UK competition watchdog will probe Google’s planned changes to Chrome browser that could drive ad revenue away from rivals who accuse tech giant of ‘abusing its dominant position’
- Publishers demand action to break Google’s monopoly on search and digital ads
- Tech giant controls up to 98 per cent of searches and 50 per cent of browsers
- Marketers for Open Web had asked Competition and Markets Authority to probe
- Critics say Google’s ‘sandbox’ privacy settings will decimate online ad revenues
- But Google says it improves privacy and built ‘in collaboration with the industry’
Google’s command of Britain’s £14billion online advertising market will be probed by the UK’s competition watchdog amid claims it is using Chrome to abuse its position as the dominant power in searches and browsing, it was revealed today.
The Competition and Markets Authority has launched a blockbuster antitrust probe after publishers said the tech giant’s controversial ‘sandbox’ privacy project will allow the US company to ‘distort’ the market, hoard customers’ data and cream off more cash.
The investigation will assess whether the possible removal of third-party cookies and other functionalities from Chrome could be anti-competitive and further hit UK businesses by decimating their online ad revenues.
The CMA’s probe was announced days after it became Britain’s guardian on antitrust and monopoly matters after the country fully left the EU and Brussels’ influence on UK competition laws formally ended.
Andrea Coscelli, chief executive of the CMA, said today: ‘As the CMA found in its recent market study, Google’s Privacy Sandbox proposals will potentially have a very significant impact on publishers like newspapers, and the digital advertising market.
‘But there are also privacy concerns to consider, which is why we will continue to work with the Information Commissioner’s Office (ICO) as we progress this investigation, while also engaging directly with Google and other market participants about our concerns.’
Marketers for an Open Web has repeatedly asked the CMA to block the tech giant’s controversial ‘sandbox’ privacy project. The pressure group says that without Government intervention to protect media plurality in the UK their members could see revenues drop by 75 per cent because Google controls up to 98 per cent of UK search engine traffic on PCs, tablets and mobile phones.
Google dominates the UK search market across all platforms, especially in mobile, faces an antitrust investigation by Britain’s competitions watchdog, it was revealed today. Recent stats from October show Google’s dominance
Google, which has its HQ in central London insists the changes to third party cookies are primarily to protect privacy
Andrea Coscelli, chief executive of the Competition and Markets Authority, has already said ministers needed to urgently set up a regulatory regime to counter big tech’s monopoly on the search and digital ad markets or it would act alone
Google has pointed to the ‘large scale blocking of cookies’ as part of its ‘Sandbox’ project.
Blocking cookies has become an increasingly popular method of regaining privacy among some users and has arisen as a proverbial selling point for Chrome’s competitors like Mozilla Firefox.
With its ‘privacy sandbox’ Google says it hopes to step in and preserve cookies while taking into account a rising demand for greater user privacy.
But critics say it also means that Google will keep the customer data about internet users to itself, and away from the businesses serving those people.
This could boost its gigantic revenues even further – but the business insists it is about privacy.
The UK’s competition watchdog will look into how the possible removal of third-party cookies and other functionalities from Chrome could distort competition.
Online publishers such as newspapers rely on third-party cookies to target advertising effectively and fund their content. But the use of these cookies comes with privacy concerns, as they allow consumers’ behaviour to be tracked across the web.
Mr Coscelli said last year that ministers needed to urgently set up a regulatory regime to counter big tech’s monopoly on the search and digital ad markets or it would act alone.
The cash hoovered up by Google using its advertising algorithms and its extraordinary market power has already put it in the CMA’s crosshairs.
Google shook the online advertising world in 2020 as it announced it would phase out third party cookies.
These allowed businesses to use targeted advertising based on websites a customer had visited or ones they had clicked on to browse or buy.
Google insists the changes are primarily to protect privacy.
Web browsers such as Mozilla and Apple Inc’s Safari have already blocked third-party cookies.
The CMA said it will assess the matter following complaints of anticompetitive behaviour, with Marketers for an Open Web (MOW), a group of newspaper publishers and technology companies, among those concerned.
‘This is about the future of the Open Web and the threat that Google poses to its development,’ said James Rosewell, director of MOW.
‘By launching this investigation, the CMA has recognised the seriousness of this issue.
‘Privacy Sandbox would effectively create a Google-owned walled garden that would close down the competitive, vibrant Open Web.
Google and Facebook could be forced to pay news publishers for their content
Google and Facebook could soon be forced to pay UK publishers for using their news content as part of a suite of new powers to rein them in, the Government’s digital taskforce said last month.
A group led by the UK’s competitions watchdog believes British publishers are victims of the tech giants’ extraordinary market dominance and payments for stories and videos could help address this.
The advice was produced by the Digital Markets Taskforce, commissioned by the government in March, and led by experts from the Competition and Markets Authority (CMA), working together with Ofcom, the Information Commissioner’s Office (ICO) and the Financial Conduct Authority (FCA).
They have recommended that a new digital regulator, the Digital Markets Unit (DMU) should be set up by next April with the remit to set up a legally enforceable code of conduct backed by fines of up to 10 per cent of global turnover. That would mean a penalty of about £12billion for Google or £5billion for Facebook if they break the regulations, which intend to stop anti-competitive behaviour.
The regulatory advice is a step towards the rules due to be imposed on tech firms by the Australian Competition and Consumer Commission, who ruled they must be forced to pay for news content generated by the Australian media.
‘Providing more directly identifiable, personal information to Google does not protect anyone’s privacy.
‘We believe that the CMA’s investigation will confirm this and save the web for future generations.’
Google says that coming up with new technologies involves complicated trade-offs, but people’s expectations for the collection and use of data are changing.
The firm has committed to publicly collaborating on the plans before making any changes in 2022.
‘Creating a more private web, while also enabling the publishers and advertisers who support the free and open internet, requires the industry to make major changes to the way digital advertising works,’ a spokesman said.
‘The Privacy Sandbox has been an open initiative since the beginning and we welcome the CMA’s involvement as we work to develop new proposals to underpin a healthy, ad-supported web without third-party cookies.’
Critics claim that their ‘Sandbox’ tech will give them even more control of data and increase their revenues.
The alleged it prevents companies from ranking highly on their search engine, even when they have been flying high on Bing and Yahoo.
SEO experts have claimed the effects of this Google tech can last ‘from a few weeks to several months’.
Google and Facebook took 80% of the UK’s £14bn digital advertising market last year, the CMA revealed in October, thanks to their ‘unassailable incumbency advantage’ and use of shadowy algorithms to drive internet traffic.
Google’s Chrome web browser also enjoys 49 per cent control of the UK market, compared with 31.5 per cent for Safari, four per cent for Microsoft Edge and four per cent for Firefox.
And pressure is growing at Westminster for the companies to pay a fair rate to news outlets when they use their material – possibly through a new ‘tech levy’ – and in particular to struggling local media companies which have been hit hardest by Covid-19.
Plans for a code of conduct for tech companies to ensure content producers are properly rewarded were first suggested in 2019 in a report for the Treasury by Jason Furman, President Obama’s former chief economist.
Google CEO Sundar Pichai has insisted in the past that the company runs advertising fairly
How Google dominates the global advertising market and spends billions deals squeezing out competitors
1) Dominating search engine space
Google, through both its deals placing its search engine above others on devices and through public interest in it, accounts for 80 percent of every internet search in the US.
In 2020, it accounted for 94% of all mobile searches in the US
2) Monetizing its dominance through ads
Google monetizes the amount people use it with ads, which generate around $40billion in revenue every year
3) Spending its billions to cement its dominance with ‘exclusionary deals’
With the money it makes through ads, Google pays companies like Apple, LG and others to block out any of its competitors from having their search engine preferred on devices
Among the deals is one with Apple. Google is the default on Safari on iPhones and it’s also the default on Siri. The deal amounts to up to a fifth of Apple’s worldwide income which last year would have been around $11billion
There is also an ongoing debate in Government over how to regulate the increasingly powerful internet giants.
Tory MP and former minister John Penrose, who is carrying out a review of post-Brexit competition and consumer rules for the government, told MailOnline recently that the government had an opportunity to be an international leader on digital regulation after leaving the EU.
‘Companies like Facebook and Google are brilliant essential parts of modern life,’ he said.
‘But we have got to make sure that they are not squashing potential competitors in Britain or anywhere else.
‘So we need to move fast, but we need to get it right.’
He added: ‘The rumours are that the EU is about to take action too. So this is an opportunity for a newly independent Britain to shape international thinking if we get it right first.’
In the US the Department of Justice has slapped Google with a blockbuster antitrust lawsuit, claiming it unlawfully maintains a monopoly to preserve its position as the ‘gatekeeper to the internet’ and stop any would-be competitors from even coming close to having a bite of the market.
The complaint alleges that Google dominates the market unfairly by making billions in ad revenue then using the money to cement its presence on smartphones and devices with ‘exclusionary’ deals with the likes of Apple, Samsung, LG to ensure it is the only search engine promoted anywhere.
It makes it not only unfair for consumers who are deprived of ‘innovation and choice’ but, according to the government, shuts out any possible competitor like Yahoo or Bing from promoting their product anywhere and in turn, ‘starves’ them of the opportunity to compete.
How Google uses multi-billion deal with Apple to dominate mobile search
According to the new DoJ complaint, Google established near total dominance in the realm of mobile search in part through a multi-billion deal with Apple.
Google pays Apple billions of dollars each year to be the default search option in the iPhone’s Safari browser, as well as Siri, with the payments accounting for some 15 to 20 percent of Apple’s worldwide net income, the DoJ said.
Although the complaint does not state exact amount of the fees paid by Google, Apple’s net income in 2019 was $55 billion, indicating fees in the range of $11 billion.
The deal is so vital to Google that the company views losing its default status on Apple devices as a ‘Code Red’ scenario. In 2018, the complaint states, a senior Apple employee wrote to a Google counterpart: ‘Our vision is that we work as if we are one company.’
Google pays Apple billions of dollars each year to be the default search option in the iPhone’s Safari browser. Above, Google’s search app is seen on an iPhone in a file photo
The complaint argues that ‘Google’s hold on Apple’s distribution channel is self-reinforcing’ and locks potential competitors out of mobile search by setting the bidding price for distribution in the billions.
Google can afford the steep fees to Apple, because they are merely a fraction of the revenue it gets from searches on Apple devices.
Meanwhile, Google’s own Android operating system now accounts for over 70 percent of mobile device usage globally.
According to the complaint, Google put strict restrictions on its ‘open source’ code for Android, subjecting versions of the mobile operating system to stringent approvals in order to allow them to access the Google Play store and other key features.
Among these requirements are that a Google search widget be displayed on the device’s home screen, and that Google be set as the default search option on browsers, the new filing states. ‘Forks’ in the code that don’t meet these requirements lose access to key features.
‘No Android fork has made significant inroads to challenge Google for mobile devices, and there is no meaningful operating system alternative for manufacturers and carriers to license,’ the complaint says.
‘These manufacturers and carriers are beholden to Google’s Android ecosystem, which Google uses to preserve its monopolies in general search, search advertising, and general search text advertising.’
Apple and Google’s own Android operating system together account for nearly all of the smartphone sales in the U.S., and the DoJ says that 94 percent of all searches on mobile devices are through Google. Mobile searches account for about 60 percent of all internet searches.
Eleven states have co-signed on the lawsuit – Arkansas, Florida, Georgia, Indiana, Kentucky, Louisiana, Mississippi, Missouri, Montana, South Carolina and Texas. Each state’s Attorney General is Republican.
The lawsuit asks Google to enter ‘structural relief’ against any parties harmed and that it end the antitrust ‘agreements’.
White House Adviser Larry Kudlow says Trump also consulted the DoJ on the lawsuit, which is the result of a 16-month investigation and a promise from AG Bill Barr to go after the predominantly Democrat world of big tech.
In America Google pays companies like Apple, LG, Motorola, Samsung, AT&T, T-Mobile, Verizon, Mozilla, Opera and UCWeb ‘billions’ to make sure it is the default search engine on smartphones, TVs and other devices that the companies produce.
They also, according to prosecutors, enter deals that specify that no other search engine can be installed on the devices.
Among the contracts is one Google has with Apple that makes it the default on the iPhone Safari browser and Siri.
The money Apple makes from Google on the deal amounts for 15-20 percent of its worldwide net income, according to the complaint. In 2019, that would have amounted to $11billion.
The deal is so vital to Google that the company views losing its default status on Apple devices as a ‘Code Red’ scenario.
In 2018, the complaint states, a senior Apple employee wrote to a Google counterpart: ‘Our vision is that we work as if we are one company.’
In a lengthy response to the US lawsuit, Google said on October 20 that the company mapped out why it thinks it operates fairly.
‘Google Search has put the world’s information at the fingertips of over a billion people. Our engineers work to offer the best search engine possible, constantly improving and fine-tuning it. We think that’s why a wide cross-section of Americans value and often love our free products.
‘The lawsuit by the Department of Justice is deeply flawed. People use Google because they choose to, not because they’re forced to, or because they can’t find alternatives.
‘This lawsuit would do nothing to help consumers. To the contrary, it would artificially prop up lower-quality search alternatives, raise phone prices, and make it harder for people to get the search services they want to use,’ Kent Walker, SVP of Global Affairs, said.
He went on to argue that it, like millions of other businesses, pays to promote its products, saying: ‘Yes, like countless other businesses, we pay to promote our services, just like a cereal brand might pay a supermarket to stock its products at the end of a row or on a shelf at eye level.
‘For digital services, when you first buy a device, it has a kind of home screen ‘eye level shelf.’
‘On mobile, that shelf is controlled by Apple, as well as companies like AT&T, Verizon, Samsung and LG. On desktop computers, that shelf space is overwhelmingly controlled by Microsoft. So, we negotiate agreements with many of those companies for eye-level shelf space.
‘But let’s be clear—our competitors are readily available too, if you want to use them.
‘Our agreements with Apple and other device makers and carriers are no different from the agreements that many other companies have traditionally used to distribute software. Other search engines, including Microsoft’s Bing, compete with us for these agreements. And our agreements have passed repeated antitrust reviews,’ he said.
Google’s history of clashes with governments for breaching competition laws and thwarting rivals
January 2021: The UK’s competition watchdog announces it will look into how the possible removal of third-party cookies and other functionalities from Chrome could distort competition.
October 2020: DoJ in US sues Google over claims it uses its power unfairly to preserve a monopoly and shut out any search engine competitors
March, 20 2019 – Google fined £1.27bn for breaching EU competition laws
July, 18 2018 – EU antitrust regulators hand down a $5 billion (£3.8bn / €4.3bn) fine to Google after a three-year long investigation.
June 27, 2017 – EU fines Google $2.84 billion (£2.1bn / €2.42bn) for thwarting rivals of shopping comparison websites.
July 14, 2016 – EU sets out another charge against Google’s shopping service. It also accuses the company of preventing third parties using its Adsense product from displaying search advertisements from Google’s competitors – a third case against the company.
April 20, 2016 – EU sends a charge sheet to Google outlining the company’s anti-competitive practices with regard to Android smartphone makers and apps makers.
April 15, 2015 – EU charges Google with blocking competitors of its shopping service.
Sept 2014 – Joaquin Almunia says he will not be able to wrap up the Google case before his mandate ends in October.
May 2014 – Joaquin Almunia, European Competition Commissioner at that time, says feedback from complainants will be crucial to determining whether he accepts Google’s concessions.
Feb 5, 2014 – Google improves its concessions related to online search.
2013 – Lobbying group FairSearch files a complaint about Google’s Android business practices to the European Commission.
April 25, 2013 – EU seeks feedback from rivals and users to Google’s concessions.
April 3, 2013 – Google offers concessions related to online search and its AdSense advertising network to address EU competition concerns, without admitting wrongdoing.
Nov 30, 2010 – European Commission opens investigation into allegations that Google has abused its dominant position in online searches following 18 complaints.
Nov 3, 2009 – British price comparison site Foundem complains about Google’s online search to the European Commission.
How Google wrecked its own website by replacing search results with ads and their own products and provoked massive US anti-trust case that could be the first step towards its destruction
Google is currently in the crosshairs of a US Justice Department lawsuit that accuses the tech giant of abusing its dominance in online search and advertising.
While Google has long defended itself against charges of monopoly by arguing its searches are free for users, the lawsuit claims that both advertisers and regular people are harmed by its dominance as the most used website.
Google, however, says the lawsuit is ‘deeply flawed’ and that people use Google because they want to and not because they’re forced.
So just how does Google’s monopoly harm the average person? Critics and lawmakers have argued that the answer, at least in part, lies in Google’s own search results.
One search of the phrase ‘Jeans’ back in 2013 yielded three links that were marked as advertisements before other, non-sponsored, content was listed below
A search this week came back with a shopping carousel of sponsored ads that show models wearing the item and subsequent starred rating. Two additional advertising links are also included below for online shopping sites
In some of today’s searches, people often need to scroll through half a dozen links – not including ones marked ads or affiliated with Google-own Maps – before they can find an unpaid result for an outside website.
Sponsored content, while more aesthetically pleasing in 2020, can also often be harder to distinguish.
More space has also been dedicated to ads that look like search results.
Some results also now display a comparison-shopping product tool that shows off advertised products, which are accompanied by starred product ratings, for people to easily view.
Results also now, more often than not, show links from Google-owned Maps and YouTube properties.
Google earns money if people click on these links instead of the unpaid ones further down the page.
The tech giant says it has changed its design over the years to ‘avoid clutter’ and insists the site only has an incentive to show ads when it is valuable to people.
Critics, however, have argued that the changes to search results in the last decade shows how Google now puts profits over people.
An analysis of some of Google’s search results dating back a decade, which are saved on Internet Archive’s Wayback Machine website, highlights some of these changes.
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