Google has drastically reduced incentives for retailers to create what some allege are “fake” price comparison sites.
Sky News reported last month that Google began encouraging advertising agencies to create price comparison sites that would be displayed in the Google Shopping box.
This initiative was introduced in response to Google being fined a record-breaking 2.4 billion Euros by the European Commission last year for anti-competitive practices.
Google was ordered to give comparison shopping services the same opportunity to show ads in search results as it gives to Google Shopping.
In June 2018, Google launched its Comparison Shopping Service.
Upon launching the service Google reportedly invited advertising agencies to build comparison shopping sites while offering generous incentives
In order to take advantage of the incentives, ad agencies created “fake” comparison shopping sites and placed ads to appear in Google Shopping.
Sky News calls the sites fake because they weren’t created for customers to actually go there and shop. In some cases, the sites didn’t even work properly when visiting them.
One ad agency interviewed by Sky News said they created a comparison shopping service for their clients solely as a means of getting a rebate from Google.
Another ad firm, called Shoptimised, admits their comparison shopping site was never intended for consumers.
Google reportedly offered retailers a monthly rebate of £32,000 if they advertised through a Google-certified comparison shopping service. It also offered a 20% discount on ads.
So ad agencies reaped the benefits of those incentives while Google created the appearance of a level playing field in Google Shopping, as ordered by the European Commission.
Google is under serious pressure to comply with the European Commissions ruling.
If found in non-compliance, Google could be liable for additional payments of up to 5% of the average daily worldwide turnover of Alphabet.
Google Substantially Lowers the Incentives
Google has now reduced the incentives offered to Google-certified comparison shopping services by nearly 85%.
This was reported last week by Sky News, who says Google has faced criticism since the initial investigation was published.
Google lowered the rebate on advertising spend from 30% to 5%, effective November 1st.
The sudden slashing of incentives has left agencies feeling “betrayed,” with several expressing their dismay to Sky News.
Claims of fake comparison shopping sites have reached the European Commission, although Google says the company’s actions have put it in compliance with the commission’s order.