Google Shopping in Hot Waters with Eu Commission

In an investigation that initiated from 2010, the EU finally slaps down on Google Shopping, demanding for a 2.4bn Euro fine. According to an official statement released by the EU, ‘The European Commission has fined Google €2.42 billion for breaching EU antitrust rules. Google has abused its market dominance as a search engine by giving an illegal advantage to another Google product, its comparison shopping service.

The company must now end the conduct within 90 days or face penalty payments of up to 5% of the average daily worldwide turnover of Alphabet, Google’s parent company.’

Commissioner Margrethe Vestagar, who leads the investigation states, ‘Google has come up with many innovative products and services that have made a difference to our lives. That’s a good thing. But Google’s strategy for its comparison shopping service wasn’t just about attracting customers by making its product better than those of its rivals. Instead, Google abused its market dominance as a search engine by promoting its own comparison shopping service in its search results and demoting those of competitors. What Google has done is illegal under EU antitrust rules. It denied other companies the chance to compete on the merits and to innovate. And most importantly, it denied European consumers a genuine choice of services and the full benefits of innovation.”

For those who are uninitiated with Google Shopping, here’s a bit of history.

What Is Google Shopping?

Google Shopping was formerly Google Products Search, Google Products, and Froogle. It was invented way back in 2002 by Craig Nevill-Manning. Working like a regular search engine, Google Shopping allows merchants to list their products and users to search for products on online shopping websites. So Google Shopping acts like a one-stop platform for the user to find their products as listed on different shopping websites and be able to compare prices. They don’t have to go through individual shopping websites or be inundated by excessive information through a regular search engine results.

How Does Google Shopping Work

Google Shopping is an entity on it own and one must be able to understand how Adwords, SEO, and most importantly the Google Merchant Center works. A merchant who wants to benefit from the Google Shopping platform should start by registering their company and product information into the Merchant Center. The main part of the Merchant Center is the Feed where you upload information about your product and Google crawls through your feed to determine which of your products should be listed in the result of a query.

Now there is a whole complex algorithm working when Google is crawling and the mechanism is pretty much the same as the Google Search Engine. Your product information has to contain the right keywords, the name of the products, the product description, product type, pricing, category, and most importantly an image. Note though that all of this information is just get you recognized or listed on Google itself. Missing on any of this information will make you ineligible for the listing.

In order to appear on the feeds, you will have to run ads through the Adsense account (hence the need to know Adsense). In fact, Google Shopping has a disclaimer on its front page that clearly states, ‘Google is compensated by these merchants. Payment is one of the several factors used to rank these results.’ So you can only benefit from Google Shopping if you sign up and use a Google Adwords account along with submitting the product information through the feed to Google via the Google Merchant Center. Yep. It’s not a piece of cake to get Google to favor you.

What Problem Does the EU Have with Google?

The need for an investigation began in 2002 when Microsoft and several others complained of Google’s monopolistic search practices. The EU’s bone of contention is Google’s Price Comparison service which works only for providers who have signed up with the company’s service and paid an amount through the ads. This means anyone who has not listed themselves with Google Shopping will not have their price or products listed when a user is searching for a certain product.

In the light of this problem, the EU demand Google to change the way Google Shopping works in three months’ time or risk having the parent company to pay 5% average daily worldwide earnings. Google, however, disagrees with the fine and is seeking an appeal.

This is not the first time that Google has come under hot waters with states, countries, and companies. In fact, in 2013, it was in a fiery case with the U.S Federal Trade Commission requiring the company to, ‘stop scraping reviews from rival websites for its own products.’ In Europe, Google is also facing two other antitrust cases one having to do with advertising practices and the other over the kind of preloaded apps that should be available on Android phones.

What Does Google Have to Say to This?

Google, as usual, denies any such monopolistic practices. The company released an official statement saying, ‘When you shop online, you want to find the products you’re looking for quickly and easily. And advertisers want to promote those same products. That’s why Google shows shopping ads, connecting our users with thousands of advertisers, large and small, in ways that are useful for both.’

Although Google describes the need for efficient search, it hasn’t responded well enough to the need for sellers to pay in order to be visible on a ‘price-comparison,’ service. That’s a fine point there that Google has yet to respond to. Should only paid sellers be able to have their price listed along with rivals? Are Amazon and Ebay the only competitors who deserve to have their products listed? Or should all sellers with complete and accurate information be allowed to have their prices listed in an ‘all-fair,’ trade policy? These are questions that we will see unfold in the coming days.

Farah tries to keep up with the fast-paced tech world by writing about it. She covers latest tech news and writes informative pieces to help her readers make informed decisions about their tech preferences.