The European Union has accused Google of cheating competitors by distorting internet search results in favour of its own shopping service as it laid formal charges against the US technology company.
The EU competition commissioner, Margrethe Vestager, said Google, which dominates search engines globally, had been sent a statement of objections – effectively a charge sheet – to which it can respond. Signalling Brussels’ renewed determination to take the battle to the company, it also opened an investigation into Google’s Android system which is used in about 80% of smartphones worldwide.
“Dominant companies have a responsibility not to abuse their powerful market position by restricting competition with others in markets where they are dominant or in neighbouring markets,” Vestager told a Brussels press conference.
“Our preliminary view is that in its general search results, Google artificially favours its own company’s shopping service and that this constitutes an abuse.”
The EU’s five-year inquiry found that in Google searches, the US firm gave prominence to its own comparison shopping services, regardless of their relevance to the search query, which diverted traffic away from competitors.
“We see that Google has engaged in misconduct in a broad number of member states since 2008 and continues to do so,” Vestager said. “The commercial importance of appearing prominently in Google search results is obvious.” She added: “If you can’t be found, you can’t do business.”
In a blog post, Google argued that internet users had more choice than ever before, and could access information in multiple ways. “We respectfully but strongly disagree with the need to issue a statement of objections and look forward to making our case over the weeks ahead,” said Amit Singhal, a senior vice-president at Google.
Other industry groups said that without legal action, Google would have continued to ignore European competition rules.
David Martin Ruiz, legal counsel for Icomp, an industry association part-sponsored by Microsoft, said: “We see this statement of objectives as a crucial first step towards ensuring that European consumers have access to vibrant and competitive online markets.”
Google has 10 weeks to respond to the antitrust charges, with a potential fine of up to 10% of its annual turnover – or $6bn (£4bn) – now hanging over its head. A separate EU investigation has been launched into incentives offered by the internet search giant to smartphone manufacturers to pre-install and bundle apps and services on its Android operating system, used by manufacturers such as Samsung, HTC and Sony.
Vestager said the EU would investigate whether Google was hindering smartphone and tablet manufacturers from “forking” Android, using the free codebase that underpins the operating system to develop competing software free of Google’s influence.
Hiroshi Lockheimer, Google’s vice-president of Android engineering saidin an online statement: “The European commission has asked questions about our partner agreements. It’s important to remember that these are voluntary – you can use Android without Google – but provide real benefits to Android users, developers and the broader ecosystem.”
Android is the world’s largest operating system, with an 81% share of the smartphone market, according to some estimates, giving rise to fears about market dominance. Google’s web search market share is over 90% in Europe, and the complaint against it in Europe was brought by Microsoft, TripAdvisor, Streetmap and others.
The UK-based Institute of Directors, a business lobby group, applauded the EU’s robust approach but warned against kneejerk reactions. “The European commission should take care to ensure that its investigation focuses on substantive breaches of EU competition law and not be dragged into a politically motivated protectionist battle with the US,” said Allie Renison, its head of EU and trade policy.
The European consumer organisation BEUC welcomed what it saw as EU enforcement of a ”non-discrimination principle” that would allow citizens to get fair and neutral search results.
Monique Goyens, the group’s director, said: “Search engines are consumers’ entry points for product information and price comparisons. Manipulating search results leads to broader problems for Europe’s digital economy, as Google’s market share means it essentially decides which companies are placed in the shop window. Such control restricts access, thereby reducing competition and resulting in less consumer choice.”
Three other EU investigations will continue into Google’s alleged misuse of competitors’ content, imposition of exclusivity restrictions on third-party websites that show Google search results, and operation of numerous restrictions that make it hard for advertisers to transfer data about their campaigns to competing platforms.
The EU believes that any legal success against Google could establish a broader precedent for enforcement of the bloc’s competition rules with other market search services.
A recent US inquiry by the Federal Trade Commission decided not to press charges against Google for demoting, refusing to display or linking to rival websites. But the ripples from any action by the EU could be felt across the Atlantic, and act as a spur to similar investigations into Google taking place in other countries.
“If the commission decides to go ahead with charges, it could have an impact beyond Europe, in the US and other places that Google is under investigation such as India and Russia as well,” Ruiz said.
Vestager is due to fly to the US on Thursday for high-level business and political meetings.
The Guardian
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