Antitrust Issues in Multisided Markets:
Google
Antonio Buttà
Rome, 6 May 2011
Recent Developments in Competition Enforcement
“For me, Microsoft is so last century.
They are not the problem.
I think we are going to continually see a problem,
potentially, with Google”
Christine Varney, 2008
In 2009 appointed head of the
Justice Department’s antitrust division in the U.S.
Outline
1
Google
2
The investigation by the Italian
Competition Authority
3
The ongoing investigation by the
European Commission
4
Conclusions
Outline
1
Google
2
The investigation by the Italian
Competition Authority
3
The ongoing investigation by the
European Commission
4
Conclusions
Google’s platform
Site owners
Site owners
Ads
AdSense
Google Maps
Google News
YouTube
Google Books
Picasa
…
Other
Search engine
services
Search ads
Advertising
platform
AdWords
Users Users
Advertisers
Google’s financials
35000
30000
million $
25000
20000
15000
10000
5000
0
Revenues
Cost of revenues
Other costs
Profit
Google websites
network websites
Other revenues
Other revenues
Other cost of Google
revenues
General & Admin
Acquisition
costs
(Adsense)
Acquisition
costs
(Other)
Other cost of revenues
Google network websites
Acquisition costs (Other)
Sales and marketing
R&D
Sales
and
marketing
Google websites
Acquisition costs (Adsense)
R&D General and administrative
Income before income taxes
Outline
1
Google
2
The investigation by the Italian
Competition Authority
3
The ongoing investigation by the
European Commission
4
Conclusions
Case A420 – Google News
 Google News
– Google News is a computer-generated news site that aggregates
headlines from news sources, groups similar stories together and
displays them according to each reader's personalized interests
– Google News allows users to search among online news, but it is
more than a search tool
– It is a form of online press review, which is continuously updated
and, to a certain extent, can satisfy by itself users’ demand for
news updates
 Publishers’ control over their own content displayed on
Google News
– Publishers can use Google’s crawler to define restrictions that
apply to Google News
– Any such restriction, however, would apply also to Google Web
Search
Case A420 – Google AdSense
 Terms and conditions of general online contract
– The share of the revenue that the publisher receives is
determined by Google from time to time in its absolute discretion
– Google does not (have to) tell the publisher how it works out that
share or what percentage of the pertinent total advertising
revenue earned by Google that share represents
– Google can change its pricing and/or payment structure at any
time in its absolute discretion
 Publishers’ bespoke contracts
– Revenue-sharing split is explicitly agreed upon
– No information/tool that allows publishers to monitor and verify
Google’s intermediation activity
Case A420 – Google’s commitments
 Google News
– Specific “crawler” that allows publishers to use the
standard robots.txt to define ex-ante restrictions on
content aggregated by Google News: restrictions do not
affect Google Web Search
– Restrictions can be defined at different levels of
granularity
 Google AdSense
– Transparency of revenue sharing
– Changes to revenue sharing become effective only after
affiliated publisher is informed
– Third-party software can be used by publishers to monitor
clicks on AdSense ads
Around the world

France
– Autorité de la concurrence: Google has implemented the content policy of
it AdWords service in a way that lacks objectivity and transparency,
resulting in a discriminatory treatment of speed camera database
suppliers

Germany
– Complaints from newspaper and magazine publishers over Google’s use
of their editorial content
– Complaints from competing providers of online services (maps): Google is
unfairly promoting its own services in the results of its search engine

Texas, Ohio
– Investigations over Google’s business practices

South Korea
– Complaint by internet providers: Android smartphones have Google’s
search engine installed as a default and are designed to make it virtually
impossible to switch to another option
Outline
1
Google
2
The investigation by the Italian
Competition Authority
3
The ongoing investigation by the
European Commission
4
Conclusions
The investigation by the
European Commission
 The demotion of competing online vertical search services in
Google’s natural search ranking and the preferential
treatment of Google’s own online vertical search services
 The demotion of the Quality Score of competing vertical
search services using Google’s AdWords platform
 The imposition of exclusivity obligations on publishers
participating in Google’s AdSense programme
 The imposition of restrictions on the storage and use of
advertisers’ AdWords campaign data with regard to
competing online advertising platforms
Microsoft’s complaint to the
European Commission
 Google bars competitors from accessing its YouTube video
site for search results and has kept phones running
Microsoft’s operating system from working properly with
YouTube
 Google also has signed contracts that block top European
websites from distributing rival search boxes
 Google is also restricting its own advertisers from accessing
the data they put in Google servers as part of ad campaigns
Outline
1
Google
2
The investigation by the Italian
Competition Authority
3
The ongoing investigation by the
European Commission
4
Conclusions
An overview of competition concerns
regarding Google
Site owners
Site owners
Ads
Other
services
Search engine
Search ads
Advertising
platform
Users
Users
Advertisers
Foreclosure of competing
search engines through
exclusive distribution
agreements and barriers to
index popular Google’s
properties (such as YouTube)
Foreclosure of competing
intermediaries through
AdSense exclusivity and
AdWords data retention
Foreclosure of competing
providers of online services
through discriminatory
treatment in Google search
engine and preferential
treatment of Google’s own
services
Discrimination among
trading partners
Exploitative behaviour: lack
of transparency and
objectivity in contractual
terms & conditions
Conclusions
 Innovation, dynamic markets and dominant position: (when)
will Google be “last century”?
 Competition concerns have been raised on various sides of
Google’s platform, but most stem from Google’s position in
the provision of web search services
 What are the prospects for competition in web search?
 In the absence of strong platform competition, where is the
boundary between search services and searched content?
“We used to have Yahoo Finance first and now is Google first…
...when we rolled out Google Finance, we did put the Google link first.
It seems only fair, right, we do all the work for the search page
and all these other things, so we did put it first.
That's actually been our policy since then …”
Marissa Mayer, 2007
Google Vice President
Search Products & User Experience