Searching a rationale for search neutrality in the age of Google by Massimiliano Granieri and Valeria Falce

1. SEARCHING A RATIONALE FOR
SEARCH NEUTRALITY IN THE
AGE OF GOOGLE
MASSIMILIANO GRANIERI – VALERIA FALCE
FSR C&M, CMPF AND ENTRANCE ANNUAL SCIENTIFIC SEMINAR ON THE ECONOMICS, LAW AND POLICY OF
COMMUNICATIONS AND MEDIA
BADIA FIESOLANA, MARCH 24, 2017

2. WHAT’S NEW
• Another case for the ‘new’ antitrust in high-tech markets (after IBM and
Microsoft) (Carrier 2013)
• New challenge for antitrust policy: dealing with search neutrality
• Quite polarized positions about Google’s conduct (good or evil)
• An occasion to review some of the tenets of modern antitrust policy and
regulation

3. OUR APPROACH
• Statement of Objections issued but not public
• Consider the proper framework of analysis (many contributions so far deal
with the US case); 102 TFEU
• Do not be scared by economic complexity of the case (and about an effect
based analysis)
• Consider other values at stake (control of information over the internet)
• Consider institutional differences and approaches (FTC v. EC)

4. MARKET DEFINITION: IS THE TWO-SIDED MARKET
PARADIGM GOOD ENOUGH?
• Market for searches is two-sided: users on the one side, advertising company
on the other, Google in between to operate the platform
• One side of the market accesses the service for «free» (whatever that means
in a «freemium» based market)
• Is there any market power that Google can leverage?
• Are available alternatives really «one click away»?

5. SEARCH NEUTRALITY AND SEARCH BIAS: DEFINING
THE ABUSE
• What is search bias? What is search neutrality? A definition needed for operational
purposes
• Is neutrality technically possible? Do we have a normative standard to define
«objective» search results?
• Results as «credence goods» (Patterson 2013)
• Search bias as a biased concept: «Nirvana Fallacy» (Manne & Wright 2011)
• Searching strategies of Google inspired by a (legitimate?) evolution of its business
model (away from the «ten blue links» paradigm)

6. EFFECT-BASED ANALYSIS
• Is search bias abuse per se?
• Overlooking the effects of Google’s conduct means disregarding the fact that one
party of the market receives the service for free (consumers welfare should be part
of the analysis)
• Without effect-based analysis art. 102 used as a pseudo-regolatory tool
• FTC Chairman Leibowitz «[a]lthough some evidence suggested that Google was
trying to eliminate competition, Google’s primary reason for changing the look and
feel of its search results to highlight its own products was to improve the user
experience» (FTC 2013).

7. SOME (BIASED) QUANTITATIVE EVIDENCE
• Between 1997 and 2000, Netscape experienced a decline of market share
for its browser from 80% to 20%
• Local search engine Yelp has grown its revenue by 350% in the last four years
• Travel search site TripAdvisor claims it has the Web’s largest travel brand and
nearly doubled its revenues in the last four years
• Travel search site Expedia has grown its revenues by 67% in the same time
frame

8. INSTITUTIONAL DIFFERENCES THAT MATTER: EU V.
US
• Enforcement strategies very different in EU compared to EU
• High-tech industry probably require a different antitrust approach (timing is
of the essence) that has been missing so far
• What is the real aim of the antitrust action of the EC?
• Who is damaged by Google search strategies and who bears the burden of
proof?
• Competition or competitors? What is the true soul of EU antitrust policy?

9. DIFFERENT VIEWS WITHIN THE EUROPEAN
COMMISSION
• «Google’s offer is capable of addressing the Commission’s concerns», and that «the
concessions we extracted from Google in this case are far-reaching and have the
clear potential to restore a level playing-field in the important markets of online
search and advertising. No antitrust authority in the world has obtained such
concessions. Remember that our colleagues from the FTC in the US investigated the
same issues. Whilst it is true that they faced a different market situation, they did not
require such far-reaching action from Google» (Almunia, 2014)
• Previous proposals by Google were not satisfactory (Vestager 2015)

10. CONCLUSIONS
• The whole framework of analysis still unclear
• Market definition still problematic (but not impossible)
• Search bias «a malleable term that remains largely undefined» (Lao 2013)
• Goals of European antitrust still unclear
• A need for «a more technological approach» in antitrust analysis and focus on
dynamic efficiency (Podszun 2014)