EU accuses Google of abusing its market dominance

Google has 12 weeks to respond to charge and could face European Commission fine

The accusation that Google is abusing the dominant market position of its Android operating system is the latest in a series of clampdowns by the European Commission on US multinational companies. File photograph: Peter Power/Reuters

The accusation that Google is abusing the dominant market position of its Android operating system is the latest in a series of clampdowns by the European Commission on US multinational companies. File photograph: Peter Power/Reuters

 

The European Union opened the latest front in its battle against US internet giant Google on Wednesday, as it charged the company with abusing the dominance of its operating system, Android.

“Based on our investigation thus far, we believe that Google’s behaviour denies consumers a wider choice of mobile apps and services and stands in the way of innovation by other players,” European Competition Commissioner Margrethe Vestager said on Wednesday as she announced the charge.

The Commission has been investigating Google for the past year, amid suspicions that the company is giving its own applications prominence on devices running the Android system by pre-installing certain Apps.

Announcing the decision in Brussels, Commissioner Vestager said that Google imposed “unjustified restrictions and conditions on manufacturers of devices running its Android mobile operating system as well as on mobile network operators”.

Dominant companies

While Google’s dominance of the EU market was not a problem under EU competition law, dominant companies have a responsibility “not to abuse their powerful market position by restricting competition”, she said.

Timeline

Google controls over 90 per cent of the internet search market and of the licensable smart mobile operating systems in Europe, according to the European Commission. About 80 per cent of mobile smart devices globally and within Europe run on Android, it estimates.

Technically, the Commission could impose a fine of up to 10 per cent of the previous year’s earnings on Google, which could leave the tech giant facing billions of euro in fines. Microsoft’s long battle with the EU’s competition arm a decade ago resulted in cumulative costs of more than €2 billion to the company.

Google, which rejected claims that it had abused the dominant position of its Android system, has 12 weeks in which to respond to the charge. In a statement on Wednesday, senior vice president and general counsel for Google, Kent Walker, defended the Android system as “good for competition and consumers”.

“We take these concerns seriously, but we also believe that our business model keeps manufacturers’ costs low and their flexibility high, while giving consumers unprecedented control of their mobile devices,” he said.

Wednesday’s move follows a separate competition investigation into whether Google is favouring its own shopping services through the dominance of its search engine. That investigation is still ongoing,

Series of clampdowns

The accusation that Google is abusing the dominant market position of its Android operating system is the latest in a series of clampdowns by the European Commission on US multinational companies, particularly those operating in the digital space, prompting accusations from US officials that the EU is unfairly targeting American businesses.

The Commission’s powerful competition arm has already opened state aid cases against Amazon, Starbucks and Apple, which it suspects of benefiting from unfair tax deals with EU countries. A ruling on its investigation into Apple’s tax arrangements with Ireland is expected in the next few months.

Google has also found itself the target of data protection and privacy concerns. The company was forced to remove certain search queries from its site, following the landmark ‘right to be forgotten’ case of November 2014 in which the European Court of Justice backed the request of a Spanish citizen for the removal of a link to an article which included information about him.

The Luxembourg court also last year rejected the ‘Safe Harbour’ agreement which governed transatlantic data transfers following a case taken by an Austrian privacy campaigner against Facebook Ireland. The successor agreement known as the ‘Privacy Shield’ has yet to be endorsed by the data protection officers in the EU’s 28 member states.