On April 15, 2015, Europe formally accused Google of antitrust violations by using the company’s massive search engine to skew results in favor its comparison shopping services, known as Google shopping. Margrethe Vestager, the European Union’s competition commissioner, after accusing Google of abuse, through what is known as a “Statement of Objections,” gave Google 10 weeks to respond. Google can request a hearing before this time in order to further explain the charges. The commission also announced that it will launch a full investigation into the Android mobile services, including applications regarding restaurants and travel, to make sure competition was not hindered in this arena. Vestager insisted that “we are not here to take the side of rivals — we are here to take the side of competition.”

The accusations stems from the diversion of competitor results when a consumer enters a shopping related query into the Google search engine. The results for the consumer have Google shopping displayed prominently at the top irrespective of  its relevant to the consumer’s query. The position of the European Union is that this practice is a disservice to consumers and prevents competitive practices.

These charges could lead to the most high profile case since Microsoft. Google currently has 90% of the market share for search engine and the impact of this case could be enormous. If Google is able to settle this case with the European Union, changes in Google query could be seen within a year. However, if Google fails to respond to the charges from the European Union, the commission would file an injunction to prevent Google from conducting further antitrust violations and charge Google with fines roughly a €6 billion dollars, about 10% of Google’s annual revenue. Afterward,Google could file an appeal in the European Union’s appeals courts in Luxembourg.

Google responded by denying the allegations stating that “people have more choice than ever before,” and “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 harmed the competition.” Amit Singhal, Senior Vice President of Google search states that Google “strongly disagree[s] with the need to issue a Statement of Objections and look forward to making our case over the weeks ahead.

As far as the investigation into the Android operating systems, Hiroshi Lockheimer, Vice President of Engineering at Android states “[t]he European Commission has asked questions about our partner agreements. It’s important to remember that these are voluntary—again, you can use Android without Google—but provide real benefits to Android users, developers and the broader ecosystem.” Additionally, he points out that [t]he Android model has let manufacturers compete on their unique innovations” and states that “[w]e look forward to discussing these issues in more detail with the European Commission over the months ahead.”

This is the first time a regulator has filed formal antitrust charges against Google. However, the Federal Trade Commission in 2013 investigated Google for antitrust violations and ultimately decided to the drop charges.

–Jennifer Lukasiewicz

Tagged with:

Comments are closed.