BERLIN — In a recent opinion piece, “€2.4 billion for Google Shopping? Really?” (June 27) author Jeff Jarvis complained that the European Union’s decision sent the wrong signal to investors and techies: instead of creating an environment for investment and innovation, it told them they’d better stay away.

Since Google’s comparison shopping service was irrelevant, the decision must have been driven by other motives, Jarvis argues. He assumes protectionists efforts and a European reflex to regulate the web, particularly in an attempt to help European publishers who, realizing that they cannot compete with Google and Facebook, are seeking more regulation.

But the facts suggest a different story.

Thanks to its promotion in search results, Google Shopping turned into the company’s most profitable service. Some may not remember ever having used Google Shopping because the service is so neatly integrated into Google’s general search results that users do not realize that the product and price information they see, the so-called Product Listing Ads (PLA), are actually powered by another service: Google Shopping.

These Shopping ads are shown in return of around 10 percent of all search terms. They are impossible to miss. In 2016, retailers spent more on Google Shopping ads than they did on standard text ads, devoting, on average, 53 percent of their AdWords budgets to Shopping ads. Revenues from these ads grew by 70 percent in 2016, making Google Shopping the single biggest vehicle for revenue growth within Alphabet.

Overall, Google Shopping ads accounted for 16.1 percent of e-commerce sales in 2016. On average, the service had 20 million unique monthly visitors in Europe, more than any other comparison site.

Given that Google Shopping is Alphabet’s fastest growing advertising service — contrary to Jarvis’ claim — the EU decision hits Google at the heart of its business. The decision marks a precedent for assessing the legality of any other Google advertising-related service.

Alphabet’s revenues amounted to €90 billion in 2016. Considering the length of infringement proceedings and Google’s aggravating delaying tactics, the €2.4 billion fine is actually moderate.

Against this background, there is no basis for assuming a European “reflex to regulate the web.” Google has dominated the European search markets since 2004, with a constant market share above 90 percent in most countries. This entrenched dominance combined with the technical complexity and socio-economic relevance of internet search would justify specific regulation under most regulatory theories.

Yet, even in the latest round of legislative initiatives in Europe, no specific regulation of internet services has been suggested. While even the smallest publishers, broadcasters, telecoms providers and radio channels are subject to media-specific regulations, there are no such requirements for search or other web services. It makes sense for the European Commission to take an active role in the absence of any regulation of internet activities.

Click Here: geelong cats guernsey 2019

I share Jarvis’ assessment that EU governments must create an environment for investment and innovation. But in my view, Brussels’ decision on Google has done exactly that.

If Google is allowed to simply copy any promising idea and promote its own service ahead of the inventor’s, there would be no incentive for others to invest in innovation. The EU decision ensures that Google cannot use its power in search to determine the outcome of competition elsewhere — and this will benefit all internet players.

Thomas Höppner

Professor, Technical University Wildau, and partner with law firm Hausfeld, which represents several complainants in the Google investigation including Visual Meta, a subsidiary of Axel Springer (co-owner of POLITICO)

Berlin, Germany