As Google faces questions from regulators in the United States over its dominance in online advertising and its entry into new markets including mobile advertising and digital books, it is running into a growing chorus of antitrust opposition across the Atlantic from erstwhile allies: publishers.
In response to questions from reporters over the weekend, Google confirmed it had received requests for information from German antitrust authorities. The inquiries came after publishers and competitors had filed complaints about Google with the agency.
“This is a fact-finding exercise, and we have been asked to provide the authority with our views,” said Google spokesman Adam Kovacevich in an email to Main Justice. ”We are happy to explain our products and business practices and we of course comply with German and European law.”
The Federal Trade Commission is reviewing Google’s $750 million proposed purchase of mobile advertising platform AdMob, a deal that does not require regulatory approval in Europe because it does not meet the size threshold for formal review there.
The Justice Department’s Antitrust Division is examining a deal Google cut with authors and publishers to scan and distribute digital books, but the deal is limited to the U.S., the U.K., Australia and Canada. Last month a French court said that Google’s book project violated copyright law.
Now, Google’s critics in Europe are turning to antitrust regulators to make their case.
Publishers in the United States and in Europe have complained that Google makes money by using their material in Google News without giving them a fair share of the revenue.
Early on, news Web sites wanted to appear in Google News searches because it drew traffic to their sites. But recent reports suggest that more people are just skimming news headlines through Google and other aggregetor sites without clicking through to the newspaper Web sites.
Google does have licensing agreements with wire services like the Associated Press and Agence France-Presse which don’t have their own Web sites, but the company doesn’t pay other publishers to appear in Google News. The company has said it doesn’t make much money on its news service, and it sends a lot of traffic to other Web sites.
Italy’s competition regulators are also investigating the search giant based on complaints by publishers that Google removes their pages from search results if they decline to participate in Google News. The company has said it does not penalize Web sites that opt out of Google News.
The antitrust complaints from publishers ask, in essence, whether the terms online publishers are being offered by Google are fair. In so doing, they ask a question that might have more traction in Europe.
“The complaints are that Google is in such a dominant position in search advertising that publishers don’t have a choice,” said David Wood, who represents the Initiative for a Competitive Online Marketplace, an organization that includes Google rival Microsoft and works on online advertising issues.
“If the terms being offered to online publishers are not fair, do they really have a choice to go elsewhere? can they afford to go elsewhere?” said Wood, an antitrust partner at Gibson, Dunn & Crutcher who served for 10 years in the Directorate General for Competition at the European Commission.
A spokesperson for the publishers told the New York Times the combined ad revenue of all German newspapers and magazines online was 100 million euros, or $143 million, while Google generated 1.2 billion euros from search advertising in Germany.
And in Europe, where Google’s share of the online search market is even larger than in the U.S., and where critics have often referenced the continent’s cultural heritage in making a case, the argument might have more resonance.
“Within Germany, publishers are very powerful, they can make a very persuasive claim they are also defending culture,” said Stephen Kinsella, an antitrust partner at Sidley Austin in London and Brussels who represents Microsoft. ”It is a simple case to state and very powerful.”
Regulators are always much more sympathetic to customer complaints than to competitor complaints, Kinsella said, and if customers or suppliers can show harm, regulators will listen.
Parties in the U.S. might generally file a lawsuit, but in Europe,with little track record of litigation, and without contingency fees or treble damages, antitrust complaints generally go to a regulatory agency.
“The law on dominant companies is a lot more strict” in Europe, said Ted Henneberry, an antitrust partner at Orrick who splits his time between Washington, D.C. and London and who spent three years in the Irish Competition Authority. ”Dominant companies have a “special responsibility” to the market on how they act, and it reflects a philosophical difference.”
Microsoft, for example, agreed last month to make other Web browsers available through its operating system in Europe, a requirement that American courts found unnecessary.
In addition to complaints from publishers, competitors in Germany have also accused Google of manipulating its search rankings and pushing web sites that might compete with it further down in its search results. Such a claim, observers say, might be an easier one to make in the United States.
Microsoft lawyers have filed a similar case on behalf search engines run by TradeComet.com in federal court in New York.