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Google rejects EU claims of abuse

Stan Ward

Stan Ward

August 28, 2015

Google is pushing back against the EU’s charges of abuse of marketing power levied by Danish EU Commissioner  Margrethe Vestager, who many consider to be Europe’s new Iron Lady. She has not shied away from controversy, and, in fact, resides firmly in the limelight, having targeted two corporate behemoths in her sights. A rising star in Danish politics, recently she hitched her wagon to that of another star, Jean-Claude Junker of the European Commission.

Presently, Google is fighting fiercely against her allegations (first lodged in spring) that it favors its own research over the competition in the EU search market. At stake is billions of dollars in fines if the tech giant is found guilty of breaking the EU’s anti-trust laws.

Google contends it is being singled out unfairly, just because it has the business acumen to garner 90 percent of the European search market. While this figure exceeds Google’s 65 percent US market share, the company maintains that this is largely due to Europe’s lack of innovation and competition, which has little to do with their success.

In parrying Vestager’s thrusts in a blog post, Google’s general counsel, Ken Walker, steadfastly denied any anti-competitive behavior by the company. He qualified this further by pointing out that multiple rivals – including rival giants Amazon and eBay, compete continually and successfully, accumulating more than 200% increases in market share. In his post, he opined:

Showing ads based on structured data provided by merchants demonstrably improves ad quality and makes it easier for consumers to find what they’re looking for. We show these ad groups where we’ve always shown ads – to the right and at the top of organic results – and we use specialised algorithms to maximize their relevance for users. Data from users and advertisers confirms they like these formats. That’s not ‘favouring’ – that’s giving our customers and advertisers what they find most useful.

Hardly deterred from its assault on Google, the EU will nonetheless take the rebuff seriously, as will the many other complainants (including Microsoft.) As an outgrowth of its four-year investigation into Google, the EU had initially focused its investigation on the company’s comparison shopping site, looking for evidence of favoritism of its own services over that of rivals.

But they expanded the analysis to potential other anti-trust abuses by Google for things such as online restaurant and travel advice. These areas are ripe for targeting, and possible fines, too, which would be based on Google’s gross European revenue.

Meanwhile, Vestager, a recent emigré to Brussels from Copenhagen, continues to assail Google and thwart attempts by detractors to paint her as an opponent of all things American. These decry Europe’s (alleged) lack of innovation and competitiveness, and see Vestager’s actions as a personal vendetta. Her visibility has earned her a rabid following, evidenced by nearly 100,000 Twitter devotees. So, she hopes (I’m sure), that the Google episode has staying power, for she could well ride the momentum into the EU political pantheon.

As far as Google is concerned, a final decision about whether it abused its online search dominance may not come until year’s end – if that, and lobbying efforts to forestall, mitigate or eliminate financial sanctions, persist. Two things are certain – the pit bull, Vestager, will not go away quietly, and the longer this plays out, the better it is for her politically both in Brussels and at home.

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