The European Union accused Google on Wednesday of cheating competitors by distorting Internet search results in favour of its Google Shopping service and also launched an antitrust probe into its Android mobile operating system.
In a statement, Competition Commissioner Margrethe Vestager said the US tech giant, which dominates Internet search engines globally, had been sent a Statement of Objections – effectively a charge sheet – to which it can respond.
“I am concerned that the company has given an unfair advantage to its own comparison shopping service, in breach of EU antitrust rules,” she said. “If the investigation confirmed our concerns, Google would have to face the legal consequences and change the way it does business in Europe.”
Both Vestager and her predecessor, Joaquín Almunia, have been under pressure from European and US tech concerns to investigate Google’s activities on the continent, where competitors – including Microsoft – say Google has abused its 90% market share by using its products, particularly search, to illegally promote its other products and services. Google-made products like Google+ and the company’s e-commerce sites are placed higher in search, detractors say, whether or not they are the superior option, and users are not aware they’re seeing what amounts to advertising.
At issue are multiple charges, among them the problem of interoperability – the capacity of programs and web pages created by competing companies to play nicely together, which can be undermined and subverted in ways that aren’t immediately obvious to the user. The antitrust agreement Almunia was brokering with the company last year was roundly criticized by other companies in the market.
Mathias Döpfner, CEO of German media company Axel Springer SE, wrote an open letter to Google chief executive Eric Schmidt a year ago in Frankfurter Allgemeine. “The statement ‘If you don’t like Google, you can remove yourself from their listings and go elsewhere,’” he wrote, “is about as realistic as recommending to an opponent of nuclear power that he just stop using electricity.”
Prasad Krishnamurthy, assistant professor of law at Berkeley Law, said the EC’s powers in this case are substantial and the punishments it could levy potentially catastrophic for Google.
“One power they have that makes them different from the US Federal Trade Commission or even the Department of Justice is that they can collect fines to the tune of tens of millions of dollars,” he said. Indeed, the Brussels-based authority fined computer chip-maker Intel €1.06bn in 2009 and upheld the fine on appeal last year.
There is a long history of international tech corporations encouraging the EC to punish competitors going back to (among others) Microsoft itself, after a complaint by Sun Microsystems, which accused Microsoft of abusing its majority share in a way not dissimilar from the charges expected to be filed against Google. Microsoft ended up paying €497m.
But, Krishnamurthy said, a fine is not the worst thing the EC can do, as far as Google is concerned. “The other power that the EC has is that they can put into place equitable remedies, conduct remedies, that would substantially hamper Google’s business practices. In some sense, they might be more worried about that than otherwise – to the extent that this messes with the search businesses, which offers advertisers revenue, it will affect their business model substantially.”
Google can talk to the European commission and bargain, of course, but they might want more than a fine and a promise not to do it again. “If they think that Google’s practices are anticompetitive and they feel strongly about a conduct remedy that goes to the heart of Google’s advertising model, [Google] won’t be able to settle and they’ll have to litigate.”
Google did not respond to multiple requests for comment.