Business development · 28 June 2017

Google EU ruling could prevent small retailers competing with Amazon and eBay

The Google EU ruling has been criticised by the search engine as favouring large companies over independents
The Google EU ruling has been criticised by the search engine as favouring large companies over independents

Following the recent Google EU ruling, which saw the search engine hit with a £2.1bn fine for breaching competition law, the European Union (EU) has been accused of directly threatening the ability of small retailers to compete with companies the size of eBay and Amazon.

The European Commission imposed the penalty after a seven-year investigation concluded Google had distorted search engine results in favour of its own shopping channels, pushing rival services down the rankings.

If Google fails to change practices within 90 days, it will be fined up to five per cent of parent company Alphabet’s average daily turnover.

However, Kent Walker, the search engine’s senior vice president and head lawyer, has now hit back at the Commission, claiming it has sided with large corporations against small retail businesses.

In an official blog post, Walker said Google’s search results reflected user feedback and natural price comparison results.

“When you use Google to search for products, we try to give you what you’re looking for. Our ability to do that well isn’t favoring ourselves, or any particular site or seller – it’s the result of hard work and constant innovation, based on user feedback,” he wrote.

Explaining the decision taken by Brussels legislators, EU commissioner Margarethe Vestager said Google had denied the “genuine choice of services and the full benefits of innovation” by actively punishing its biggest competitors.

Walker refuted this position and claimed Google ads were fair and gave retailers vital exposure among large competitors.

“When you shop online, you want to find the products you’re looking for quickly and easily. And advertisers want to promote those same products. That’s why Google shows shopping ads, connecting our users with thousands of advertisers, large and small, in ways that are useful for both.

“Thousands of European merchants use these ads to compete with larger companies like Amazon and eBay,” he added.

Walker confirmed Google was set to appeal the ruling and looked forward “to continuing to make our case”.

Jamie Evans, ecommerce and digital manager at Native Youth, reached out to Business Advice to reflect on the Google EU ruling from the perspective of an independent clothing brand.

“As a growing retailer, Google Shopping is an incredible tool for us as it gives us the chance to attract potential customers through our search and display adverts, despite us being a very young brand with little brand awareness.

“I don’t think it’s that egregious that Google gives preferential treatment to its shopping network, as sites like eBay offer free product listing ads to retailers without them having to spend a penny. We couldn’t possibly compete with behemoths like eBay with regards to budget, so for us the current model works as it levels the playing field.

“It’s interesting to see that Google are being sanctioned with such a heavy fine as it could open up black hole. We could end up with regulators messing around with search display and how can you even begin to start legally regulating search engines? Where does it begin and end when it comes to regulating the internet?”

Read on to find out the crippling ecommerce mistakes even Amazon is guilty of making

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ABOUT THE EXPERT

Simon Caldwell is a reporter for Business Advice. He has a BA in politics and communications from the University of Liverpool, and previously worked as a content editor in the ecommerce industry.

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