Why the European Commission's fine on Google matters to hotels

Google has been hit with a hefty 2.42 billion euro fine by the European Commission, after the regulator ruled that the search giant was employing unfair practices by promoting its own shopping comparison service at the top of search results. According to the Commission, "Google has abused its market dominance as a search engine by giving an illegal advantage to another Google product, its comparison shopping service."

The issue

Sponsored content from Google's Shopping service (from which Google makes money) tends to dominate 'above-the-fold' search results (at the expense of traditional organic links). On mobile, it's normal not to be able to see any traditional links at all until the user scrolls down. Google Shopping is not subject to the search engine's own algorithms, meaning its results appear at the top of a results page regardless of ranking factors. The most highly ranked rival service appears on average only on page four of Google Search results (by which point click-through rates are almost negligible).

Commissioner Margrethe Vestager, who is responsible for competition policy within the EU, stated:

"What Google has done is illegal under EU antitrust rules. It denied other companies the chance to compete on their merits and to innovate, and most importantly it has denied European consumers the benefits of competition, genuine choice and innovation."

What it means for hotels

What's truly significant about today's announcement comes at the end of the Commission's statement:

"The Commission ... continues to examine Google's treatment in its search results of other specialised Google search services. Today's Decision is a precedent which establishes the framework for the assessment of the legality of this type of conduct."

Google may therefore have cause to worry about its Hotel Ads offering, which by its own admission is a huge moneymaker in Europe. Google is integrating Hotel Ads into search results, Maps, and Trips, becoming one of the leading hotel metasearch providers in the market in the process. Indeed, research conducted by Fastbooking earlier this year concluded that Google Hotel Ads' traffic was outpacing that of TripAdvisor.

The question is, though, is this because of a better product offering - or because of unfair advantage?

TripAdvisor results are often buried under Google's own Google+ review boxes, yet TripAdvisor hotel scores are based on hundreds of reviews, rather than the handfuls that make up Google+ scores. It's hard to argue that this ordering makes sense. And it hasn't gone unnoticed - Expedia and TripAdvisor have both previously complained that Google sets the competition rules within the hotel search industry.

Hoteliers are increasingly investing in 'search marketing' like Hotel Ads to capture potential guests at the earliest stage of their planning process. Google has previously released data that shows that 38% of travellers start their planning on a search engine, compared to the 8% that start on an OTA. Google's metasearch feature now takes up much of the attention once earned for free by strong placement in natural search results, and a desire to stay 'above the fold' is persuading hotels to list on it.

If the European Commission begin to focus their attention on Hotel Ads, it could be bad news for Google's burgeoning metasearch feature. But whether that would be good news for hotels is unclear. Would another monopolising provider just move into the same space? Far more unhelpful for hotels at the moment is the fact that links to their own websites rarely appear above paid ads for Booking.com and Expedia. The 'Google My Business' and metasearch features are actually helpful for hotels wanting to take attention away from the OTAs.

We are yet to see how Google will alter their Shopping service in response to the Commission's ruling, if they choose to at all. Whatever changes they do make may spell further disruption to an already rapidly-changing online travel industry.

About The Author

Lily is Lead Product Marketing Manager at Triptease. When she's not investigating the industry or spreading the word that #DirectIsBest, she enjoys music, cycling, and obscure radio quiz shows.

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