European Union Files Antitrust Suit Against Google

April 16, 2015
By: Joe Rizzo

Over the years, Google (News - Alert) has been hit with a variety of antitrust suits from various countries and regulatory committees. A few years ago the U.S. Federal Trade Commission (FTC (News - Alert)) filed a federal antitrust lawsuit which resulted in Google agreeing to make voluntary changes to its search business. However, earlier this year, officials at the FTC concluded that in 2012 Google used anticompetitive tactics and abused its monopoly power in ways that harmed Internet users and rivals—a more severe analysis of Google’s business than was previously known. It went from what could be considered a slap on the wrist to the possibility of severe consequences.

Now a similar situation is unfolding across the pond, and the EU is going for Google’s jugular. After years of investigation and three attempted settlements, Google is facing formal antitrust charges. The EU’s former competition commissioner, Joaquin Almunia, attempted on three separate occasions to reach an agreement with Google, however the plaintiffs—Microsoft and Yelp (News - Alert) among them—protested the settlements did not go far enough.

Image via Shutterstock 

The European Commission has recently charged Google with abusing its dominant position in Internet search services in Europe by systematically favoring its own comparison shopping product, Google Shopping. Google’s response was that the company practices were serving customers better by saving them time and effort.

However, as CNN Money explains, “People searching for "running watch" will see photos, prices, ratings and links to five watches from companies that paid Google to advertise on the site. They won't see Amazon or other rivals' results listed first, and they're not necessarily seeing the best or most relevant products at the top of the results.”

As a result, Google faces a fine of up to $6 billion, which represents more than a quarter's worth of profits, or up to 10 percent of the company’s annual turnover. This would mark the first time that formal charges are being brought against Google by the EU. Under EU rules, Google will have 10 weeks to respond to the allegations and call a hearing to present a defense.

The new Competition Commissioner, Margrethe Vestager, said "It's not based on the merits of Google shopping that it always comes up first in search. Dominant companies can't abuse their dominant position to create advantage in related markets."

In addition to this antitrust lawsuit, the Commission has also opened a separate antitrust investigation into Google’s Android (News - Alert) OS. The claim here is that Google is abusing its dominant position by requiring device manufacturers to bundle its own services and applications with the open-source operating system.

The following two complaints have been filed:

Commissioner Vestager, said “It is the Commission's objective to apply EU antitrust rules to ensure that companies operating in Europe, wherever they may be based, do not stifle innovation or artificially deny European consumers as wide a choice as possible. There are concerns that the company has given an unfair advantage to its own comparison shopping service, in breach of EU antitrust rules.”

Edited by Dominick Sorrentino