SA watchdog tackles Google on adverts

• Competition Commission makes list of recommendations for online retailers and websites

The Competition Commission wants Google to better identify adverts that come up in searches and place them lower down the page from organic search results, while also recommending that Google not be the built-in search option on SA mobile phones. The commission has made provisional wide-ranging recommendations for online retailers and websites including Google, Airbnb, Booking.com, Apple, Uber and Takealot as well as international and local restaurant franchisees.

The Competition Commission wants Google to better identify adverts that come up in searches and place them lower down the page from organic search results, while also recommending that Google not be the built-in search option on SA mobile phones.

The commission has made provisional wide-ranging recommendations for online retailers and websites including Google, Airbnb, Booking.com, Apple, Uber and Takealot as well as international and local restaurant franchisees.

The commission initiated an inquiry in 2021 into online retail, search engines and app stores because it said there were features of the market that distorted and restricted competition.

Globally regulators have expressed concern with big tech players’ apparent monopolistic behaviour. The 14-month inquiry investigated property classified sites, online and brick and mortar retailers, food delivery services such as Uber Eats and app stores such as that of Apple. It also investigated booking sites for flight tickets and hotels and comparator sites like Hippo, which compares insurance quotes.

Many recommendations upend how large multinationals such as Google and Apple do business, which could pose a threat to SA’s efforts to attract investment from abroad. The commission’s provisional report said if Amazon were to enter SA to sell online, as has been reported, these recommendations would apply to it too.

Final recommendations from market inquiries are now binding in law said advocate Margaretha Engelbrecht. This means that once final, they can be legally challenged by companies but it is not yet clear whether a review would be before the Competition Tribunal or high court, she said.

When Google is used to search for a product or business, paid adverts are displayed at the top of a page. The inquiry recommends that advertising is clearly displayed and labelled as an advert with a border and they should appear much lower down the page.

“Across all platforms there is a tendency to sell top-ranking search positions to businesses which are not the most relevant to the consumer and constitute a form of advertising that is not transparent. This impacts on consumer choice and competition, especially for small businesses that cannot spend as much as large businesses,” the commission said.

APPS

It said locally developed apps could not easily be found on the Google Play store and Apple app store as international apps appeared first. It recommends that these app stores “provide country-specific curation of app recommendations and provide free promotional credits to SA app developers to help get visibility”.

When addressing food delivery it said companies like Uber Eats and Mr D should not enforce rules that prevent restaurants from selling food more cheaply on their websites.

The firms also should not engage in predatory pricing — with extreme low-price food promotions that lose money but entrench their services as market delivery leaders.

International and national restaurant chains may not restrict their franchisees’ choice of local food delivery platform, and must communicate the lack of restrictions to franchisees, the commission recommended.

Uber Eats and Mr D add about 30% commission to the food price before delivery fees, and the commission says this must be displayed to customers.

It also said small business should pay lower fees to use companies such as Takealot and Uber Eats.

The inquiry’s provisional recommendation is that all leading platforms provide historically disadvantaged businesses personalised onboarding, a waiver on the associated costs and fees, free promotional credits, fees that are no higher than the best placed, and the opportunity for consumers to discover these businesses on the platform.

The commission recommended that the estate agents who have shares in the website privateproperty.co.za divest as it is believed these agents’ houses are favoured in search results. It wants online retailer Takealot that sells it own products and for third-party sellers to change its internal structure so that they have neutral processes for outside sellers and do not favour their own products on the site.

It is not clear how it would enforce these recommendations as many are linked to multinational companies’ algorithms.

Former Competition appeal court judge Dennis Davis has raised questions over whether SA competition authorities possess the technical skills to enforce competition rules on global tech players that use sophisticated algorithms.