Europe slugs Google with antitrust charges and opens Android probe
The European Commission today formally charged Google with violating EU competition law by abusing its dominance in search to gain an edge over specialist rivals.
The charges could force Google to change the way it does business and pay fines of up to $6.4bn, or approximately 10 percent of its global revenues last year.
On Wednesday the European Commission commissioner Margrethe Vestager said the EC had formally sent a statement of objections to Google.
The statement says Google "abused its dominant position in the markets for general internet search services in the European Economic Area (EEA) by systematically favouring its own comparison shopping product in its general search results pages", breaching antitrust law, according to the EC.
"In the case of Google I am concerned that the company has given an unfair advantage to its own comparison shopping service, in breach of EU antitrust rules. Google now has the opportunity to convince the Commission to the contrary. However, if the investigation confirmed our concerns, Google would have to face the legal consequences and change the way it does business in Europe," Vestager said in a statement.
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A fortnight ago, Vestager sought permission from complainants to publish their claims, suggesting that formal charges were imminent. Past complainants include Microsoft, TripAdvisor, and Yelp, as well several German and French publishers.
The charges will bring to a head the EC's five-year investigation into Google's business practices in Europe, where it has a market share of over 90 percent share for search. The investigation has previously focused on whether Google used its dominance to give its own specialised searches in shopping, travel and other categories an edge over rivals', as well as claims Google reused content from rivals without authorisation, and forced publishers to use Google ads.
According to the FT, some of the 28 commissioners that will be shown the charges today are concerned that Vestager has narrowed the scope of the claims against Google.
ZDNet has also sought comment from Google and will update the story if it receives one.
Google has however acknowledged the charges in a letter to staff yesterday, reprinted by Recode, noting that it was "obviously very disappointing news", warning staff to expect "tough" criticism.
As Google points out though, the statement of objections is not a final finding and it has the opportunity to respond and have the claims modified - a process that could take two years.
One of the key reference points for the EC's actions against Microsoft in 2007, which ultimately saw the company fined hundreds of millions of euros. If the EC proceeds with a $6bn fine it would become the largest fine it has issued to date.
However, in its memo, Google told staff it has a "very strong case", that competition was alive and well, and noted that mobile and apps "has changed everything", offering consumers a way to get information directly from a mobile app rather than via search.
"The competition is just one click away - and it's growing. People can use Bing, Yahoo, Quora, DuckDuckGo, and a new wave of search assistants like Apple's Siri and Microsoft's Cortana, as well as more specialized services like Amazon, Idealo, Le Guide, Expedia, or eBay. In addition, users increasingly turn to social networks like Facebook and Twitter to find news and suggestions - where to eat or which movies to watch," Google said.
The EC on Wednesday confirmed it was opening a probe into Android and whether Google has been breached antitrust law here too.
"The Commission will assess if, by entering into anticompetitive agreements and/or by abusing a possible dominant position, Google has illegally hindered the development and market access of rival mobile operating systems, mobile communication applications and services in the European Economic Area," the EC said.
There are three areas the Commission will investigate - whether Google hampered rivals by forcing OEMs to only use Google services; whether it stopped those OEMs from using and marketing non-Google-controlled versions of Android; and whether bundling its services with Android has hurt competition.
Google also acknowledged the EC's investigation into Android in its memo. Google has faced a number of complaints from rivals, including over its bundling of Google apps like YouTube and Maps as well as complaints Google has blocked third-party app stores on Android.
Here too, Google says it has a strong case, since Android had lowered prices and increased choice for consumers and pointed out that Samsung's new Galaxy S6 included pre-installed apps from rivals.
"Consumers decide which apps they use and download on Android devices. Apps that compete directly with Google such as Facebook, Amazon, Microsoft Office, and Expedia are easily available to Android users; and
"Many of these apps come pre-loaded onto Android devices. Google apps, like Search, Maps, Gmail, and Google Play, are also available out of the box on many handsets. The recent Samsung S6 is a great example of this - there are pre-installed Facebook, Microsoft, and Google apps."
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