Google to propose spinning-off Google Shopping in a bid to resolve EU antitrust case

Google Shopping to be made to stand on its own, suggests Google, in proposed solution to EU anti-trust case

Google is to propose spinning-off its Google Shopping service into a separate, standalone unit with its own P&L in a bid to resolve its European Union anti-trust case.

Bloomberg reports that while Google Shopping will still remain part of the company, it will have its own revenue that it will use to make bids for ads on equal terms against rivals.

We first heard about Google's plan to auction off ad placements earlier this month. Reuters reported that the will allow rival firms to bid for spots, known as 'Product Listing Ads' on its Shopping service.

As part of this plan, the company will tweak the advertising panel at the top of the search screen that shows several pictures of products with links to retailers' websites, Bloomberg notes, adding that each of 10 slots will be auctioned off to give rival sites, such as Kelkoo.com or Shopzilla, a chance to buy space to show links to retailers.

However, Google made a similar proposal to the EC three years ago, but the offer was ultimately rejected following negative feedback from rivals. However, under this earlier proposal, Google had reserved the first two slots for its own ads. The new offer would also see Google set a floor price with its own bids minus operating costs.

Despite these changes, Google's latest proposition also hasn't gone down well with rival shopping firms.

According to reports, Google sought feedback from four to five competitors and received an "overwhelmingly negative" response, while Foundem - whose complaint triggered the EU investigation in 2010 - has slammed the proposal as an "additional anti-competitive barrier".

"Unless Google is volunteering to break up its general-and specialised-search businesses, the inclusion of Google's comparison shopping competitors into a new or existing pay-for-placement auction would simply create an additional anti-competitive barrier," it said.

EU competition chief Margrethe Vestager told Reuters it was too early to say if the offer would be accepted.

"It is at this point in time, of course, impossible to say what will happen but obviously market reactions will be one of the things that we'll be taking under consideration."

Google has until Thursday to comply with the EC's ruling that it must end its anticompetitive shopping search results practices, or face an extra penalty of five per cent of its parent company Alphabet's daily income.

The European Commission handed Google a €2.42bn antitrust fine in June for "abusing its market dominance as a search engine by giving an illegal advantage to another Google product, its comparison shopping service".