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Google's European Negotiating Tactic: Convince the EU That Amazon Is Crushing It

In the EU case, Google's key argument is an economic one.

iStock / Sven Hoppe

Google’s lengthy, full-throated retort to the European Union’s antitrust charges is mounted with legal points claiming the regulators cannot make the company change its core software or levy a fine. But the more foundational argument from Google is that other companies — chiefly, Amazon — are thriving despite, or because of, the search giant’s products.

The crux of that case, according to a redacted version of the official response seen by Re/code, is an economic one. Much of Google’s response, delivered with loads of illustrative internal company data, is devoted to proving that the search engine is not favoring its own shopping service in its results, and instead often boosts traffic to competing shopping aggregators and online merchants — like Amazon.

To recap: The EU’s competition authority made its official case that Google uses its search results to favor its own comparative shopping service in April, after years of back and forth between the company and the Brussels watchdog. The EU also began an antitrust probe into Android, and its competition commissioner, Margrethe Vestager, has said she’s weighing cases on other portions of Google’s business, like maps and ads.

Google disagrees. Strongly, in fact — it handed over its combative response, which runs at 130 pages, in August. Therein, Google stresses that the driving force behind its reinvention of search — ditching the old ten blue links, then adding, in 2012, its comparative shopping boxes — has been responding to online users’ needs, not taking out competitors. The company claims both the unpaid and paid product results in search are based on relevance.

As evidence, Google points to the number of online price aggregators — sites that collate retail prices elsewhere on the Internet — born in Europe: 180 between 2008 and 2014. The EU’s charge sheet, or statement of objections (SO), “focuses on a handful of aggregators that lost free Google traffic, but ignores many that gained traffic,” Google’s lawyers wrote. Google says it drove 20 billion “free clicks” to these aggregators in Europe over the past decade.

More critical to Google’s defense is the argument that online marketplaces, like eBay and Amazon, should be considered peers to Google’s shopping service, a position at odds with the EU, which charges that these merchants are “irrelevant” when it comes to price comparisons. Google’s lawyers claim, using internal data, that Web visitors prefer merchant links over aggregators and go directly to Amazon for product searches. (They do.) Google also argues that these giant merchants consider the smaller price aggregators as rivals as well — in the response, Google cites Amazon SEC filings where the e-commerce company lists “comparison shopping websites” and “Web search engines” as competitors. Ergo, Google contends, the EU should see them that way too.

And echoing the company’s internal note to the charges in April, Google spells out how Amazon and eBay are far more dominant as online retailers in Europe than Google’s service.

Another key element to Google’s response is its focus on shopping, and shopping alone. The company wants to make it clear that any charges against its practices are limited to its shopping results so any ruling wouldn’t apply to other parts of its business. In recent comments, Vestager has nonetheless said the current case could inform investigations into other Google services related to search. She mentions maps and travel comparisons, but Google’s online ads rivals are trying to start a case there too.

Google, obviously, doesn’t want that. If the company is to make concessions with the EU, the legal doc sets it up so that it will fork those over on online retail. “They’re trying to push the commission to respond to arguments that are just shopping specific,” said one antitrust lawyer familiar with the case.

An EU spokesperson declined to comment. As did Google. Brussels regulators are now considering Google’s arguments and deciding on the next steps in the investigation, a process that could take months if not years.

This article originally appeared on Recode.net.