The European Commission (EC) filed a Statement of Objections against Google on Wednesday in which it alleged that the firm has abused its dominance of the search market to unfairly boost its own shopping comparison service.
The decision came after many years of failed attempts by Google to appease the EC and avoid this course of action.
However, the EC has finally lost patience with Google. Recently-installed EU competition commissioner Margrethe Vestager obviously decided that enough was enough and filed charges against Google.
"I am concerned that the company has given an unfair advantage to its own comparison shopping service, in breach of EU antitrust rules,” she said.
What's the problem?
The case centres around the EC’s belief that Google is abusing its dominance in the search market to promote results from its own shopping services at the expense of rivals'.
The EC said that acting in this manner not only harms rivals but is detrimental to consumers by limiting choice and competition.
Furthermore, the EC said that Google does not apply the same search 'penalties' to its own comparison service as it does to others, which can affect rivals' page rankings. Again the EC claims that this is a clear breach of EU competition laws.
What is a Statement of Objections?
The Statement of Objections formalises the EC's concerns with Google’s practices and sets out exactly how it believes the company is breaking the law.
“The purpose of the [Statement of Objections] is to inform the parties concerned of the objections raised against them with a view to enabling them to exercise their rights of defence,” is how the EC’s Antitrust Manual of Procedures puts it.
How important is this?
The statement is significant as it shows that the EC believes it has enough evidence to make a case against Google to force the company to change its ways. The decision could lead to a sizeable fine.
It is even more notable given how many opportunities Google has had to head off this action during its four-year back and forth with the EC which failed to yield a satisfactory outcome.
Google now joins the ranks of other US tech giants which have received a Statement of Objections from the EC.
Microsoft was charged in 2001, 2002 and 2003, which ultimately led to a fine of €497m which was paid in 2004. Intel was charged in 2009 after being accused in 2007, and was ultimately fined a record $1.06bn.
Meanwhile Apple was charged in 2007 over its dealings with music labels, while Samsung (in 2012) and Motorola (in 2013) have also been charged, both concerning alleged patent abuses.
What happens next?
Google has 10 weeks to respond and can attend a hearing at the end of this period to present its argument.
“The Commission will fully respect Google's rights of defence and carefully consider its comments before taking a decision,” the EC added.
What does Google say?
Google has already come out swinging in response to the EC’s decision, and a long and detailed blog post by senior vice president for search Amit Singhal outlined the firm's belief that the EC’s argument is without merit.
“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,” he said.
What could the outcome be?
Broadly there are four possible outcomes.
1. Google convinces the EC that its actions are not in breach of EU laws
2. Google agrees to make changes that appease the EC
3. Google is forced to make changes by the EC but avoids a fine
4. Google is forced to make changes and is fined
The fine could be a significant amount of money, as the EC can base the figure on 10 percent of worldwide turnover. This would equate to a staggering $6bn for Google.
It is unlikely that the EC would levy such a high fine but, given that Microsoft has been fined twice for over $400m and Intel for over $1bn, the EC is clearly not afraid of taking on the tech giants and making them pay.
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