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How Google’s Local Search Results Harm Consumers and Why the EU Acted

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Today, the European Commission announced that Google has breached antitrust rules by manipulating search results to favor its own vertical search services. In a landmark decision, the EU antitrust enforcement body hit Google with a record fine of €2.42 billion and gave Google a deadline of 90 days to end all discrimination against rival services. We applaud the European Commission’s dedication to the issue and commitment to restoring competition in online search to the benefit of consumers.

Google ordered to cease anticompetitive practices

Google has been found guilty of engaging in illegal conduct with the aim of promoting its vertical search services. Although the decision addresses comparison shopping services, the European Commission has also recognized that the same illegal behavior applies to other verticals, including local search. To this end, Google has been ordered to cease abusing its dominant general search engine to give advantages to its own specialized search products. A similar order has the potential to neutralize the harm Google has inflicted to online search and to effectively address anticompetitive concerns over local search.

Why local search matters

Local search is one of the most important human behaviors on the internet. It is the bridge between online research and offline commerce. Local searches – people looking for a pediatrician in Munich, a hotel in Barcelona or a Thai restaurant in Copenhagen – comprise the largest single category of search, representing roughly one third of total desktop search volume, and over one half of smartphone search volume. Between the defaults on iOS Safari and Android’s pre-installed Chrome, Google enjoys a 98% market share on smartphones.

The European Commission has been investigating Google for seven years following a number of complaints by both European and US companies, as well as consumer groups. Yelp has been a complainant in the case and we have been engaging with the EU authorities providing evidence of consumer harm in the market of local search.

Impact on US enforcement

The Commission’s findings provide a blueprint for enforcement authorities in the United States. In 2013, the Federal Trade Commission terminated its investigation of search bias by Google. However, the scrutiny provided by the EU authorities, coupled with overwhelming evidence of consumer harm, should compel the FTC to undertake action to protect American consumers from search manipulation.

How Google’s bias harms consumers

Indeed, with Columbia Law School Professor Tim Wu and Harvard Business School Economist Michael Luca, Yelp’s Data Science Team published a research paper that reexamined whether Google has been degrading search results and the impact this practice has on consumers. The authors of the study found that search bias by Google does, in fact, harm consumers. According to the study, users were significantly less likely to engage with Google’s “answer boxes” when they were powered with Google’s exclusionary local review content.

Any further delay in bringing Google’s anti-competitive practices to end in the US will cause irreversible damage to the competitiveness of the search market and consumers. US policy makers should view the EU’s decision as a call to action. Consumer welfare needs to be equally protected on both sides of the Atlantic.