, and Google set forth on tightening the reins and exerting more control such that when people buy an "Android" phone, it means a particular experience. (And of course there's nothing stopping OEMs from shipping AOSP-based devices and just not calling them Android - as in fact a number have done).
The issue I have is that if you're a non-techy user and you get accustomed the "The Samsung Way", then try to switch to a different brand device, it can be very disorienting. They practically feel like different OSes in some cases.
In addition, the current Nexus devices (5/6) are pieces of crap compared to the halo phones from the big OEMs.
But I do agree, that OEM skins do improve some lacking features of the stock Android, they also bring in tons of dark patterns and just terrible UX design with them - TouchWiz (Lollipop) for example removes all timed audio profile functionality, brings confusing duplicated apps for pretty much all standard applications (Play Store, Google Fit, Calendar, Mail, Keep, etc.) with their own separate accounts, hides camera functionality in public API and several other problems. Not to mention a completely different design of the OS from the whole Material ecosystem.
And thats a tip of the iceberg considering the times of Android 2.3/4.0 when Google CTS tests weren't so strict and developing anything worthwhile was practically impossible since OEMs kept overwriting even default integrated themes - stuff like setting black text to be white, removing fonts and other fun stuff we had to deal with.
Samsung phones have been degrading in quality as well - screens have become more fragile, Samsung has focused on copying Apple in many ways, and probably most damning, the market has responded negatively to these more recent changes.
Give me a more spartan device like the Nexus 5 over that crap any day. Google had it right, but unfortunately has been blocked from bringing that experience over wholesale.
But without Motorola in the picture, it's an easy argument to make that if the EU wants to encourage a competitive handset market (Android) over a monolithic one (Apple), the core product feature set has to be centrally controlled. Too much fragmentation of the platform would lead to the emergence of a dominant vendor (likely Samsung) and actually decrease competition as their competitors will no longer be at sufficient scale to support a differentiated product in both hardware AND software.
The thing is, the Google Play Store is more than just an app store, it's an entire ecosystem of apps and libraries that are guaranteed to be there and synchronized across the device. If you make Google services optional, then developers can't rely on their presence and would have to develop against multiple APIs. You'd get into a situation where an app would work on one manufacturer's device and not on another, and the platform would likely crumble over time as the user experience would pale in comparison to the tightly integrated iPhone.
Developers having to do real work is irrelevant, because developers are not the goal of antitrust law. Antitrust law is about protecting consumers, and if developers have to do more work because of it, so be it. If the EU's new limits on Google after this case causes their infrastructure to collapse or become unfeasible, that's Google's problem to solve. These are technical issues, not legal ones, and have no place in this discussion.
Developers having to do work is absolutely a competitive issue: it's erecting a barrier to entry through regulation because it drives up the cost of developing an Android app. For many developers, it would likely drive the cost beyond the point of feasibility.
And the market is likely at the point where even if the restrictions were relaxed, companies wouldn't take advantage of them because the market has already settled on Google and Apple. But if they were relaxed, it would likely be the end of Google's support of AOSP, which would further hamper the ability of OEMs to develop their own platforms / ecosystems.
Most other OEMs would take longer to set up their own apps, but they'd all follow suit.
And they absolutely compete against each other. They just don't do it in public because there are more effective ways of competing.
If they did have a dominant market position, there is all sorts of tying going on between OSX and iOS lately.
The way safari runs on iOS compared to other browser is very similar to how Microsoft shipped explorer with windows. Except windows did not prevent other browser from using the full API and your app didn't have to go through a approval process.
There's nothing wrong with refusing to interoperate with competitors. The market often works to take care of that to some extent.
However, when you have one player which is manifestly more powerful than the competition, you don't have a fair market. The whole reason we have anti-trust legislation is the recognition that this isn't desirable, and that businesses with too much pressure can exert influence which is harmful to the market in the long term.
Yes, the effect of laws that are about constraining harmful uses of market power depend, among other things, on whether or not an actor has market power in the market at issue.
I'm not sure why this is surprising.
EDIT: If you read HN, you're probably not a real human. Let's not fool ourselves.
https://gigaom2.files.wordpress.com/2015/02/screen-shot-2015...
Wow...
That's the whole point of these rules, any company can do whatever they want on their own platform except when the become so dominant competition no longer happens.
Please stop comparing actions when it's context that matters here.
How is that any different from people using websites directly? I don't see any change here, except that now 1 out of 8 minutes is apparently spent away from content?
>Apps that compete directly with Google such as [...] are easily available to Android users
They forgot to mention how you are not allowed to distribute alternative app stores over Google Play and can only be installed after changing the phone settings.
Any country or group of countries with a shared legislation can be seen as a platform. Yes, like the software platforms we are discussing here in HN. You must obey their rules. People who wants 100% market freedom forget that when companies like Google has an incredible market share THEY ARE THE MARKET, and they impose their own rules (imposing agreements, modifying and limiting APIs, etc) just like the EU is doing now.
There is only one thing that leaves a bitter taste in my mouth, nobody is innovating enough to really compete with Google in some important fronts such as search. This can't be solved with regulations.
Microsoft's power was reduced more by market shifts, failure to adapt, and unanticipated new tech than it was by monopoly sanctions.
I do believe absolute free markets are not practical, as evidenced by the fact they mostly don't exist.
However, the minimum force principle applies. For every government constraint on tech I thing it's fair to ask, is there no way the market can fix itself in 5 years? How many disruptive shifts will happen during that time?
Maybe government could help more by starting first with stronger patent reform?
It's like saying "so many people are driving BMW, it's not fair for Audi, BMW should include an Audi advertisement now and then. If they don't, they will have to pay us a big fine!". Isn't Europe a free market?