By Jasper van den Boom & Sarah Hinck
This brief summary of the Alphabet workshop sheds light on its most important changes, some of the most relevant questions and answers in the Q&A, and shares some general observations. These reports are intended to represent facts and convey information on what was discussed during the workshops. They are not intended to provide normative considerations on whether the undertaking complies.
Opening remarks
Alphabet started with a brief explanation of everything it has done to comply with the DMA across services. Noting the large number of core platform services that it had to make changes to and the large number of provisions with which it had to comply. In fact, the list was so extensive that Alphabet was not able to discuss all provisions in just one day. Alphabet noted that the DMA marked a significant shift in its business model and day-to-day operations. Amongst its designated services are its search engine, Android OS, Play Store, YouTube video-sharing service, it’s web browser, online advertising services, Google Maps as an Online Intermediation Service. Alphabet has made changes related to art. 5(2), 6(2), 6(9), and 6(10) DMA that apply to all its services. For other provisions, it made changes required to the specific service.
Each decision taken has multifaceted implications as many services are impacted, so Alphabet mentioned that their compliance solutions should be valued as a whole, not for each service individually. In trying to comply with the DMA, Alphabet had to strike a balance between the interests and experiences of its end- and business users, safety and security, and compliance with the law. Hereunder, an overview is provided of the changes discussed in the compliance workshop.
Google Android and Search Data – Articles 6(3), 6(7) and 6(11)
The discussion on article 6(3) DMA focused on the introduction of choice screens in Google Android. Here, Google referred to its experience in implementing such choice screens under direction of the European Commission, noting that they have taken into account the feedback they have received on their previous choice screen designs as to further optimize the choice screens for users and in terms of compliance with the DMA.
On Android devices, there are quite a few choices for users to make. Alphabet states that the choices are presented neutrally for every device and appear during device set-up. Users will select their online search engine and their browser in separate choice screens. Alphabet argues that the choice screens are neutral as they use stratified randomization, which will be updated into full randomization. Each choice screen offers 12 choices, including description, in a random order without any steering towards Alphabet’s proprietary services. Once the users selects a browser, it will be downloaded automatically in the background and set it as a default, the selected search engine will also be set as default, which can later be changed in settings. Participation in the choice screen by third parties is free of charge.
The choice screens are already available on Google Pixel. However, they will not be available on third-party devices until mid-May of this year. Alphabet will require third-party original equipment manufacturers (OEMs) to introduce the choice screens with the first update after agreements. Alphabet does not have any visibility of how successful OEMs are in rolling out this feature. With regard to existing OEMs, Alphabet indicates that they cannot force them to apply new updates but that there is technical advisory. Besides that, the pre-DMA choice screens will stay in place until the new choice screens are rolled out.
On art. 6(11), Alphabet remarks that the sharing of search data is a far-reaching change. Some search queries include sensitive user data, there are also two different obligations in one: share and anonymize data. Alphabet remarks there is a natural tension between these obligations. Alphabet has engaged with online search engines and data privacy experts to navigate this tension. The solution has taken shape as a data set that includes several million queries and extensive information on Google results. Alphabet has come up with competitive pricing for this access.
Alphabet explains which types of data fields are included in the data set (device type, query string, country etc.) and their anonymization measures (at least 30 users must have made the query in the past 13 months before the relevant quarter). Alphabet will roll out additional mechanisms for queries with under 30 searches in July. Licensees of the data set can choose to pay for the entire set or sub-set of data. For these subsets, third parties pay €3 per 1000 distinct queries. Alphabet has based the prices on the basis of a market analysis of competitive offerings from a variety of third parties and believes that this solution offers price flexibility. The datasets are delivered per quarter, maintain open standards, and can be downloaded through Google Cloud. Third parties that wish to be eligible to receive data must prove that they maintain high standards for safety and security and they can only be active in the EEA.
On art. 6(7), Alphabet notes that it is already mostly compliant. In order to mitigate remaining concerns, google has built a portal where interested parties can file observations and submit requests for further changes.
The Q&A focused predominantly on the choice screens. Observers wondered why there were no choice screens for the app stores users wish to use, where Alphabet responded that this was not a requirement under the DMA, and whether the introduction of a choice screen would really help prevent steering with so many pre-installed Google apps, which warranted the same response. Moreover, observers asked on whether Alphabet would share data on the effectiveness of choice screen with the Commission and the public. To which Alphabet noted it would share information with the Commission where available and appropriate. There were another range of questions on the technicality of data sharing for competing search engines, which Alphabet answered appropriately, elaborating on how data is anonymized and syndicated, what security measures they take and that the data is only available to third-party search engines and not researchers under the DMA.
Google Play – Articles 5(4), 5(7) and 6(4)
The second session discussed the changes to Alphabet’s app marketplace. Alphabet started by highlighting that its Play Store has always been largely open and interoperable. On the application of art. 6(4) DMA, Alphabet mentioned that it has always been possible to install third-party apps, to side-load, and to install third-party marketplaces. In fact, most of their OEMs do install their own third-party marketplace. As a result, Alphabet did not have to make technical changes under the DMA.
For art. 5(7) DMA, Google has made a number of important changes to its fee model as to allow for more direct promotions by software developers. Here, Alphabet has introduced the user choice billing program and the EEA program. Following the user choice billing, users are presented with the option to pay through Google’s payment system or a third-party payment system. The EEA program allows developers to only show a third-party payment system without showing Google’s payment system. Developers can choose to show either one screen or the other, and can revert their choices at any time. Alphabet has introduced a number of changes to their billing and fees related to these options, which are discussed later.
On art 5(4), Alphabet has introduced new options for developers to promote offers outside of the Play Store. These include external offers programs with specific terms and conditions to send messages in-app. Alphabet will not prescribe how developers can and will communicate in-app, but there will be user safety requirements. Developers can direct users to their own websites, but will need to provide factual information including language that informs users they are leaving Google’s services and that these terms will not apply anymore.
Alphabet will charge a number of additional fees. While there is no up-front fee, and fees are time limited, these are quite significant. Fees for user choice billing are lowered from 4% to 3%. Meanwhile, for direct promotions, Alphabet charges an initial acquisition fee of 5% for automatically renewing subscriptions and 10% for other digital items, as well as 17% charge for providing Play Security and Update Services. The initial acquisition fee applies for two years, and the 17% charge is ongoing. Altogether, the fees for direct promotions will not be much lower than for using Google services directly. Alphabet iterated that it made these choices, and not an upfront fee model, on the basis of developer feedback. This way, developers do not have to start paying until money comes in.
In the Q&A, many observers asked questions on the freedom of developers to offer their goods and the fee models. For instance, what would happen after the two years expire. Here, Alphabet explained that they would no longer pay the initial acquisition fee but would still pay for the ongoing services provided by Alphabet. Others asked whether these prices would actually lead to competition, or if there is a risk that users would have to pay a higher price to use direct promotions or third party services. Here, Alphabet responded by stating it believed its pricing was competitive. There were also a number of questions on technical aspects of side-loading and installation and the unbundling of the ecosystem. Here, Alphabet mostly defined what was in the scope of the DMA and what was not. Finally, one observer commented on Alphabet’s limited explanation of how it had determined its services were offered on a FRAND basis. Here, Alphabet explained it has provided more details in the confidential report to the Commission.
Google Search – Article 6(5)
The introduction of art. 6(5) DMA required extensive changes to Google’s horizontal search results page. In order to comply with the requirement of no self-preferencing, 300 Alphabet engineers, product designers and product managers were involved in a two year process. Alphabet understood the intention behind the words as to create new opportunities for businesses on search. The changes are multi-faceted, and have to strike a balance between the interests of vertical search service (VSS) providers and direct suppliers. There is a natural tension: promoting VSS diminishes the prominence of direct suppliers and vice versa. Alphabet argues it has made an evidence-based assessment to strike a reasonable balance between the interests of these groups, and have engaged extensively with stakeholders and the Commission.
Alphabet explains these changes by remarking a number of subtractions (removed features) and additions (new features). In terms of subtractions, it has removed reserved links from search to Google Services, related to buttons or boxes that directly promoted Alphabet’s proprietary services; it has removed direct links from Google Maps to Google’s Hotel service; it has removed direct links to its Flights service; and it has changed the user interface in their flight results to include third party VSS.
In terms of additions. For VSS, Alphabet will now allow richer descriptions in terms of prices and images under the blue links, as long as VSS pay a mark-up; it has introduced a specific box dedicated to VSS, which VSS can request eligibility for free of charge; in the VSS box, VSS providers can also have richer descriptions if they pay a mark-up; users can choose to see just results from VSS by clicking a button above the search results; and users can preview more information such as reviews curated by the VSS in the horizontal search results screen. For direct suppliers, there are more prominent links to the website of the supplier; direct suppliers can also pay a mark-up to have richer descriptions with their search results; they can also include more metadata such as reviews; and direct suppliers are included if users click the Flights button. Alphabet then set out the details of participation in these programs, as to how direct suppliers and VSS can apply and what technical solutions were used.
This Q&A was arguably the tensest, as many direct suppliers and VSS providers highlighted how these changes harmed their competitive position vis-à-vis Google Search and one another. More visibility for direct suppliers on the horizontal search page meant a decline in added value for the VSS, and more visibility to the VSS meant more intermediation for direct suppliers. After a number of contradictory demands and statements by one group and the other, one observer commented that Alphabet has successfully intensified competition between VSS and direct suppliers but not between them and Alphabet itself. One observer noted that it is questionable whether Alphabet is competing on the merits, or if its position is still limiting the competitive efforts of VSS and Comparison Shopping Service providers. Alphabet also answered questions on the implications for specific sectors or services, highlighting the complexity of balancing different interests in different areas of activity. On questions surrounding whether they would make relevant data from their testing and indicators of success available, Alphabet mentioned that the data they are willing to share is that 85% of their users found the inclusion of prices in general search useful and that 85% found buttons with specific links to be a natural part of search. In terms of indicators, Alphabet emphasized that it focuses on ensuring technical compliance, but that effective compliance should not be measured in the form of outputs.
Data related obligations – Articles 5(2), 6(9), 6(10)
Alphabet has introduced a number of changes to its data practices that span across all its designated CPS and beyond. For 5(2) DMA, Alphabet has made changes to the front-end and back-end. On the front-end, Alphabet has introduced new consent screens and enhanced its consent mechanism to allow or prevent the cross-use of data. They also allow users to defer giving consent if the timing is unfortunate, this would make them operate from a non-consented default and data would not be shared between services.
On the back end, if users do not consent, data generated from each source is treated as being in a data silo, meaning that should be considered a separate data-entity. Alphabet exemplified how this would impact personalization, so that search queries in Google Search are not used for video recommendations on YouTube and vice versa. Alphabet labels data with the source and time so that it is clear when and where data is generated, it has tried to label data as far back as possible. The new consent options are based on best practices, own experiences, and third-party research to be neutral and well-informed. Once consent is refused, Alphabet will not continue to persuade users to give consent.
Alphabet deals with art. 6(9) and 6(10) together as they mirror one another. Alphabet argues that here it has been on the forefront of promoting data portability. They view this as a differentiator that adds value, and Alphabet has allowed data portability for over 15 years. To comply with the DMA, they have enhanced their data portability mechanisms. Alphabet already had Takeout, which allows users to download their information to their personal devices or download it to cloud-based storage such as Dropbox. Data downloaded through Takeout is offered in a common machine-readable format, it also allows for portability options and customization. Now, in light of the DMA, Alphabet has introduced the Data Portability API, this allows users to directly transfer their data to third parties. This provides third parties with a rich developer experience, but also creates safety risks for users. Alphabet mitigates these risks by ensuring the data goes to the right people through their verification process, where they check the privacy policy of the third party and whether they are not a known bad actor. After granting authorization, there is ongoing monitoring of the use of the data. Alphabet also provides documentation and resources to developers so that they can make the most out of the API.
Art 6(10) relates to providing business users with the data they have generated on Alphabet platforms. Here, Alphabet believes there is a mutual interest as sharing performance data also improves the experiences of their clientele. Alphabet shares a number of categories of data, including performance information, quality data, benchmarking information and other data that is relevant for conversions or engagement with video content. Alphabet offers a number of supporting resources on how developers or content creators can use the information to enhance their services and performance, and a number of tools to make sense of the data. Alphabet believes that they are in a strong position here to prove compliance, and will continue to develop their solutions.
Observations
Alphabet has had to make a large number of changes across a large number of services. This has been an intensive efforts and due to Alphabet’s central position for the business activities of many types of third parties this is not easy. They have had to consider the interests of app developers, third-party search engines, direct suppliers, VSS providers, end-users etcetera. Alphabet’s road to compliance is long and complicated, but they do not escape the Commission’s scrutiny, especially where it relates to their activities in horizontal search. This is evidenced by the Commission’s opening of a first non-compliance investigation just a few days after Alphabet’s compliance workshop. Alphabet has stated that it will – and most likely must – continue to work on their compliance solutions over time. One question that remains is how this compliance is measured: will it suffice that they show technical compliance, or will there be an expectation of changes to outcomes? It seems that the work for Alphabet is still far from over.