Comment - A Google Gesture

Search engine Google has offered to settle an ongoing antitrust investigation by the European Commission in an attempt to end possible proceedings against the web giant. 

Last month, Google’s chairman, Eric Schmidt, sent a letter to European Commissioner Joaquin Almunia, expressing his hope that a deal could prevent a fully-fledged and in-depth antitrust investigation, which could lead to hefty fines of up to 10% of the search giant's annual revenue.

Google’s move does not come as a surprise, since Almunia urged Google in May to ‘make concessions’ and ‘offer remedies’ in order to avoid an all-out antritrust investigation. The US search giant did not have many other options than to respond to Joaquin’s request swiftly, since the Commissioner had made it clear that if the internet company failed to respond Almunia would take that as a refusal to adjust its business practices, and the Commission would not shy away from sending a formal antitrust complaint to the US-based company.

Although Schmidt’s letter was not made public, Google said Schmidt addressed the ‘four areas of concern’ that the Commission had singled out last month. Almunia had said it would look into the unequal treatment of third-party vertical search links; search engines specialised in particular queries, such as travel searches. He would also consider investigating whether Google is systematically copying content – without authorisation - from those vertical search engines (such as travel and restaurant reviews). Furthermore, Almunia believes that Google’s AdSense unfairly excludes competing ad networks through exclusivity requirements in the agreements with its partners. Finally, the Commission is alarmed by Google AdWords’ terms and conditions, which impose contractual restrictions on software developers, preventing them from offering search terms across other platforms for search advertising. 

Almunia

For Google, three of the four issues should not be too difficult to address, but a fair placement of the vertical search links in its search results is more problematic. It goes to the heart of Google’s ability to control its search experience and algorithm. And for a company that controls 90% of Europe's search traffic it will be hard to amend its business model in such a way that competitors and other search engines will not top the list without satisfying the European Commission. 

Furthermore, Google’s success can be partly explained through a practice called ‘predatory pricing’; offering products at a price that is below their cost of production. In many countries, such as France, this is outlawed, unless it can be objectively justified. Google is offering many of its products free of charge so it is therefore not surprising that many smaller web companies – such as Expedia and Trip Advisor - are eagerly awaiting the EC's response to Google’s letter. Their case will be that Google is not really prepared to make any sincere and fundamental changes, since that might mean the beginning of the end of the company’s European success.

However, Google surely has not forgotten what happened to computer giant Microsoft in March 2004: the EU ordered Microsoft to pay a fine of £381 million for abuse of its dominant position, the largest fine ever handed out by the EU to one single company. So far that is, because should the settlement offer fail, Google could face a fine up to $3.79 billion, a maximum of 10% of its global revenue last year. 

Michiel Willems © 2012 CP Publishing Ltd. Picture: Technorati.com / Bloomberg.com 

Interview: Jake Berry MP

Michiel Willems spoke to Jake Berry, Member of Parliament for Rossendale and Darwen, and a former City solicitor, on the government’s role in developing and regulating the mobile phone industry, broadband issues and the future of the UK’s online infrastructure.

Jake Berry MP

How do you see the future of the mobile phone in the UK?
Already great strides have been made with the availability of many ‘apps’ giving mobile phones the flexibility of being more than just a communication tool. Indeed, one of the newer apps is to summon a taxi and have it arrive within minutes that takes you to the destination you have programmed and finally charges the cost to a credit/debit card and emails the receipt to the passenger.

What should happen to give mobile payments a breakthrough with the mass audience?
It is down to the banks and retailers to make a breakthrough with the mass audience. Without the participation of the majority of retailers and all banks it would not be viable. Costs and security issues would also have to be taken into account. As banks, retailers, phone manufacturers and many others are involved, there needs to be a common set of protocols and standards.

Do you think the current government is giving the telecoms industry the space to grow and develop?Yes, the British Government is undertaking a wide-scale review of the regulatory framework supporting the communications sector. The aim is to strip away unnecessary red tape and remove barriers to growth. The wider public interest will underpin the way we address these issues.

Do you think the Government should regulate the mobile industry more?
The Government is committed to the principle of independent regulation and will ensure that Ofcom has the right powers and duties to work in a way that gives businesses confidence in the regulatory system. It is crucial that the Government implements a deregulated framework suitable for the digital age and properly oriented towards growth is required in order to take account of the rapid pace of change in new communications technologies in the last few years.

How do you see the future of the internet?
Many of the most dynamic developments in broadband are in wireless devices and the development of very high data rates in mobility. Whether in the home or outside, consumers are enjoying services and content over devices which connect wirelessly.

Could give an example?
Grant Shapps MP, Minster for Housing, is calling on every social landlord to look long and hard at how they can help their tenants get online, from offering networks of public internet cafes to providing the technology to log on at home. The Minster for Housing said internet connectivity is considered by many to be the fourth essential utility, and should be a necessity, not a luxury. The Government is committed to helping demolish the unacceptable digital divide that is blocking social mobility for millions of council tenants.

Will the UK infrastructure be able to cope with increasing data demands?
The current Mobile networks were engineered to support a real-time voice service which supported roaming between cells. Today, devices such as Apple’s iPhone and iPad make very different demands on the network infrastructure, requiring operators to meet customer expectations of mobility, but with rapidly growing demands for data downloads.
Broadband infrastructure investment is vital in supporting the overall growth agenda. Rural and remote areas of the country should benefit from this infrastructure upgrade at the same time as more populated areas, ensuring that an acceptable level of broadband is delivered to those parts of the country that are currently excluded. Infrastructure sharing and new overhead deployment can play an important role in delivering superfast broadband that meets increasing data demands.

Do you embrace the concept of net neutrality?
Yes. The Internet has brought huge economic and social benefits across the world because of its openness and that must continue. Technology neutrality will be an essential criterion, as we believe a mix of technologies will be needed. It will be important that Government maintains its commitment to technology-neutral solutions for broadband.

Thank you for your time.

Jake Berry - Member of Parliament for Rossendale and Darwen
House of Commons
Twitter @jakeberryMP


Michiel Willems © 2012 CP Publishing Ltd. Pictures: Conservativs.com / Blackburnlife.com

EU Commission to clarify takedown piracy procedures

The European Commission (EC) has said it will give more details about how the procedures for taking down and blocking access to illegal content should be explained. The EC is planning to launch a 'targeted public consultation' before the end of the year so it can determine how procedures can be further developed. 

During an earlier consultation, in 2010, the EC received many complaints that no attention was paid to the interests of businesses and consumers and their legal uncertainty was ignored because the rules on the notice and takedown period were not clear resulting in unlawful content remaining online too long. In a statement, the EC said 'the Commission will analyse how notice-and-action procedures can work in a way to best address these concerns'.

Under the EU E-Commerce Directive internet service providers (ISPs) and website hosts are generally not liable for copyright infringing material, although the UK High Court ordered the British ISP BT in October 2011 to block its customers' access to the Newzbin2 website.

Michiel Willems © 2012 CP Publishing Ltd. London, UK.