Why Turkey’s Regulators Became Such a Problem for Google

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Type “running shoes,” “best laptop” or “camping equipment” into Google from just about anywhere in the world and the top of the screen will show a carousel of ads from websites promoting products to browse and compare.

Not in Turkey. Google eliminated those advertisements last year after Turkish antitrust officials ordered the company to make it easier for competing shopping websites to appear more prominently in the ads.

The Turkish demands went further to crack down on Google’s shopping service than any other global regulator had to that point. But that was not all. In April, the country’s officials made another bold move, saying the company’s lucrative search function for finding local destinations like “nearby pharmacy” violated antitrust laws, a first-of-its-kind decision that threw that service’s future into question, too.

The tension between Turkey and Google reflects how growing animosity toward Silicon Valley giants is popping up even in places, like Turkey, with little history of antitrust enforcement against the industry. The efforts threaten to upend conditions — an open global internet and light-touch government regulation — that have helped fuel the growth of those companies in the past two decades. In their place could be a checkerboard of laws and regulations, where the available products and services depend on where a person logs on.

Google has been a constant target. This month, French antitrust authorities fined Google[1] 500 million euros, or $593 million, for failing to negotiate in good faith to reach a licensing deal with news publishers to use short blurbs from articles in search results. Last month, Indian competition authorities opened an investigation into claims that Google used its dominant position as owner of the Android mobile operating system to give itself an advantage in the smart-television market.

In May, Italy’s antitrust authorities fined Google €102 million for barring an electric vehicle services app from access to its Android in-car software system.

Some attribute Google’s troubles in Turkey in part to the increasingly authoritarian leadership of President Recep Tayyip Erdogan and his efforts to wrest power from Western internet companies. But the pushback in Turkey and elsewhere is also prodded by Google’s rivals, such as Yelp. Those competitors have spent years lobbying regulators around the world to be tougher than authorities in the United States and Europe, the traditional powers for regulating global businesses. Sometimes, as in Turkey, the rivals work with governments whose politics they may otherwise oppose.

“Enforcers from around the world think something needs to be done, and they’re not satisfied with what the traditional centralized regimes are doing,” said Harry First, a law professor at New York University.

In the past, countries focused on domestic industries because they didn’t have the resources or the knowledge to pursue antitrust action against major international firms, said William E. Kovacic, a former chairman of the Federal Trade Commission. But as more countries take action against Big Tech, he said, a “shared intellectual infrastructure” makes it easier to pursue a case. In Turkey, the authorities leaned on European Commission findings.

The number of countries with antitrust laws has surpassed 130, up from 30 in 1990, Mr. Kovacic said.

“The Turkish experience is going to be important,” he said. “There are going to be other countries similarly situated that say, ‘Why not us?’”

Google, which successfully fended off some past antitrust investigations from Turkish regulators related to online advertising and search rankings, said it had removed services like the shopping ads when the changes demanded by the authorities would have made them less beneficial for users.

“We work constructively with regulators around the world and have been able to find solutions based on facts and evidence to address similar concerns, without removing features that people and businesses find helpful,” Miguel Perez Guerra, senior competition counsel for Google, said in a statement.

Google’s rivals went to Turkish regulators in 2018 after the European Union fined Google[2] €2.42 billion, worth about $2.87 billion today, for favoring its online shopping service over rivals in search results. The fine was a record, but Google’s opponents were angry that regulators did not force the company to change its practices more. Google was still giving its shopping service preferential treatment, they said, reducing web traffic and visibility for their sites.

Rival services, including Kelkoo, a comparison-shopping site based in London, told Turkish officials that the European penalty had not restored competition. The rivals asked for more of an opportunity for greater visibility in Google search results, some of the internet’s most valuable real estate. The Turkish authorities complied, rejecting a more modest Google proposal.

The opponents said Google had then eliminated the ad boxes to avoid setting a precedent that other jurisdictions could follow, similar to the way it dropped its news service in Spain[3] in 2014 in response to unfavorable regulation.

“The goal was very much to make sure that they could benefit from our experience in Europe and push for something better,” Richard Stables, the chief executive of Kelkoo, said of the efforts to influence Turkey. “Turkey is generally not a huge market by value, but it could have important significance in showing other regulators the way forward.”

The Turkish Competition Authority credited Google’s competitors, as well as consumer groups, for helping explain how the company unfairly used its “gatekeeper” position in search and mobile software to gain an edge in areas like shopping and local business listings.

Turkish enforcement is part of a wider push “making competition the norm in markets dominated by the big tech,” the agency said in a statement. “Our decisions are related to the efforts we are observing in the rest of the world.” The antitrust agency is also investigating Facebook’s data-sharing practices.

Turkey’s position as an important antitrust battlefield is centered on one of Google’s most important services: searches like “restaurants open near me,” which result in a box of information that links to other Google services like maps.

For years, Yelp tried unsuccessfully to get regulators in the United States, the European Union and Brazil to go after Google’s local search business, arguing that it was being unfairly cut out.

In 2018, not long after Turkey said it was investigating Google’s shopping service, Yelp’s head of public policy, Luther Lowe, flew to the capital, Ankara, for a meeting with antitrust officials. On a thumb drive, he provided regulators with a copy of an earlier complaint the company had filed with the European Commission, translated into Turkish, along with other evidence. His effort helped start an investigation.

In April, the Turkish authorities delivered the ruling Yelp wanted. Google broke antitrust laws, regulators said, by displaying local search results that cut off rivals from critical internet traffic.

The resulting fine, roughly $37 million, was relatively minuscule. More important to Yelp is what could happen next: In the coming months, Google must outline remedies to include listings from competitors in local search results. If the proposed fixes do not satisfy regulators, another showdown could follow, confronting Google with a choice of offering additional changes or shutting down the service.

Given Mr. Erdogan’s history against Google’s YouTube — he temporarily blocked access in 2007 and 2014 — many question Turkey’s motivations in the antitrust cases.

The country’s antitrust agency said its actions against Google were not political, and some legal experts said they respected the regulator’s independence. But Mr. Erdogan has tightened his grip over the government bureaucracy. Last year, Turkey adopted a law to regulate content on social media[4], targeting YouTube, Facebook and Twitter. Critics of the move saw it as an attempt to tighten control of information and stifle dissent.

Atilla Yesilada, an investment analyst specializing in Turkey, said the antitrust board had become more politicized the last two years and followed government priorities. Others said that while the regulator was considered better than other institutions in Turkey, none were totally independent.

A lawyer in Istanbul representing Google, Gonenc Gurkaynak, said that although Turkey had gone further than other regulators, he did not believe the antitrust rulings were related to the government’s other regulatory efforts. “We have not observed any link,” he said.

Mr. Lowe of Yelp, who has spent more than a decade urging regulators to act against Google over local search, acknowledged Turkey’s uneven political environment but said the antitrust agency was acting independently. Disappointed that other governments had not acted on Yelp’s complaints, he said Turkey could provide an important example of how tough enforcement could force Google’s services to change.

“This is the first real shot we have at succeeding,” Mr. Lowe said of Turkey. “This is the goal I’ve set out to do the whole time.”

Carlotta Gall contributed reporting.

References

  1. ^ fined Google (www.nytimes.com)
  2. ^ European Union fined Google (www.nytimes.com)
  3. ^ dropped its news service in Spain (bits.blogs.nytimes.com)
  4. ^ a law to regulate content on social media (www.nytimes.com)
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