EU cites Google for abuses

Stan Ward

Stan Ward

April 16, 2015

The European Commission is ratcheting-up its rhetoric against Google, and taking strident steps to get it to curtail what it considers to be monopolistic behaviour with its comparison-shopping services. But the EU’s ire is not limited only to this one area of Google’s dominance.

If history is a guide, the EC’s case against Google will expand, which could lead to the company paying billions of euros in fines, and cause it to alter its business practices. For sake of comparison, as a result of a case stemming from a 2000 EU complaint, Microsoft paid a then record $1.3 billion fine for bundling its media player and web browser with its Window OS.

The European Commission said that Google systematically favors its own shopping services, displaying its own results in search queries ahead of rival comparison shopping services, and claims that Google takes unfair advantage of its whopping 90% share of online searches to squeeze out competitors.

Hidden in its statement is a hint that the EC action may be motivated by jealousy over a US based company becoming so dominant, but lawyers familiar with the case say that the move is tactical, and deliberately narrow in its focus on the shopping service, as a victory there would make it likely the EC will succeed in other actions against other areas of what it deems are Google abuses. It also means that the more focused case can be brought to a swift conclusion.

As expected, Google disagrees with the with the EC charges, arguing that,

“While Google may be the most used search engine, people can now find and access information in numerous different ways – and allegations of harm, for consumers and competitors, have proved to be wide of the mark… It’s clear that: (a) there’s a ton of competition – including from Amazon and eBay, two of the biggest shopping sites in the world and (b) Google’s shopping results have not the harmed the competition… Any economist would say that you typically do not see a ton of innovation, new entrants or investment in sectors where competition is stagnating – or dominated by one player. Yet that is exactly what’s happening in our world.”

On behalf of the EU, Ioannis Lianos, a global competition law professor opined that “if you are dominant in Europe, you have a special responsibility to respect competition,” adding that more charges may be imminent.n

At issue is a complaint about how Google bundles serves and apps (including Google Search) by default with its Android OS. Rivals have complained that this practice constrains is unfair.

Regardless of the outcome of the proceedings, the action is likely to have a profound effect on the company’s culture, and the way it conducts future business. What remains to be seen is whether there will be more innovation in the industry as a result. That is the hope.

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