Monopolies and divorces

Google’s decision, which must now be approved by the relevant authorities, marks a milestone. Google Shopping does not enjoy a dominant position in the European market, in fact, its market share is much lower than that of many other comparable services. However, all results appear on a typical Google search page, the first of which is the must-be place for all businesses, with a market share of more than 90% in Europe. In reality, therefore, the fine is not about any dominant position Google Shopping may have, but from the fact that its activity, although limited in competitive terms, is leveraged over the domain the company maintains over all internet search activity.

Thus, the fine is not about Google Shopping’s impact on its competitors, but rather about the effect it might have if Google Shopping were allowed to continue extracting all the possible synergies of the search tool. The ruling is basically saying: “If you are the best search tool, the success of your shopping comparison service must be based on the merits of that activity, not by association with Google.” Which is all well and good, but in reality, practically all companies leverage their emerging activities on the success of previous ones. In fact, most of the time, the decision to launch a new product or service is based on synergies with existing products or services: what is known as related diversification: “I am good at this, I know how to do it, I have learned new things from it, so I am going to diversify.” But if you are Google and enjoy a monopoly position, you have to be more careful, even if it goes against your philosophy of offering users all the possible results that could enrich their search, whether purchases, addresses, books or whatever.

Google has reached its monopoly position by creating an undoubtedly superior product, changing the world as we know it. Punishing it makes no sense. But at the same time, once a company has reached such a position, it must be careful when entering any other related business and avoid upsetting the apple cart and preventing others from competing.

In the case of Google Shopping, rival shopping comparison engines are unlikely to be able to compete with Google when the latter not only parses their pages, but can also include its results on the first page of any results… even though there are plenty of shopping comparison engines out there with a much greater market share than Google Shopping. There is nothing new about Google trying to promote its other businesses, albeit with varying success: Google Maps on the one hand, and Google Plus on the other.

In any event, from now on, Google will need to evaluate cross-promotion more carefully. Paradoxically, on the internet, as opposed to real life, if things go well, you are forced to separate.

For Google’s competitors, this week also marks milestone: from now on, if Google Shopping steals their market share, they will not be able to blame the browser’s dominance: they just won’t be doing their job as well as Google (which is hardly surprising, considering the company’s expertise, R&D and familiarity with its own product).

So finally, there is the question as to who will better manage purchasing space on Google: Google Shopping, or a third party? But to all intents and purposes, and as long as no one proves otherwise, Google Shopping will be just another competitor in an open market, on an equal footing when it comes to advertising and displaying its products. All that remains to be seen now is how the invisible hand of the market arranges things.

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