Google and Booking Face European Objections Over Competition

In the past week, the European Commission has issued two separate statements of objections to Google and Booking Holdings over antitrust concerns.

The Commission preliminarily found that Google’s advertising technology services have for at least almost a decade broken the European Union’s antitrust laws because Google “self-preferences” these services and tools, essentially freezing out competitors. That gives Google the ability to charge higher advertising fees, and this leads to higher prices for consumers, according to the Commission.

“Google is active on both sides of the market with its publisher ad server and with its ad buying tools and holds a dominant position on both ends,” the Commission stated. “Furthermore, it operates the largest ad exchange.”

If the Commission ultimately finds that Google is indeed at fault, the Commission said, “a behavioral remedy” would be unlikely enough to cure the problem.

“The Commission’s preliminary view is therefore that only the mandatory divestment by Google of part of its services would address its competition concerns,” the Commission said.

This is the fourth time the Commission has accused Google of violating European Union antitrust laws, according to The New York Times.

While the Commission’s preliminary findings didn’t single out travel advertisers in particular, they would be affected in a manner similar to advertisers in other industries. That also goes for travelers, who face inflated trip costs because of higher advertising prices.

In response to the Commission’s statement of objections, Dan Taylor, vice president of Google Ads, said in a prepared statement: “Our advertising technology tools help websites and apps fund their content, and enable businesses of all sizes to effectively reach new customers. Google remains committed to creating value for our publisher and advertiser partners in this highly competitive sector. The Commission’s investigation focuses on a narrow aspect of our advertising business and is not new. We disagree with the EC’s view and we will respond accordingly.”

Booking’s Pending Acquisition of Etraveli Is In the Crosshairs

The Commission’s preliminary objections to Booking Holdings’ acquisition of Sweden-based Etraveli Group are more directly travel-related. That deal has been pending since November 2021 when Booking announced its proposed acquisition of private equity firm CVC Capital Partners-owned Etraveli for around $1.8 billion.

The Commission undertook an in-depth look at this deal in November 2022, and some — but not necessarily all — of its concerns seem a head-scratcher.

The committee found that Booking.com is the dominant online travel agency in the European zone. That’s true, but some of the concerns focus on Booking’s position in hotels.

The Commission stated the acquisition would: “Strengthen Booking’s dominant position in the hotel OTA market further, increasing its bargaining position towards hotels and diverting demand from cheaper alternative sales channels. Competition is already limited in the hotel OTA market and Booking appears to be unconstrained by competing OTAs, hotels and end customers.”

The “unconstrained by competing OTAs” mention seems to downplay the role of Google, which operates a robust hotel advertising business in Europe.

Meanwhile, Etraveli indeed operates several online travel agencies such as GoToGate and MyTrip, which offer hotels, as well as flights and rental cars. But these two brands already source their hotels from Booking.com, and they, as well as other brands in the Etraveli Group, focus on flights, not hotels, and the air business is the main reason Booking wants the deal.

Unlike Booking Holdings’ Priceline brand, which offered flights from day one in 1997, Booking.com only launched flights just before the pandemic, and expanding its flights business is Booking’s prime motivation behind the deal.

The acquisition would likely only improve Booking’s hotel business around the edges. And when it comes to any consumer harm, it should be noted that hotels are the ones that set rates — not Booking.com.

Still, the Commission believes that the deal would: “Allow Booking to expand its ecosystem of travel services (e.g., flights, accommodation, car rentals, attractions), making its market position in the hotel OTA market more difficult to contest.”

When considering these two Commission statements of objections against Google and Booking, it appears as though Google has the tougher hill to climb. Still, at this point — although there will be a lot of negotiating to come — it seems like Booking’s eventual and much-coveted acquisition of ETraveli Group is very much in doubt.