Tech Industry

European Parliament vote promotes idea of a Google breakup

A resolution calls on Europe's competition regulators to consider "unbundling" Google's other commercial services from its search business. The vote sends a signal -- but it's only symbolic.

Ramon Tremosa i Balcells was pleased when the European Parliament approved a motion he helped introduce that calls on regulators to take a tough stance against Google's search dominance.
Ramon Tremosa i Balcells was pleased when the European Parliament approved a motion he helped introduce that calls on regulators to take a tough stance against Google's search dominance. Screenshot by Stephen Shankland/CNET

In a move whose bark is worse than its bite, the European Parliament on Thursday approved a resolution suggesting one way to address Google's dominance is by splitting the company's search business from its other operations.

The nonbinding resolution calls upon the European Commission, whose competition division has been scrutinizing Google's search dominance since 2010, "to consider proposals aimed at unbundling search engines from other commercial services." That unbundling could separate Google services such as flight search, hotel reservations and shopping comparison from the company's search results.

The vote -- 384 in favor and 174 opposed -- sends a message of disapproval from nine time zones west toward Google's headquarters in Mountain View, Calif. But it doesn't actually mean any big changes for Google.

Even Thomas Vinje, a lawyer with Clifford Chance who represents Google search competitors in a consortium called FairSearch, is reluctant to read much into the vote.

"The whole thing is a bit blown out of proportion," Vinje said. "The resolution doesn't call for a breakup, and voting up or down doesn't actually vote for or against that proposition."

Still, it's a new indication that last decade's consumer excitement about Google's technological achievements is now tempered by governmental displeasure at Google's business might.

Google didn't respond to a request for comment.

The resolution doesn't mention Google by name, but it's clearly the big target, especially given the European Commission's investigation since 2010 of Google's search dominance. Google has an overwhelming share of the markets for online search and the profitable search ads that come with them -- Vinje puts the figure at more than 95 percent in Europe, significantly higher than in the US. Google is using that considerable search-ad revenue to fund its expansion into other businesses, and it can use search results to promote those new businesses.

Rivals that don't like Google's ability to promote its services include travel booking sites such as TripAdvisor, Expedia and Hotwire, and shopping sites TheFind and Foundem, all of which are members of FairSearch. Notably, much of Google's organized opposition in the EC competition case is from US companies.

But the parliamentary resolution was from European politicians. Two members of parliament brought the motion: Andreas Schwab, a German in the Christian Democrat party, and Ramon Tremosa i Balcells, a Spaniard in the Group of the Alliance of Liberals and Democrats for Europe.

Self-promotion?

"Indexation, evaluation, presentation and ranking by search engines must be unbiased and transparent," the resolution said. "For interlinked services, search engines must guarantee full transparency when showing search results." For that reason, the resolution "calls on the commission to prevent any abuse in the marketing of interlinked services by search engine operators."

That's close to what Vinje would like to see the Commission require of Google.

n Parliament, shown here voting on Thursday, approved a resolution that suggests regulators consider splitting Google's search business from other businesses it can promote through search results.
Members of the European Parliament, shown here voting on Thursday, approved a resolution that suggests regulators consider splitting Google's search business from other businesses it can promote through search results. Screenshot by Stephen Shankland/CNET

"It's preferencing its own and demoting others to restrict competition and favor itself," Vinje said. "In our remedy, Google puts its own stuff into the same algorithm it puts others' into. If Google wins on the merits, fine, but using one's strong dominance to preference one's own stuff and demote other guys' stuff is unlawful."

The resolution also asks the commission "to come up with the long-overdue copyright reform"; reform regulations "to allow an integrated and secure online and mobile payments market"; and promote standards that will "enable privacy-friendly, reliable, highly interoperable, secure and energy-efficient cloud services."

The foundation for the parliament's resolution is the European push for a digital single market, in which today's companies have a harder time competing because of an environment with fragmention in matters such as regulations, tax rules and wireless spectrum availability.

'Politicization' complaint

One US-based trade group, the Computer & Communications Industry Association (CCIA), doesn't like it.

"The increased politicization of the Google competition investigation is deeply troubling," CCIA Chief Executive Ed Black said earlier this week of the parliament's move. The CCIA often has allied with EU and US competition authorities in competition cases against its own members, but the European Parliament's action is counterproductive, Black said. "It potentially undermines the legitimacy of competition law if it is seen merely as another tool to be manipulated by special pleading and used for protectionist and political ends."

Of course, politics are part of doing business nowadays. Google employs lobbyists in Washington, DC, and it's been emphasizing projects that benefit the European economy like promoting tourism in Greece and opening a new $773 million data center in the Netherlands.

Thursday's resolution is a new rough spot in Google's relations with European governments. It's also dealing with the European "right to be forgotten" requirements, under which Google has received at least 170,000 requests for data to be removed from search results. Right now Google is also reckoning with a potential expansion of right-to-be-forgotten requests from country-specific domains like Google.fr, where they're in effect today, to the main Google.com domain as well. Google also has had to deal with political pressure stemming from publishers' complaints in Europe, including from global media powerhouse News Corp. Its CEO, Robert Thompson, wrote in September that Google is a

Competition case lingers on

The biggest issue, though, is the competition case, where European competition commissioner Margrethe Vestager is now overseeing the competition case against Google. She took over from Joaquin Almunia, who tried but ultimately failed to reach a settlement. The case began with search but appears to be expanding to include Google's Android operating system, too. That OS is used in smartphones, tablets, TV set-top boxes and other devices, and it's a major business success helping Google draw users to services like Google Maps, Gmail and Google Play.

For its part, Google believes the days are long gone when search engines just provided a list of links to other sites. Increasingly, Google provides answers directly in search results. And along with Google commercial services there are calculators, weather reports and even a tool to flip a coin or roll dice. People can search with spoken words, and on phones, Google will sometimes read results back.

Rachel Whetstone, Google's senior vice president of global communications, phrased it this way in a rebuttal to News Corp.: "Larry Page, our co-founder, has always believed that the perfect search engine would 'understand exactly what you mean and give you back exactly what you want.' Initially, 10 blue links were the best answer we could give. But now we have the ability to provide direct answers to users' queries, which is much quicker and easier for them."