Editorial

The Google Commitments: Now with a Cherryon TopAndrew Leyden and Maurits Dolmans*

On 5 February 2014, Vice-President Almunia announcedthe third iteration of Google’s proposed commitmentsto bring an end to the Commission’s investigation intoGoogle’s online search and advertising business. This an-nouncement followed a period of particularly intensenegotiations and, unprecedentedly, two market tests oftwo previous iterations of the Commitments text. Thetext has changed substantially since the first version waspublished on the Commission’s website on 3 April 2013,though the principles underlying the proposed remediesremain the same. The Commission is expected to adopta decision under Article 9 of Regulation 1/2003 approv-ing the revised text in the summer of 2014.

Perhaps inevitably, the revised commitments havemet with vocal criticism from complainants. For themost part, complainants have criticized the ‘verticalsearch’ component of the commitments, which is by farthe most contentious aspect of the case. This editorialdoes not seek to assess in detail the merits of the Com-mission’s preliminary concern with respect to Google’salleged ‘dominance’ in free online search (which, on itsface, is inconsistent with the Commission’s findings withrespect to free services in itsMicrosoft/Skype decision, re-cently upheld by the General Court). Nor does it seek toaddress the Commission’s preliminary concerns relatingto vertical search (which Google continues to contest,and which have been rejected by regulators and courtsworldwide, including the US FTC, and EU MemberState Courts, such as the Hamburg District Court).

Rather, this editorial addresses the legally relevantquestion raised by the complainants’ criticisms. Namely:do the commitments adequately address the Commis-sion’s stated preliminary concerns? The answer to thisquestion is a clear ‘yes, and then some’. Regulation 1/2003expressly limits the role of Article 9 commitments deci-sions to remedying the ‘concerns expressed . . . by theCommission in its preliminary assessment’. The commit-ments text as it now stands goes much further than

anything that possibly could be required of Google, as amatter of law, to address the preliminary concerns theCommission has stated, and provides rival vertical searchsites with an additional, highly valuable opportunity forpromotion on Google. Even if complainants are still notsatisfied, as the Commission’s Manual of Proceduresstates, a market test ‘is not an opinion poll which deter-mines the fate of the remedies’. Moreover, Article 9 com-mitments cannot be used as a vehicle to address additionalareas of concern, regardless of how vocally complainantsmay express them in market test responses or other publicfora.

To understand the commitments, it is essential tounderstand the scope of the Commission’s preliminaryconcerns, which arise from complaints from ‘verticalsearch’ websites. Such sites operate within narrow so-called ‘vertical’ areas of interest, such as products, restau-rants, hotels, and the like. In contrast, generalist, or‘horizontal’ search services like Google, Bing, or Yahoo!,aim to provide results for all categories of information.The complainants alleged that Google was leveraging adominant position in a user-facing ‘market’ for ‘horizon-tal search’ to user-facing ‘markets’ for ‘vertical search’through two principal means.

First, complainants alleged that Google ‘manipulated’its search algorithms to ‘demote’ links to their sites inGoogle’s web search results (the ranked set of ‘blue links’visible on a Google search results page). Following thepublication of the revised commitments, complainantsare raising such concerns again, but the Commission hasthoroughly investigated and roundly rejected these alle-gations already (indeed, Vice-President Almunia has ex-plicitly stated that the ‘objective of the Commission is notto interfere in Google’s search algorithm’). The US FTCsimilarly unanimously found these allegations to lackany factual basis.

Second, complainants alleged that Google foreclosescompetition by displaying its own specialised results for

* Respectively Associate, and Partner, Cleary Gottlieb Steen and HamiltonLLP. Cleary Gottlieb Steen and Hamilton LLP represents Google in the EUCommission’s investigation. The views stated here are the authors’ own.

Journal of European Competition Law & Practice, 2014, Vol. 5, No. 5 EDITORIAL 253

# The Author 2014. Published by Oxford University Press. All rights reserved. For Permissions, please email: journals.permissions@oup.com

by guest on June 11, 2014http://jeclap.oxfordjournals.org/

Dow

nloaded from

certain query categories (e.g., products or local places)in specialized display formats within its general searchresults (known as ‘Universal Results’). Complainants areagain raising the mere fact that Google displays suchresult designs in their criticisms of the commitments.But the Commission has not raised any preliminaryconcerns with respect to Google’s display of UniversalResults as such. Indeed, it would be difficult to do so, sinceUniversal Results are manifestly pro-competitive anduseful. For example, when a user searches for [restaurantsin London] on google.co.uk, Google will display a list oflinks to such restaurants, along with their location on amap, and reviews and star ratings for each. Such informa-tion is clearly more beneficial to users than a bare list ofblue links to other websites, since it is directly responsiveand relevant to the query put to Google. The mere factthat more specialized ‘vertical’ search services also offersuch information should not preclude Google, or othergeneralist search engines, from providing it in a usefulformat. Indeed, competition between generalists and spe-cialists is an inherent part of the competitive process.

Nevertheless, the Commission raised a ‘preliminaryconcern’ with respect to ‘vertical search’. Specifically, theCommission’s preliminary concern relates to ‘favourabledisplay’ of ‘links to Google specialised search services’ withinGoogle’s general search results. This preliminary con-cern relates only to hyperlinks to separate Google-ownedpages containing such category-specific results (typicallythe links to pages containing ‘more shopping results’,or ‘more local results’ found in the header or footer ofcertain Google Universal Results). The Commission’spreliminary concern was that any favourable display ofsuch links might ‘divert traffic’ from rival vertical searchservices. The goal of the search commitments is thereforeto eliminate this preliminary concern by providing, inthe words of Vice-President Almunia, a ‘choice betweendifferent options’. Simply put, if users are aware of alterna-tive choices, but still choose to click on Google’s results,there could be no question, even in theory, of any antic-ompetitive traffic ‘diversion’.

From the first iteration of the Commitments, there-fore, the essence of Google’s proposed solution has beento provide users with such informed ‘choice’, by (i) clearlylabelling links to Google’s specialized search results; (ii)separating such links from other links displayed on thepage; and (iii) for certain types of monetized results,providing additional links to three rival specialized searchservices selected based on mechanisms set out in thecommitments (‘Rival Links’). The display of such RivalLinks would be free of charge for rival sites when appear-ance in Google’s results is free for merchants or otherthird parties. But where, eg, merchants pay to appear in

Google’s specialized shopping results, and the RivalLinks take up valuable promotional space that otherwisecould have beenmonetized through ads, the Rivals wouldalso pay to appear via a dedicated auction mechanism(‘Paid Rival Links’).

During the first and second market tests, the complai-nants raised numerous concerns about the proposedcommitments. The final text reflects the outcome ofextended negotiations on the basis of these concerns, butthe principles set out above remain constant. In particu-lar, while the details of the auction mechanism havebeen modified to respond to rivals’ concerns, participa-tion in Paid Rival Links is still subject to payment. Thisreflects an important point of legal principle: Even ifGoogle were an essential facility (which the Commissiondoes not even allege), it would be entitled to compensa-tion for its highly valuable promotional ‘screen real estate’.Just as Commercial Solvents was not required to supplyaminobutanol for free, United Brands was not required tosupply bananas for free, and Volvo was not required tosupply spare parts for free, Google should not be requiredto provide its valuable promotional space for free.

However, the text has seen numerous other changessince the first iteration, all of which provide importantadditional concessions and opportunities for rival sites topromote themselves on Google. Notable changes includethe following.

First, the complainants publicly claimed that theirtesting data demonstrate that users would not click onRival Links. Even assuming such data to be reliable, thismisses the point, since the purpose of competition law isnot to guarantee a certain market outcome, but to ensurecustomer choice. Regardless, to address this concern, thecommitments text was modified to allow greater ‘prom-inence’ for Rival Links. Under the revised text, RivalLinks will be associated with prominent branded icons(‘favicons’), and will include snippet text. Moreover, ifGoogle uses prominent display formats (e.g., productimages or videos) in its results, rivals can also includecomparable prominent visual elements.

Second, the revised text allows vertical search sitesbroad freedom to define the destination of Rival Links,including by linking to relevant pages on third-partysites that sell the product or service relevant to the user’squery. This will create a novel and remarkable commer-cial opportunity for vertical search sites by, in effect,allowing them to resell Rival Links to merchants, and toextract their own margin, without the user visiting therival site at all.

Third, the revised text applies not only to links to separ-ate Google specialised search pages, but also to evolutionsthat may replace such designs, including equivalent user

Journal of European Competition Law & Practice, 2014, Vol. 5, No. 5254 EDITORIAL

by guest on June 11, 2014http://jeclap.oxfordjournals.org/

Dow

nloaded from

interface elements that are directly displayed on Google’sgeneral search results pages. This is a significant conces-sion that expands the scope of the remedies beyond linksto pages containing specialised search results (as per theCommission’s stated preliminary concern).

In summary, the revised commitments are more thanadequate to address the Commission’s preliminary con-cerns. Already, the text has undergone multiple revisionsand two market tests, and the Commission has obtained

concessions from Google that go far beyond what anyother regulator (notably the US FTC) saw fit to extract.Based on the terms of the Commission’s preliminaryconcerns, Google’s commitments were adequate even intheir very first iteration. If the second revision of thecommitments provided the ‘icing on the cake’, then thethird iteration is surely the ‘cherry on top’.

doi:10.1093/jeclap/lpu038Advance Access Publication 9 May 2014

Note from the Editors: in accordance with our aim to organize a forum between leading practitioners, we willpublish another view on the Google case in the following weeks.

Journal of European Competition Law & Practice, 2014, Vol. 5, No. 5 EDITORIAL 255

by guest on June 11, 2014http://jeclap.oxfordjournals.org/

Dow

nloaded from