After receiving a €2.42 billion fine from the European Commission back in June, Google is now letting other comparison shopping services (rather than just its own Google Shopping) place ads at the top of its search results.

What Happened?

Back in June, Google was deemed to have broken EU antitrust rules, and was handed the EC regulator’s largest fine to date for distorting the market by promoting its own shopping comparison service at the top of its own search engine results, and thereby demoting competitors’ shopping service adds.

Google was given a 3 month deadline to put things right, or face paying 5% of its parent company Alphabet’s average daily worldwide earnings, which could amount to an estimated $14m a day. Google must also submit a report on its compliance with the EC’s ruling every four months.

Prior to the decision to fine Google, it was reported that the company disagreed with the EC’s findings, and had argued that Amazon and eBay exerted more influence over the public’s spending habits.

Changes

Google is now reported to have made changes to how its search engine results to comply with the EC’s ruling. These changes are reported to include:

• Comparison shopping services being given the same opportunity to show shopping ads from merchants on Google’s Search results pages as are given to Google Shopping.
• Google Shopping operating as though it were a separate business in order to create greater equality in search engine results.
• The foot of adverts will now visibly identify the comparison shopping service via which the ad arrived, as well as the merchant concerned.

The changes will initially affect shopping ads in Austria, Belgium, the Czech Republic, Denmark, France, Germany, Italy, Ireland, Netherlands, Norway, Poland, Portugal, Spain, Sweden, Switzerland and the U.K.

Criticism

Critics of Google’s announcement that it has changed things to make it fairer for advertisers in response to the ruling have been quick to say that Google may, in fact, profit from the ruling by being able to charge comparison shopping sites for expensive ad slots when the sites used to appear for free in organic search results.

Also, some commentators have suggested that Google could impose penalties on comparison shopping sites that got it into trouble with the Commission, and that Google should simply let its search engine crawl, index, and rank comparison shopping results in the same way that it does other web pages.

What Does This Mean For Your Business?

Some see this whole situation as a political move at a time where there has been mounting anxiety in European capitals about the influence that the US giant companies known as ‘Gafa’ – Google, Apple, Facebook and Amazon – have on our lives. This has been amplified by the deterioration in European / US trade relations since the start of the Trump administration.

It has to be said though that it is quite an unusual situation anyway whereby the company displaying the adverts to so many people around the world has a less than transparent system for doing so (using its own essentially secret algorithms). Simply because of the sheer volume of adverts that Google sells and displays, having to change the system even slightly in a relatively short time frame may have had a negative impact on Google’s profits. Some commentators have also pointed out, however, that the large fine that Google was given could actually have been twice as large.

If the ad playing field actually does now become a more level one, this can only really be good news for smaller shopping sites, but, although it offers online businesses new opportunities, the change could also offer them new costs too.

A year after launching an investigation into the viability of introducing an e-currency, Sweden’s central bank looks likely to introduce the ‘e-krona’ as a government-guaranteed means of payment and a digital complement to cash.

Why?

In November last year, Sweden’s central Riksbank, which had been the first to issue paper banknotes in the 1660s, reported a massive drop in the use of cash with the amount of notes and coins in circulation having fallen by 40% since 2009. This trend among the general population, coupled with the increasing digitisation of banking services, forced Riksbank to decide on exploring the real possibility of introducing the ekrona within two years.

Sweden’s Riksbank, like other central banks, currently provides electronic money through accounts to banks and clearing organisations, but only provides central bank money to individuals in the form of notes and coins.
The plan now, therefore, is to create a proposal for the digital currency, and then, in 2018, to explore more of the detail about any regulatory challenges, and about how an e-currency system for all could function in practice in the country.

Issues

Among the many issues that the central bank and the government are considering in drawing up their proposals for the possible introduction of the digital currency, is the potential vulnerability of a cashless society in the case of a systemic failure, due to a digital payments market being in the hands of only a small number of commercial players, payment services and infrastructures (as is currently the case in Sweden).

Other issues, such as how the ever-declining use of cash in Sweden will affect society (and certain groups within it), and the infrastructure, and what could happen when there is no central bank money in society, are all being considered.

How Would It Work?

It is currently envisioned that the e-krona could be used for small payments between consumers and companies and could be made available via an account or through an app or card.

The advantages of having the e-krona are cost savings, convenience, accessibility (24 hours a day, seven days a week), and the fact that it would be risk-free because it would still be linked directly to the central bank.

Not New

Digital currencies are not new. The most well known digital crypto-currency ‘Bitcoin’ has seen a large rise in value in recent years, and despite having a ban placed on trading in the currency 2 weeks ago in the Chinese markets (as a way for the Chinese government to gain some control over it), has rallied round and recovered its initial 8% drop in value.
Unlike the proposed e-krona, however, Bitcoin is not linked to any banks, and is generally used by companies, organisations, banks, and investors rather than by individuals (1 Bitcoin = £3238.86).

What Does This Mean For Your Business?

For businesses, handling cash can be costly and time-consuming, and for consumers, the introduction of contactless payments (the closest thing we have to digital currency) has proved to be very convenient and easy to use. In July, for example, Browns of Brockley, an independent café in east-London become the UK’s latest small business to go completely cashless, preferring instead to take just (mainly contactless) card payments. This move was actually inspired by the owner’s visit to Sweden, and his positive experiences in the near cashless society where he reported that he didn’t have to withdraw money once.

Cash is also declining in use in the UK, and the prospect of digital currencies that could be used by all (not just large organisations or banks) could be a win-win situation for consumers and UK businesses, particularly small businesses. Digital currencies could be a way to help business to ultimately increase efficiency and boost profits.

In the case of Bitcoin, for larger businesses and organisations (and investors) it offers the benefits of freedom from the constraints and controls of banks, speed, convenience and accessibility (borderless, day or night). This kind of currency and its underlying technology (Blockchain) look set to make its easier to do large-scale business in the not-too-distant future.

A recent YouGov survey of more than 2,000 people in the UK, sponsored by subscription software firm Zuora has revealed that the average monthly spend by UK adults on subscription services of all kinds has tripled in the past year.

Why?

A challenging global economy, fierce competition, disruption and changes across many industry sectors, the need to reduce costs and combat piracy (e.g. of software), and the effect of consumers getting used to using their mobile devices to sign up for what they want, when they want (and switch just as easily), plus a shift towards apps and the ease on online payment systems are some of the contributors to what has become a challenge to customer loyalty and retention.
This has meant that businesses have been forced to move away from a product-centric mentality, and to try and create long-term brand affinity based around flexible subscription-based services. This, in turn, has meant that the ‘subscription economy’ has become a reality for many of us.

What Kinds of Subscriptions?

Businesses are now offering a vast range of subscription-based services including:

• Software – Software as a Service (SaaS) models are now commonplace (no more sending out CDs).
• Magazines, newspapers and journals – subscription-based services offer huge cost savings, convenience, and environmental benefits in this sector.
• Cars – car makers are now providing services where customers pay to use cars rather than buying them outright.
• Healthcare – medical and dental services.
• Online data storage services – e.g. Google Drive and Dropbox.
• Telecoms – for example, Norway’s state-owned operator Telenor offers a subscription-based service for businesses trying to use IoT access to technology.
• Airlines – Surf Air, for example, is offering a subscription-based service in Europe whereby, for a monthly charge (and an initial membership fee), customers can subscribe and receive unlimited flights.
• Grocery shopping services – now have nearly 2 million UK subscribers.
• In-car apps – now have 650,000 subscribers in the UK.
• Beauty and grooming – this includes subscriptions for men’s shaving service, Harry’s, which now has more than 1.3 million UK monthly subscribers.

The Figures

The report shows that a staggering 58 million UK shoppers now subscribe to services, and UK consumers now spend 12% of their monthly disposable income on subscription services. This means that the UK adult population is now spending an average £56 per month on subscription services. 35–54 year-olds are spending the most at £62 every month on their subscriptions, although spending has risen across all age groups and isn’t confined to just millennials.

What Does This Mean For Your Business?

Consumers in the UK now have a clear preference for on-demand, personalised, and subscription-based access to services. The subscription-business model has officially gone mainstream, and in order to compete effectively, retain as well as gain customers, and to protect customer and brand loyalty, businesses need to look seriously at how they can take advantage of this opportunity by shifting and transforming their business models so that they are in-line with the subscription economy that consumers are buying so heavily into.

One other interesting finding in the report is that a quarter of the UK population predict that they will be subscribing to even more services over the next five years. This should flag-up the importance for UK businesses to look now at how they can best position themselves to get a piece of the subscription pie in what appears to be a trend that is set to continue.