On Wednesday the 15th of April, the European Union launched a legal attack against American Internet Multinational, Google, charging the company with violating antitrust rules with bias search results. The commission argues that Google’s shopping comparison service promotes the company’s product more than that of its competitors, abusing its superiority of the European search market. The charge, the result of a five-year investigation embarked on by the EU competition commission, will likely spark a debate on Google’s intent – consumer satisfaction or competition manipulation?
The attack could also result in a long regulatory nuisance, and could be quite costly. The search giant could be fined up to $6.4 billion, approximately a third of its 2014 annual income.
But that’s not all, the EU had one more strike for Google – a formal investigation has been opened into the company’s popular Android software. The commission is set out to inquire whether Google has manipulated gadget companies into featuring their products on their devices, thereby preventing them from developing competing software.
Google’s shopping comparison
Right now, the Commissions gaze is fixed on Google shopping – the company’s shopping comparison service. This is a search service which shows a variety of products and prices when consumers make a search for products to buy. The commission alleges that ‘Google Shopping’ is always at the top of Google’s search results page to the detriment of competitors, even when these competitors might have better deals. “I am concerned that the company has given an unfair advantage to its own comparison shopping service, in breach of EU antitrust rules,” said Margrethe Vestager, the EU Commissioner in charge of competition policy. She emphasises that the objective of the commission is to implement EU antitrust rules, ensuring that European consumers have a wide range of choices and competition is not stifled. However, Google remains defiant, standing on the position that its search results are packaged to enable consumers easily find their product of choice.
Google’s Android
Google’s Android software is used by most gadget manufacturers because it costs little or nothing. The development of the operating system, which is designed to feature Google’s search engine, Gmail, maps, and other products, has been spearheaded by Google since 2005. These manufacturers sign agreements with Google to gain installation rights of Google’s applications on their devices. Hence the Commission’s seeks to inquire whether Google has violated EU antitrust rules by hampering the progress and market access of competing mobile operating applications, systems, and services, thereby harming the consumers and creators of to such products and services.
Regarding this, Margrethe Vestager said, “I have also launched a formal antitrust investigation of Google’s conduct concerning mobile operating systems, apps and services. Smartphones, tablets and similar devices play an increasing role in many people’s daily lives and I want to make sure the markets in this area can flourish without anticompetitive constraints imposed by any company.”
Plausible Outcomes
Since what the commission want is for Google to make amends by placing the relevant shopping results at the top of its search pages, whether or not the results are theirs, Google might very well make these alterations. The Commission is of the view that for Google to make amends, it has to “treat its own comparison shopping service and those of rivals in the same way.”
But as it is, Google has denied these allegations, stating in a memo to its employees that it has “a strong case with especially good arguments when it comes to better services for users and increased competition.” The memo also explains that the Statement of Objection (SO) is not a final finding, but just a preliminary argument to which Google has to respond.
Another outcome could be a pull-out. Google can decide to pull its service out of Europe, as it had previously done with Spain and China. Early last year, Spain passed an amendment to its copyright law, allowing publishers to charge Google every time it used an extract of their stories for services like Google News. The internet giant wasn’t having any of that, so it simply took out Google News from its Spanish version of the site. In 2010, Google pulled out from China, following a censorship regulation battle.
Any chance of a Google victory?
Google had won a case in Europe before, so it may go ahead with this battle and come out victorious. August last year saw Google in a legal battle with a group of German publishers who wanted the company to pay them royalties for using excerpts from their work. However, German publisher, Axel Springer, backed down after traffic to its articles plunged.
Legal battles are not strange to Google, and the world watches as this current one unfolds. But whatever the outcome, with $6 billion at stake, this remains the company’s biggest battle yet.
