google-mobile-smartphones-blue-ss-1920-800x450Google SVP and General Counsel Kent Walker, in a formal filing and in a companion blog post, says that Google is denying that they have abused the market position in search.  In their defense, Google stated that they are characterizing the actions they took and UI changes that were made as a move towards quality and improving the user experience.

Found within the blog post, Walker said that “improving quality isn’t anti-competitive.”  He feels that the European Commission (EC) Statement of Objections (SO) doesn’t have specific proof on the matter and is “unfounded.”

Google has always worked to improve its services, creating new ways to provide better answers and show more useful ads. We’ve taken seriously the concerns in the European Commission’s Statement of Objections (SO) that our innovations are anti-competitive. The response we filed today shows why we believe those allegations are incorrect, and why we believe that Google increases choice for European consumers and offers valuable opportunities for businesses of all sizes.

The SO says that Google’s displays of paid ads from merchants (and, previously, of specialized groups of organic search results) “diverted” traffic away from shopping services. But the SO doesn’t back up that claim, doesn’t counter the significant benefits to consumers and advertisers, and doesn’t provide a clear legal theory to connect its claims with its proposed remedy.

It’s felt that the EC field of view on the “search market” is narrow, and Walker believes that the competitive landscape discussion should be expanded to include Amazon and eBay.  “We show why the SO is incorrect in failing to consider the impact of major shopping services like Amazon and eBay, who are the largest players in this space.”

Walker also said that “The universe of shopping services has seen an enormous increase in traffic from Google, diverse new players, new investments, and expanding consumer choice.” Right now, the current version of SO only focuses on Google shopping search results. Walker said that Google’s delivered “more than 20 billion free clicks to aggregators over the last decade” in European markets.

Instead of limiting consumer choice and generating harm, Walker’s point is that Google has shown a “commitment to quality” with evolving UI and search results:

[W]e knew we needed to go beyond the old-fashioned “10 blue links” model to keep up with our competitors and better serve our users and advertisers. We developed new ways to organize and rank product information and to present it to users in useful formats in search and ads. In 2012, as part of that effort, in addition to our traditional ads, we introduced the Google Shopping Unit as a new ad format . . .

We don’t think this format is anti-competitive. On the contrary, showing ads based on structured data provided by merchants demonstrably improves ad quality and makes it easier for consumers to find what they’re looking for.

Walker attacked the proposed EC remedy by saying that by “requiring that Google show ads sourced and ranked by other companies within our advertising space.” He believes this would harm the quality and relevance their results.

More than likely though, this isn’t going to persuade the EC, as this is something that they’ve heard before.  If Google can’t persuade the EC to their side, then they have the power to impose fines, as well as other penalties that could cost Google billions.

The fines reflect the gravity and duration of the infringement . . . The starting point for the fine is the percentage of the company’s annual sales of the product concerned in the infringement (up to 30%). This is then multiplied by the number of years and months the infringement lasted. The fine can be increased (e.g., repeat offender) or decreased (e.g., limited involvement). The maximum level of fine is capped at 10% of the overall annual turnover of the company.

If and when penalties are successfully placed upon Google,

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