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Competition in an Era of Hyper Consumption: Google Search Is Not The Only Way To Find Products and Services

· November 4, 2016

Imagine the scene: it is a sunny autumn afternoon and you are walking down your favourite shopping street kicking leaves to one side. Try guessing whether your fellow shoppers are out for a stroll, are off to browse in the shops or are heading intently to buy an item they have already identified online or during a previous stroll. The chances are that the people you see fall into all of these categories.

People are complicated. Consumer behaviour is complicated. Technological change throws even more variables into the mix.

It is worth bearing all this in mind when thinking about the European Commission statement of objections against Google in its ‘shopping’ case. The Commission asserts that Google’s general search engine prioritises its own services in a way that is anti-competitive and is able to harm consumer welfare. The key questions to my mind are (i) what is the reality of consumer behaviour online in finding goods, services and prices; (ii) what is the reality of investment in the EU in ecommerce and related activities; and, given this, (iii) even if Google wanted to, could it exert such influence over the market?

As I have already said consumers are complicated, comparing offers and purchasing in overlapping ways online and in the high street. As the Marketing Tech Blog reports, 54% of online purchasers read online reviews before making a purchase and 39% read online reviews before purchasing offline. Further, the ways people decide include using a company’s website, talking to a sales person and talking to friends and contacts (online or offline). The trick for marketers is to try to influence this.

Consumers therefore use price comparison sites as one way to find attractive offers. But they also make active use of additional sources from brand or service providers’ own websites and recommendations received from acquaintances online (e.g., social networks) and offline. The fact that online brands choose to advertise offline, e.g., on TV, illustrates this mix well.

This reality makes the European Commission’s assertion that price comparison is a unique and distinct market somewhat theoretical: it does not fit the complex reality of consumer behaviour and purchasing decisions. Consumers have never had so many ways to find and compare products, services and prices. The success of companies such Zalando and Asos in fashion, Skyscanner in finding good flight deals, Trainline in finding train tickets and Booking.com in finding hotel deals testifies to this: people are using all these methods.

And because people are using all of these different methods, many of these companies are thriving and overall investment in European ecommerce is booming. Research by The Analyst Research LLP shows that between 2012 and 2015 investment in this field increased from 1 billion EUR per annum to 12 billion. This shows there is opportunity as hard headed investors are not giving away their money to charity. If there is opportunity it shows that the market is competitive. Because competition is tough some fail.

It will be interesting to see where the European Commission goes from here. Related cases before the courts in the UK and Germany, and before enforcement bodies in the United States, Canada and Taiwan, have been dismissed. Judges have argued, inter alia, that anti-competitive effects need to be shown and not assumed. Given the number of paths to market in an era of hyper consumerism it does not seem plausible that Google could actually prevent a consumer accessing a rival service, or a rival service finding an audience.

European Union

DisCo is dedicated to examining technology and policy at a global scale.  Developments in the European Union play a considerable role in shaping both European and global technology markets.  EU regulations related to copyright, competition, privacy, innovation, and trade all affect the international development of technology and tech markets.