Cade investigates Google’s possible anticompetitive practices in the Brazilian online search market

The General-Superintendence of the Brazilian Council for Economic Defense – Cade opened, this Friday (Oct 11th), three administrative proceedings to investigate alleged anticompetitive practices carried out by Google Inc. and Google Brasil Internet Ltda. in the Brazilian market of online search. The investigation was started after complaints presented to the antitrust authority by E-Commerce Media Group Informação e Tecnologia Ltda., owner of websites Buscapé and Bondfaro, and by Microsoft Corporation, owner of online search provider Bing.

Google’s online search, largely accessed by internet users, offers a free search engine that allows open and rapid access to online information. Part of the search results delivered to internet users is placed on the website as “organic search”, where the listed websites are not required to pay Google any kind of reward, and are supposedly searched and ordered through an algorithm established by Google, according to certain criterion. Other spaces on the search website show “sponsored links” results, which are websites that launch advertising campaigns for its products and remunerate Google in return.

There are websites that specialize in specific search services, such as price comparisons of products offered online. This is the service provided, for instance, by Buscapé and Bondfaro. Google also offers specific search services, such as Google Images, Google Books, Google News and Google Shopping. The latter specializes in product searches and price comparisons.

The administrative proceedings opened by Cade’s Superintendence investigate the following practices:

• Administrative Proceeding n. 08012.010483/2011-94: investigates, according to the complaint brought by E-Commerce, if Google would be unduly favoring its own specific search websites within the organic results, such as Google Shopping, in detriment of competing websites, such as Buscapé and Bondfaro. The Superintendence will also investigate E-Commerce’s allegation that Google Shopping would be unduly positioning itself in a more privileged manner in other spaces of the website (among the sponsored links), again aiming at favoring itself in relation to its competitors. The proceeding will investigate, still, if Google Search would be granting less room to the organic search in relation to the sponsored search and adopting mechanisms to confuse internet users when identifying unpaid and sponsored search results, with potential anticompetitive outcomes.

Another practice investigated in the proceeding is related to the allegation that Google Search, potentially in a discriminatory manner, would allow the use of photo ads by Google Shopping – which is supposedly a more attractive way of exposure – but would not allow it by competing websites that provide specific search services. The complaint brought to Cade claims that Google, at first, would have refused to sell space for photo ads to its competitor Buscapé, and that later would have required the transfer of its rival’s sensitive data in return for allowing the ad.

• Administrative Proceeding n. 08700.009082/2013-03: investigates scraping practices. The complaint regards alleged scraping by Google of relevant competitive content held by rival specific search websites, in order to use it in Google’s on specific search services. According to E-Commerce, Google Shopping would have unduly appropriated reviews (clients’ opinions regarding qualities and faults of products and stores) gathered by price comparison websites Buscapé and Bondfaro. According to the complaint, since internet users reviews compile relevant information and are appealing to users of shopping search engines, Google’s conduct could subtract competitive advantages from theses rivals and benefit from it. Still, according to the allegations brought before Cade, Google would not allow its competitors to “scrape” from Google’s specific search engines.

• Administrative Proceeding n. 08700.005694/2013-19: investigates supposed anticompetitive restrictions within the contracts of Google’s online advertising platform, known as AdWords. Through this platform, advertisers purchasing space for ads in Google’s website manage their advertising campaigns and define, for instance, key words to which they wish to associate their ads, so that they are shown in the results of certain searches, such as “television” or “mobile”. It is also through this platform that advertisers that are shown amongst the limited sponsored links are selected, through an auction dispute, according to criterion such as the value of the bid or the quality of the ad. According to Microsoft, Google would have imposed restrictions that hamper the advertisers’ ability to manage their campaigns, simultaneously, in Google and other competing search providers. Such interoperability is known as multihoming. According to the allegations presented to Cade, multihoming facilitates and lessens the costs associated with creating and managing campaigns in different search platforms, and allows comparisons between each platform’s performance. Still according to the complaint, by imposing restrictions to the sharing of information in advertising platforms, Google would end up discouraging advertisers to also launch campaigns in competing search engines, thus harming the development of these competitors, which already hold little market share.

The investigated conducts, if proven, may hinder the entry and development of competitors in the Brazilian online search market, as well as increase Google’s already elevated market power – close to 99%, according to some analysis. Such practices could result in obstacles to innovations, less options of companies, products and services to internet users and, eventually, impacts on prices of products and services offered to consumers online.

After the opening of the proceedings, Google will be notified to present its defense. At the end of the investigation, the Superintendence will render an opinion towards the conviction or the filing of the proceedings, and will send the cases for final trial by Cade’s Tribunal.