Google SA anti-competitive?
GLOBAL internet giant Google is being investigated by the Competition Commission for allegedly abusing its dominance by trying to steal a customer away from Cape-based e-marketing company Entelligence.
Entelligence has filed a complaint accusing Google SA of flouting the Competition Act by inducing a customer not to deal with Entelligence but to deal directly with Google instead.
In a statement yesterday, Google said the accusations were without merit. It adhered to “strict professional protocols” for working with agencies and clients in SA and around the world, it said, specifically to create a fair and open business model.
The clash stems from a contract that Entelligence won in June to promote Telkom’s Yellow Pages website. Much of that involves displaying adverts that click through to the Yellow Pages website when users run a Google search for particular goods or services.
Entelligence pays Google 60c each time a user clicks on an advert, and recovers that fee from Yellow Pages as part of its contract.
Entelligence MD Sean Riley said his company met Google SA to discuss how to maximise traffic to the Yellow Pages website, and agreed to co-operate. But Google then hiked the pay-per-click rate from 60c to R2, instantly making it more expensive for Entelligence to promote Yellow Pages.
Riley complained to Google’s country manager, Stafford Masie, about that “unethical behaviour”, triggering a breakdown in their relationship.
Riley then heard that Google SA was trying to persuade Yellow Pages to cancel its contract with Entelligence and let Google manage the account directly.
That was also unfair, he said, as Entelligence had already told Google about its strategies for promoting Yellow Pages and had demonstrated some proprietary technologies.
The final blow came when Google switched off a credit account that Entelligence had with Google, which let it display adverts on the search engine. Riley has also been told that a second account he holds will be closed at the end of the month. That means Entelligence can no longer run some Yellow Pages adverts on Google’s website and will be unable to display any at all when its second account is axed.
“We are now unable to deliver as much traffic to the Yellow Pages site because we can’t create any adverts for them,” Riley said. “The decrease in traffic has been devastating. This is one of our key customers and we can’t provide all the services we are contracted to provide.”
Google’s goal was to make it impossible for Entelligence to fulfil its contract with Yellow Pages so that it could win the account for itself, he said. He would not disclose any financial details of how important Yellow Pages was as a client to his company.
Riley said he tried to escalate the complaint to Google internationally, but was told that the parent company did not interfere in the actions of its local subsidiary. “Our business hinges on a healthy relationship with Google so taking legal action against them was the last resort,” he said.
Google owns about 90% of the market share for search engine traffic in SA and earns 98% of all pay-per-click search advertising revenue.
Entelligence and several other agencies represented Google in SA for years before it set up a direct presence here last year. It was now cherry-picking the high-spending customers at the expense of agents that had grown its popularity in the country, Riley said.
The Competition Commission had begun its investigation, he said.
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