Google has formally denied the antitrust charges raised by the European Union’s Competition Commission. The EU regulator had alleged that the American search giant abused its dominant position to unfairly promote its shopping services. Rival digital services have accused Google of showing its own services and advertisements prominently in search result pages, causing serious disadvantage to their business.
Allegations of Google’s abusive practices surfaced in late 2010. After verifying the complaints, the European Commission, the executive arm of the European Union, acted on its observation that Google's business practices were detrimental to the interests of EU as it was stifling competition.
The Competition Commission sent two statements of objections to Google saying, “Google artificially restricted the possibility of third party websites to display search advertisements from Google's competitors.” Commissioner Margrethe Vestager, in charge of competition policy, said, “Google has hindered competition by limiting the ability of its competitors to place search adverts on third party websites.”
With Google replying to these allegations, the ball is back in the EU's court. The commission will make a final ruling in the matter next year after considering Google’s reply. However, Google can challenge the EU decision in court. Having made its stand clear, Google is ready for a prolonged legal battle if the decision turns out to be unfavourable. Google's competitive price comparison sites are equally worried that their business won’t survive that long.
Bitter battle
Google’s two-year-long attempt to strike a deal with the EU’s antitrust authorities met with stiff resistance from competitors as well as politicians in Germany and France. Finally, in late 2014, Google’s offers were rejected as inadequate.
In April 2015, the EU regulators officially claimed that Google forced mobile phone makers to preinstall its operating software Android by offering them financial favours. Again in July this year, the EU charged that Google abused its dominant market leadership to take undue advantage for its ad search service AdSense. As a result, the users missed the most relevant results to their online queries, thereby limiting consumers’ choices.
Google denied that it was diverting traffic of its competitors for the benefit of its own online advertising tool. It said its users had freedom to access any online search product. It said the competitors were welcome to offer their own digital services and handset manufactures need not necessarily preinstall Google apps or its software services as part of Android.
If found guilty, Google faces fines up to 10 per cent of its annual global sales for each case. Considering its total revenue of $75 billion in 2015, the maximum penalty for Google in one case will be $7.5 billion. Furthermore, Google will be forced to change its successful business strategy in the EU. So far, the highest amount fined by the EU Competition Commission is 1.1 billion euro levied on chip-maker Intel.
Headquarters of the European Union in Brussels
US domination
Many European politicians and business leaders are of the opinion that Google wields too much power in Europe. Google's search engine operates as an information gateway for more than 90 per cent of European internet users. This is higher than in the US. The dominance of Google and other US-based technology companies like Apple, Amazon and Facebook is a matter of concern for many Europeans. The brand power of these companies with their economic, technological and political clout is seen as US hegemony dominating Europe's future. It has led to a growing mistrust of American tech giants in the EU nations.
In 2013, the United States Federal Trade Commission ruled that there was no an antitrust issue involved. Nevertheless, European regulators and privacy watchdogs are pursuing Google as a pilot case to contain future domination of American companies in Europe.
