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Google’s business model distorts competition, CompCom finds

Admire Moyo
By Admire Moyo, ITWeb's news editor.
Johannesburg, 31 Jul 2023
Google is required to implement measures taken in Europe to comply with similar provisions in the Digital Markets Act to address self-preferencing.
Google is required to implement measures taken in Europe to comply with similar provisions in the Digital Markets Act to address self-preferencing.

The Competition Commission (CompCom) has found Google’s dominance and business model distorts platform competition, as small and new platforms struggle for visibility and customer acquisition.

In its Online Intermediation Platforms Market Inquiry report published today, the competition watchdog says to address this distortion, the remedial actions have focused on improving paid and organic result visibility for smaller South African platforms.

On organic results, the internet search giant must introduce a new platform sites unit (or carousel) to display smaller South African platforms relevant to the search (eg, travel platforms in a travel search) free of charge, and augment organic results with a content-rich display.

It adds that Google must introduce a South African flag identifier and local platform search filter to aid consumers to easily identify and support local platforms in competition to global ones.

On paid results, the CompCom says Google must provide R180 million in advertising credits for small platforms to use in customer acquisition, along with free training to optimise advertising campaigns.

It notes Google must also provide a further R150 million in training, product support and other measures for SME and black-owned online firms to offset the competitive disadvantages faced on Google Search.

“In certain platform categories, such as shopping and travel, there is the additional distortion of Google providing services that compete with its customers for consumer attention,” says the commission.

It adds that Google has strong incentives to capture this specialist search traffic and has the ability to do so, given that the majority of traffic originates on Google Search, where it designs the search page and algorithm.

“In this way, it can influence where and how its own shopping and travel units appear on the search page relative to competitors. Google’s shopping unit appears at the top of all search results, and its travel units at the top of organic results, with a new paid hotel unit now appearing at the top of all search results. The evidence demonstrates these units attract a large, growing share of consumer traffic, and for shopping this has been found to distort competition in the European Union,” says the report.

The inquiry finds Google self-preferencing of its own shopping and travel units on its search results page distorts competition.

To address this distortion, the remedial actions focus on changes to Google Search to cease self-preferencing its own products.

In the interests of both regulatory compliance for Google and oversight by the commission, Google is required to implement measures taken in Europe to comply with similar provisions in the Digital Markets Act to address self-preferencing.

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