Why Turkey’s Regulators Turned Such a Downside for Google

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Type in “running shoes,” “best laptop,” or “camping gear” into Google from almost anywhere in the world and you’ll see a carousel at the top of the screen with ads from websites promoting products for you to search and compare.

Not in Turkey. Google eliminated these ads last year after Turkish antitrust authorities ordered the company to make it easier for competing shopping websites to display more prominently in their ads.

Turkish demands to crack down on Google’s shopping service went further than any other global regulator to date. But that was not all. In April, the country’s officials took another bold move, saying the company’s lucrative search function for finding local destinations such as “pharmacy nearby” was in breach of antitrust laws, a first of its kind to question the future of that service.

Tensions between Turkey and Google reflect the growing hostility towards the Silicon Valley giants even in places like Turkey where there is little experience of enforcing antitrust law against the industry. Efforts threaten to reverse the conditions – an open global Internet and light government regulation – that have fueled the growth of these companies for the past two decades. In their place could be a chessboard of laws and regulations, with the products and services available depending on where a person signs up.

Google was a constant target. This month, French antitrust authorities fined Google € 500 million, or $ 593 million, for failing to negotiate in good faith a licensing agreement with news publishers for the use of short blurbs from articles in search results. Last month, the Indian competition authorities opened an investigation into allegations that Google exploited its dominant position as the owner of the Android mobile operating system to gain an advantage in the smart TV market.

In May, the Italian antitrust authorities fined Google € 102 million for blocking access to its in-car Android software system for an electric vehicle services app.

Some attribute Google’s problems in Turkey in part to President Recep Tayyip Erdogan’s increasingly authoritarian leadership and efforts to wrest power from Western internet companies. But the pushback in Turkey and elsewhere is also being driven by Google’s competitors like Yelp. These competitors have spent years campaigning with regulators around the world to be tougher than the authorities in the United States and Europe, the traditional powers to regulate global corporations. Sometimes, as in Turkey, the rivals work with governments whose policies they may otherwise oppose.

“Enforcers from around the world believe that something needs to be done and they are 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 lacked the resources or knowledge to launch antitrust proceedings against large international companies, said William E. Kovacic, a former chairman of the Federal Trade Commission. But as more countries crack down on big tech, he said a “shared intellectual infrastructure” makes it easier to prosecute a case. In Turkey, the authorities relied on findings from the European Commission.

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

“The Turkish experience will be important,” he said. “There will be other countries that are similarly positioned and say, ‘Why not us?'”

Google, which had successfully fought off some previous antitrust investigations by Turkish regulators into online advertising and search rankings, said it removed services like the shopping ads when the changes requested by the authorities made them less beneficial to users.

“We have worked constructively with regulators around the world and have been able to find solutions based on fact and evidence to address similar concerns without removing features that people and businesses find helpful,” said Miguel Perez Guerra, Senior Competition Counsel at Google, in a in opinion.

Google’s rivals went before Turkish regulators in 2018 after the European Union fined Google € 2.42 billion, worth around $ 2.87 billion today, for suspending its online shopping service Preferred search results over competitors. The fine was a record, but Google’s opponents were upset that regulators didn’t force the company to further change its practices. Google is still giving preferential treatment to its shopping service, they said, to reduce web traffic and the visibility of their websites.

Competing services, including Kelkoo, a comparison shopping site based in London, told Turkish officials that the European penalty did not restore competition. Competitors called for more opportunities for better visibility in Google search results, some of the most valuable properties on the internet. The Turkish authorities followed suit and rejected a more modest proposal from Google.

Opponents said Google subsequently eliminated the ad fields to avoid a precedent that other jurisdictions could follow, similar to how it shut down its intelligence service in Spain 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 work for something better,” said Richard Stables, Kelkoo’s CEO, of the efforts to influence Turkey. “Turkey is generally not a huge market in terms of value, but it could be important as a guide to other regulators in the future.”

Turkey’s competition authority praised Google’s competitors and consumer groups for explaining how the company has unfairly used its position as a gatekeeper in search and mobile software to gain an advantage in areas such as shopping and local business listings.

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

Turkey’s position as a major antitrust battleground is centered on one of Google’s key services: search queries such as “restaurants open near me” which lead to an information box pointing to other Google services such as Maps.

For years, Yelp tried unsuccessfully to get regulators in the US, European Union, and Brazil to track Google’s local search business, arguing that it was wrongly banned.

In 2018, shortly after Turkey announced it was investigating Google’s shopping service, Yelp’s public policy director Luther Lowe flew to the capital, Ankara, to meet with antitrust authorities. He provided the regulators with a copy of a previous complaint the company had lodged with the European Commission in Turkish on a USB stick, along with other evidence. His efforts helped initiate an investigation.

In April, the Turkish authorities delivered the verdict that Yelp requested. According to the regulators, Google has violated antitrust laws by displaying local search results that were preventing competitors from critical internet traffic.

The resulting fine, about $ 37 million, was relatively tiny. More important to Yelp is what could happen next: In the coming months, Google will have to work around to include competitor listings in local search results. If the proposed fixes don’t satisfy regulators, another showdown could ensue, leaving Google with the choice of offering additional changes or discontinuing the service.

Given Mr Erdogan’s history against Google’s YouTube – he temporarily blocked access in 2007 and 2014 – many question Turkey’s motives in the cartel cases.

The country’s antitrust agency said its actions against Google are not political, and some legal experts said they respect the regulator’s independence. But Mr Erdogan has tightened his grip on the government bureaucracy. Last year Turkey passed a law regulating social media content targeted at YouTube, Facebook and Twitter. Critics of the move saw it as an attempt to tighten control over information and suppress dissenting opinions.

Atilla Yesilada, an investment analyst specializing in Turkey, said the antitrust agency has become more politicized in the past two years and is following the government’s priorities. Others said that while the regulator is seen as better than other institutions in Turkey, it is not completely independent.

An Istanbul attorney representing Google Gonenc Gurkaynak said that while Turkey went further than other regulators, he did not believe the antitrust decisions were related to other government regulatory efforts. “We didn’t see any connection,” he said.

Yelp’s Mr Lowe, who has spent more than a decade urging regulators to crack down on Google over local search, acknowledged Turkey’s inconsistent political environment but said the antitrust authority was acting independently. Disappointed that other governments had not responded to Yelps complaints, he said Turkey could provide a key example of how strict enforcement could force Google’s services to change.

“This is the first real chance to be successful,” Lowe said of Turkey. “That’s the goal I’ve set myself all along.”

Carlotta Gall contributed to the coverage.