The European Union accused Google
Inc on Wednesday of cheating competitors by distorting Internet search
results to favor its shopping service, and launched another antitrust
investigation into its Android mobile operating system.
European Competition Commissioner Margrethe Vestager addresses a news conference at the EU Commission headquarters in Brussels April 15, 2015. Photo: Reuters
Competition Commissioner Margrethe
Vestager said the U.S. tech giant, which dominates Internet search
engines worldwide, had been sent a Statement of Objections - effectively
a charge sheet - to which it can respond. She also said other probes
into Google's business practices would continue.
"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."
The Commission, whose control of
antitrust matters across the wealthy 28-nation bloc gives it a major say
in the fate of global corporations, can fine firms up to 10 percent of
their annual sales, in Google's case up to $6.6 billion.
If it finds that companies are abusing a
dominant market position, the EU regulator can also demand sweeping
changes to their business practices, as it did with U.S. software giant
Microsoft in 2004 and chip-maker Intel in 2009. Its record antitrust
fine was 1.09 billion euros on Intel.
Asked whether she was ready to go as far
as fining Google, Vestager told a news conference: "It is very
important that every road is open - first when it comes to commitments
but also when it comes to the other road, at the end of which is a
fine."
Google now had an opportunity to explain
itself, she said, and the case might be settled by the company making
further commitments to change its products.
Of the formal investigation into
Android, used on smart phones and tablets, Vestager said: "I want to
make sure the markets in this area can flourish without anticompetitive
constraints imposed by any company."
In its first reaction, the Mountain
View, California-based company said in a blog post that it strongly
disagreed with the EU's statement of objections and would make the case
that its products have fostered competition and benefited consumers.
"Android has been a key player in
spurring this competition and choice, lowering prices and increasing
choice for everyone (there are over 18,000 different devices available
today)," it said of its free operating system for mobile devices.
Vestager, a Danish liberal who took over
the politically charged EU competition policy dossier in November,
announced the moves on the eve of a high-profile visit to the United
States. Her findings following nearly five years of investigation and
abortive efforts by her Spanish predecessor, Joaquin Almunia, to strike a
deal with Google.
The focus on the ranking of searches for
shopping sites - Google has its own service called Google Shopping -
did not address all complaints lodged with the Commission by
competitors, large and small, in Europe and the United States, which say
Google has hurt their business.
Vestager stressed her antitrust staff
would continue to investigate other areas of concern, including alleged
"web scraping" to copy rivals' content, and restrictive practices on
advertising.
She stressed the EU regulator did not seek to change Google's screen design nor the mathematical algorithms it uses.
Google initially has 10 weeks to respond
to the charges and can demand a hearing. A final resolution - quite
possibly involving court action if Google does not choose to settle - is
likely to take many months and probably years.
Critics welcome
Google's critics welcomed the decision
to pursue the U.S. giant, though many industry experts believe the
action is unlikely to markedly shift existing business their way.
Rather, by firing a hefty shot across Google's bows, it may favor
competitors in new areas as technology develops.
That has been a priority for the new
European Commission led by Jean-Claude Juncker, which wants to promote a
more dynamic digital market in Europe and foster home-grown
enterprises.
Juncker is also pressing for a
free-trade treaty with Washington to bolster growth and Vestager has
stressed she is not seeking to penalize American firms or large
companies - merely to avoid abuses of dominant market positions.
Vestager's action won cross-party
endorsement in the European Parliament. In a statement headlined "Even
Uncle Google must play fair", German lawmaker Manfred Weber, floor
leader of the largest conservative group, said: "Internet is not the
Wild West - there are rules on the web that must also be respected."
French Socialists Pervenche Beres and
Virginie Roziere applauded the Commission for "at long last" taking
action against "the threat posed to the European economy" and renewed
their call for the breakup of Google.
President Barack Obama accused the EU in February of taking a protectionist stance against the U.S. tech industry.
American domination of the Internet and
other new technology sectors has prompted a mixture of admiration and
anxiety in Europe in an echo of similar mixed feelings about reliance on
U.S. military might for security against a resurgent Moscow.
However, many of the firms that have
complained to Brussels to challenge Google's business practices in
Europe are themselves U.S. companies, such as Microsoft and Expedia.
The Initiative for a Competitive Online
Marketplace, an alliance of businesses, applauded the Commission for
taking what it called "decisive action to end Google’s years of abusive
behavior in its long-running antitrust case".
Germany, backed by major companies in
the EU's biggest economy, has been particularly vocal in pressing the
Commission to act against Google.
Axel Springer chief Mathias Doepfner
told the German media group's shareholders in Berlin on Tuesday that
Almunia's efforts to negotiate a deal with Google would have been a
"shoddy compromise" and praised Vestager for being "more determined,
quicker and more true to the facts".
Almunia, who launched the initial probe
in 2010, last year yielded to pressure from Germany and others to
abandon a deal he had been favoring to settle the case.
Google has put forward three proposals
to resolve the case. Most recently, just over a year ago, it offered to
give competing products and services bigger visibility on its website,
let content providers decide what material it can use for its own
services and make it easier for advertisers to move their campaigns to
rivals.
Almunia initially accepted that deal,
only to reverse his decision six months later and demand more
concessions, leaving the ultimate decision to his successor.
Microsoft has been hit with total EU fines of more than 2.2 billion euros ($2.34 billion) over the past decade.
Source: Reuters
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