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The European Parliament Voted To Break Up Google

Published in politica, web-marketing by max.favilli, 28/11/2014 (edited on 29/11/2014 ) 0

The EU Parliament just passed an historic vote which could lead to US search giant Google break up.

Never in the past has the European Parliament ever voted to break up a company.

European legislators voted 458 to 173 in favour of the proposal.

While the EU parliament doesn’t have the power to actually break up the US based company, it did send a clear message to Google that the EU is unhappy with its business practises.

My crystal ball

I have been comparing Google with Standard Oil for years now, and my crystal ball was telling me this was coming. Sooner or later Google will have to face some sort of break up like the one Standard Oil was forced to undergo.

Ages ago, in 1998, before AdWords was invented, Google founders were willing to sell their company to Yahoo for 1M (yes you read that correctly, just 1M), Yahoo declined, and one year later, in 1999, they tried to sell to Excite for 750k (yep, just 750k), Excite walked away too.

It’s not that google was not a good search engine back then, in fact was by far the best around. Early adopters like myself where suggesting family and friends to use Google in place of Altavista, all the time. Their algo was already the best 1999, and by far. When you were searching for anything on the web, you could trust google was the best choice to find it.

What Google totally missed in those years was any sort of revenue, zero, nada, no revenue of any sort.

AdWords totally changed that. And if you fast forward to nowadays, AdWords account for 90% of Google revenues. You read that right, 90%.

In EU Google dominate internet searches with 90% of the market, in the US is up to 67% of searches.

As of today, Google market cap is 369B, we don’t know what could be the value without AdWords, but the founders themselves were willing to sell for just 1M when AdWords didn’t exist, remember?

Now think about it for a moment. You are the company controlling 90% of internet searches, and 90% of your revenue is coming from AdWords. You are sitting on 369B, and if you strip those sponsored links (AdWords) you are sitting on 1M? Let’s say actualized is 10M, or even 100M.

What would you favor if you were running that company? The lucrative business or go bankrupt with the best organic search engine in the world?

At each Google SERP page update, Google have been pushing ads a step further, cannibalizing the majority of the page space, melting organic and sponsored links, and testing new subtle ways of confusing them with organic results.

Which lead not only me to one basic question: “Where did google organic search results go?

Any surprise now someone is finally understanding their monopoly is evil?

The EU vote and the EU antitrust commission

To be very clear, the EU parliament vote  is not enforceable, it doesn’t directly give regulators the mandate to force Google to break up, it doesn’t actually ever mention Google directly.

What it mean is that European Commission and the antitrust authorities now have been given a green light to more enforceable calls for Google to change how it does business in Europe, or potentially break up.

The EU antitrust commission is focusing on four areas of investigation:

  • The way search engines displays its search services compared to its competitors.
  • How search engines uses content from other websites.
  • Search engines dominance over advertising on search terms.
  • Search engines restrictions that surround how advertisers can move their campaigns to other search engines.

There’s no specific mention of Google in the vote, but it’s clear that the EU is unhappy with its search engine’s dominance. Google has been the subject of a four-year anti-trust investigation in Europe, which conclusions has been sent back for further investigation after now-former competition commissioner Joaquin Almunia failed to get enough consensus around his original proposals for resolving it. In the past Almunia had rejected calls to look into breaking up Google — an argument that is now up to his successor, Margrethe Vestager, to either also reject, or decide to pursue after today’s vote of the parliament.

As a consequence of the anti-trust investigation Google has suggested a series of concessions, but all have been rejected. If the dispute continues, Google could face a fine of up to $5 billion.

The EU legislators intention is clear reading the statement the EU spokesman released to the media:

In case the proceedings against Google carry on without any satisfying decisions and the current anti-competitive behaviour continues to exist, a regulation of the dominant online web search should be envisaged.

The Parliament is angry with Google and antitrust

The proponents of Parliament’s resolution say they want to put pressure on the commission to act against Google, which they accuse of abusing its dominant market position.

“Competition on the Internet is greatly skewed,” said Evelyne Gebhardt, a EU socialist lawmaker, during the parliament debate preceding the vote. “Many suppliers and providers don’t really have genuine access to consumers because there is market dominance by certain search engines.”

After the antitrust commission five-year-old investigation into Google’s search practices ended in failure, Margrethe Vestager (competition commissioner), has said she would take her time to assess the strength of the case before taking further steps, but that appears to be too slow for European lawmakers.

“The commission is exploring, it is exploring and exploring, but it has been exploring for years now,”

(Evelyne Gebhardt)

Even members of the center-right EPP party  like Anne Sander, a French lawmaker, express their satisfaction for the vote:

“The resolution should act as an electric shock, to ensure that Europe comes out of its situation as a colony of the new digital world.”

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