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Consumer Groups Reject Proposed Google Antitrust Settlement With European Commission

2:49 pm in Uncategorized by Consumer Watchdog

GoogleopolyConsumer groups on both sides of the Atlantic have objected to Google’s proposed European antitrust settlement, which relies heavily on labeling Google’s own services and on showing links to rivals in its search results, Consumer Watchdog said today.

“Consumer welfare is the ultimate test of any antitrust settlement. Google’s proposed Commitments fail to meet this standard,” wrote John M. Simpson, director of the U.S.- based public interest group’s Privacy Project in comments filed with the European Commission’s Directorate-General for Competition. “Labeling does nothing but obscure the results of Google’s anticompetitive abuses. It does not resolve the fundamental issue of search manipulation.”

Simpson continued:

Google has developed a substantial conflict of interest. It no longer has an incentive to steer users to other sites, but rather to its own services. It is becoming even more effective at this and has a greater incentive to engage in manipulation now that it is merging data collected across all its services. The only way to deal with this conflict is to remove it. There needs to be a separation of Google’s different services and assets. At a minimum any remedy must insist that Google use an objective, nondiscriminatory mechanism to rank and display all search results – including links to Google products.

BEUC, The European Consumer Organization stressed the importance of search neutrality in its comments to DG-Comp:

It is important that Google is obliged to use an objective, non-discriminatory mechanism to rank and display all search results, including any links to Google products. We therefore call upon the European Commission to ensure that the non-discrimination principle is the starting point of the remedies.

Read Consumer Watchdog’s comments here (.pdf).

Read BEUC’s Comments here (.pdf).

After more than a year’s antitrust investigation by the European Commission, Google offered changes in its practices that it hopes will answer the Commission’s concern that Google is unlawfully favoring its own services in its search results. Other concerns expressed by the Commission are that Google appropriated content from other websites without permission, forced publishers to obtain most online ad services from Google and hindered advertisers’ ability to transfer campaigns across platforms.

The Commission has been “market testing” – taking comments from competitors and the public – on Google’s proposed deal for the last month. This week the Commission extended the deadline for comments until June 27 and Competition Commissioner Joaquin Almunia said it is likely Google will be asked to do more.

Consumer Watchdog said there are “fundamental flaws” in Google’s proposed Commitments and noted the proposed remedy is based on two principles. First is labeling – Google must identify its own results that it is favoring. Second is the idea of presenting links to rival services.

“Neither of these proposed solutions gets to the heart of the problem. They will not restore a competitive search marketplace that will serve the interests of consumers. Google’s conduct has severely damaged competition, leaving consumers with less choice and facing higher prices,” wrote Simpson. “The Commission must insist on remedies that as much as possible restore the market position of Google’s rivals – one possibility could be requiring the preferencing for some period of time the search result listings of rivals over Google Shopping or Google Places.”

Consumer Watchdog continued:

Ultimately the solution must be based on the non-discrimination principle. Because Google is the gateway to the Internet for so many people, it has an obligation to honor the concept of search neutrality. Google must hold all services – especially its own – to exactly the same standards, using the same web crawling, indexing, ranking, display and penalty algorithms. A demand for this even-handed treatment of all services including Google’s in the display of search results has a precedent in the regulation of Computerized Reservation Systems, which were prevented from favoring the parent air carrier on the system.

Allowing Google to continue promoting its own services and demoting those of rivals, but requiring Google to label its own services does nothing but enshrine the uncompetitive status quo. In fact the results manipulation would continue and labeling could well have the undesired outcome of making Google’s services even more prominent and attractive to consumers. Consumers would have a far less effective choice of other services because these services would be less visible. The Commission must insist on true objectivity and search neutrality in Google’s results.

BEUC’s comments written by Augusta Maciuleviciute, Senior Legal Officer and Konstantinos Rossoglou, Senior Legal Officer, warned that Google’s proposal to offer links to rival services does nothing to stop Google from squeezing out competitors:

On the contrary, Google will now be able to profit not only from the traffic it diverts from competitors, but also from the new possibilities to charge them for the inclusion among the rival links. By requiring Google rivals to pay a price for their links, Google will be granted the right to monetize its anticompetitive behavior. It will have the incentive to provide links to the rivals who pay the most and not those who provide the best or most relevant results according to consumers’ search queries.

Consumer Watchdog said another obvious failure of the proposed settlement is the limited number of Google domains to which the Commitments would apply. The proposal only covers European Economic Area domains such as www.google.at, www.google.be, www.google.cz, etc. Consumer Watchdog noted that the home page of each of these EEA Google search domains has a clear link to www.google.com. “Many Europeans click on this link and use www.google.com for their searches, yet the proposed Commitments do not apply to this important part of Google’s business,” wrote Simpson.

New survey: Americans don’t want insurance rates tied to prior insurance coverage

4:16 pm in Uncategorized by Consumer Watchdog

Doug Heller

The Consumer Federation of America released a new report earlier this week assessing consumer views on the factors insurance companies use to set premiums around the country. Not surprisingly, Americans think that insurance rates should be based primarily on motorists’ driving safety record (87% and 85% of respondents believe rates should reflect a driver’s number of accidents and tickets, respectively).

More than a majority of Americans think it’s unfair to consider the ZIP-code in which you live or your occupation. More than two-thirds (68%) call it unfair to charge drivers more if they did not have insurance because they did not previously have a car. This data point should interest Californians, because there’s an initiative on the November ballot – Proposition 33 – that would allow insurance companies to penalize people based on this precise factor that 68% of Americans consider unfair.

Proposition 33 was put on the ballot by Mercury Insurance’s billionaire Chairman, and his $8 million campaign conveniently ignores the fact that the initiative allows insurance companies to raise prices on drivers who didn’t previously have insurance because they didn’t have a car. No doubt, his pollsters are telling him the same thing that the national survey reports: Americans don’t think his scheme is fair. (So if people think your initiative is unfair, your only option is to run a deceptive ad campaign filled with disingenuous patriotism and hope people can’t see the trick you’ve hidden behind that flag.)

But back to today’s report for a moment. Another interesting thing Consumer Federation did was look at rates around the country and show the effect of a variety of rating factors, including prior insurance coverage. Two things stand out:

  1. Where most companies in most states dramatically jack up the rates on customers who do not have prior insurance when they want to buy a policy, Californians’ premiums are unaffected by that factor because it is illegal to apply it in California. The whole point of Prop 33 is to make California more like these other states in a bad way.
  2. Generally speaking, rates in Los Angeles, California are both lower than the other big cities tested and more stable after testing for factors considered unfair, such as ZIP Code, occupation, prior insurance and credit scoring. In other words, the insurance reforms Californians installed through Proposition 103 in 1988 not only apply standards of fairness to the marketplace, they have created a competitive and lower priced market as well.

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Posted by Doug Heller, Executive Director of Consumer Watchdog, a nonpartisan, nonprofit organization dedicated to providing an effective voice for taxpayers and consumers in an era when special interests dominate public discourse, government and politics. Visit us on Facebook and Twitter.