Google Rolls Out Search, Shopping Ad Changes In Europe -- Update

By Sam Schechner Features Dow Jones Newswires

Google has started overhauling millions of search results in Europe -- and neither the search giant nor its detractors are happy about it.

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The Alphabet Inc.-owned search engine on Wednesday said it has started allowing rival shopping-comparison services to bid for and resell advertising space at the very top of Google search results in Europe. The new ads appear alongside similar product ads from Google's own shopping-ad unit, which Google said is bidding independently in the same auctions.

The changes are part of the tech company's effort to comply with a European Union antitrust decision that fined the company 2.42 billion euros ($2.71 billion) for using its dominant search engine to favor its own shopping ads at the expense of competitors'--and ordered it to start treating itself the same as its competitors as of Thursday.

Google is appealing the decision, but is implementing its order to avoid noncompliance fines that can reach total 5% of its global daily revenue, or more than $12 million.

Google says it thinks the remedy is unwarranted. Rivals say it doesn't go nearly far enough.

Richard Stables, chief executive of Kelkoo, a shopping-comparison engine that is an interested party in the shopping case, says that Google's remedy will likely force his firm to pay the company high rates to win auctions for ad space -- an outlay that would leave him with little if any profit from selling those ads in the first place.

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"The damage has been done. The industry is on its knees, and this is not going to put it back," said Mr. Stables, who has decided to participate in Google's new auctions despite misgivings. "I'm sort of shocked that they've come out with this," he added.

Google promised Google Shopping, the unit that sells ads to merchants, would be run as a stand-alone business, and would participate in auctions in an arm's-length capacity. It said it would operate the unit profitably, which means it wouldn't be able to bid so much that it posts losses. The company has committed to providing whatever information regulators request to monitor its commitments, according to a person familiar with the company's thinking.

A spokesman for Google said the company is giving rivals the "same opportunity to show shopping ads from merchants" as Google gives itself. "Google Shopping will compete on equal terms and will operate as if it were a separate business, participating in the auction in the same way as everyone else," a company spokesman said.

Laurence Norman contributed to this article.

Write to Sam Schechner at sam.schechner@wsj.com

(END) Dow Jones Newswires

September 27, 2017 12:54 ET (16:54 GMT)