How Europe’s antitrust watchdog got its teeth into Google

Outcome will focus minds in all big tech multinationals doing business in EU

Ruling against Google on abuse of search dominance is first of three cases working their way through EU antitrust process. Photograph: EPA/Walter Bieri

Ruling against Google on abuse of search dominance is first of three cases working their way through EU antitrust process. Photograph: EPA/Walter Bieri

 

The landmark EU antitrust decision against Google, and the record-breaking fine of €2.4 billion, was a long time coming. For seven years, the European Commission has been investigating whether Google – now part of parent company Alphabet Inc – was using its search engine to give higher-ranking returns for its own shopping service, to its benefit, while sinking the results of rival services.

The investigation arose out of formal complaints made in early 2010 to the EU by three competitors – Microsoft’s Ciao shopping service (sold in 2011 to Le Guide Group), UK shopping service Foundem and French search company eJustice.

Near the end of 2010, the commission announced it would launch an investigation into whether “Google has abused a dominant position in online search”. Eventually, 18 American and European companies would join the complaint.

The investigation has proceeded to slowly unfold under two successive antitrust commissioners, growing more complex and ultimately diverging into two and then three investigations. The ruling on Tuesday was for the first of three separate investigations.

Over those seven years, and no doubt mindful of lessons learned from Microsoft’s long antitrust tussle with the commission, Google tried and failed in three attempts to reach a satisfactory agreement with the EU.

Abuse of position

The first proposed settlement was announced by then competition commissioner Joaquín Almunia in February 2013, but swiftly ran into opposition from a range of American and EU companies.

A few months later a group of companies filed a complaint with the EU regarding Google’s Android mobile operating system, claiming its distribution for free was a way of locking down the mobile advertising and data market.

Meanwhile, the US Federal Trade Commission, which was also investigating Google on antitrust concerns, closed its file against Google without charge in January 2013.

In September 2014, as he prepared to step down from his role, Almunia declared time had run out on negotiations for the settlement. Incoming Competition Commissioner Margrethe Vestager took over in November 2014, pumping fresh energy into the investigation.

Declaring that Google has abused its dominant market position in the EU, the commission sent a formal statement of objections to the company in April 2015, the next major step in the complaint investigation process. Google responded that it dominated the market because of its innovative services but denied it was abusing the market, a key distinction in antitrust cases.

In 2016, the EU advanced its investigation into anticompetitive complaints about Android. and added a new investigation into the potential anticompetitiveness of Google’s Ad Sense service.

Significant daily fines

This week Vestager announced her findings against Google on the original shopping complaint, giving the company 90 days to address the problems and noting that significant additional daily fines, backdated to Tuesday’s announcement, could be made if it failed to do so.

Google has said it will appeal the findings. Meanwhile, the two additional investigations are proceeding.

Without any question, the ruling will focus boardroom and executive suite minds in all market-dominating technology multinationals doing business in the EU.

The size of the fine and the firm tone of Vestager’s statement on her findings will leave no doubt that Europe intends to use and enforce its antitrust legislation. And, significantly, it shows that Europe is willing to take up the digital-era antitrust watchdog role largely abandoned in recent years by the US.

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