As expected, the European Commission on Wednesday accused Google of abusing its status as the 800-lb. search gorilla and has launched a separate investigation into its Android mobile operating system.
The complaint comes in the form of a Statement of Objections that accuses Google of giving “systematic favourable treatment to its comparison shopping product (currently called ‘Google Shopping’) in its general search results pages.”
Google responded by pointing out that it can’t be responsible for all that much antitrust bad behaviour in the comparison shopping realm, given that online competition is “thriving”.
Amit Singhal, Senior Vice President of Google Search:
Companies like Axel Springer, Expedia, TripAdvisor, and Yelp (all vociferous complainants in this process) have alleged that Google’s practice of including our specialized results (Flight Search, Maps, Local results, etc.) in search has significantly harmed their businesses. But their traffic, revenues and profits (as well as the pitch they make to investors) tell a very different story.
He pointed to competitors’ robust market growth and boasts as proof that Google’s not cornering the market, including Yelp’s claim to be the “de facto local search engine” and its 350% revenue growth over the last four years; TripAdvisor, which claims to be the web’s largest travel brand and which has nearly doubled revenues in the last four years; and Expedia, whose revenues have grown more than 67% over the same period. Expedia reportedly told investors that Google’s responsible for part of that growth with its Google Hotel Finder and that it’s “happy to play in any market that Google puts out there and over a long period of time, we have proven an ability to get our fair share in the Google marketplaces.”
“Remarkable,” Singhal remarked, “given their complaints.”
Google also responded to the Android investigation, saying that Android has been a “key player” in the thriving mobile market, where it’s now possible to buy a mobile phone for less than $100 and where “the app ecosystem has exploded, giving consumers more choice than ever before.”
The EC first opened its comparison shopping investigation in November 2010.
The Commission says that one example of how Google discriminates against competitors is by showing Google Shopping more prominently on the screen.
The EC has provided screenshots of how that abuse looks and how Google proposed fixing it.
Last year, Google gave the EC mockups of how its search results looked at the time, as compared with how they’d look if Google presented competitors’ search results to satisfy a proposed settlement.
Google’s competitors successfully opposed the settlement.
Two investigations are now underway: one into antitrust issues surrounding comparison shopping, and a separate investigation into Android.
The Android investigation will focus on whether Google has breached EU antitrust rules by hindering development and market access of rival mobile operating systems, apps and services.
On Wednesday, EU Commissioner in charge of competition policy Margrethe Vestage said in the Statement of Objections that now’s the time for Google to convince the EC that the antitrust accusations are wrong:
In the case of Google I am concerned that the company has given an unfair advantage to its own comparison shopping service, in breach of EU antitrust rules. Google now has the opportunity to convince the Commission to the contrary. However, if the investigation confirmed our concerns, Google would have to face the legal consequences and change the way it does business in Europe.
Singhal said, in Google’s rebuttal, that accusations of the company’s having caused “harm” to consumers and competitors because of its dominant position were “wide of the mark”.
Any economist would say that you typically do not see a ton of innovation, new entrants or investment in sectors where competition is stagnating - or dominated by one player. Yet that is exactly what’s happening in our world.
Google has 10 weeks to respond to the comparison shopping antitrust accusations and can also demand a hearing. It says it’s looking forward to discussing details about Android with the EC in coming months.
8 comments on “EU accuses Google of abusing search dominance, opens Android investigation”
The EU/EC overall government are idiots. People choose a service provider. It’s not Google’s fault if more people use them. Its hardly like the only sit you can load up is google to make searches.
People use Android devices because of the ability to open it up and do what you want to it. Google doesn’t force you to use Google search sites. Don’t like Google use another Browser from the play store and use Bing or Yahoo.
Google should tell the morons to get lost, and to take it up with how users use their devices.
There is no such thing as an EU/EC government. I think you need to take a look at some of the past EC anti-trust cases e.g. Intel trying to suppress competition (read the hundreds of pages of evidence in the case – I did).
It is a tricky thing to judge if a dominant market position is being abused. In the end, it will come down to whether or not Google has been operating within the EU “laws” that govern anti-competitive practices. I put “laws” in quotes because there are no EU “laws”. The EC (European Commission) which is the executive arm, directed by the EU Parliament and national governments is tasked with creating directives. Once the EU Parliament passes these directives, then each country in the EU is expected to incorporate them into their national laws. Trans-national breaches of these are then followed up by the EC. Microsoft, Intel and Google cases garner attention because of the high brand name recognition, but if you look into the detail, there are usually lots of ongoing cases – most notably with state telecom providers who control the infrastructure and effectively give their own ISP a better deal and thus stifling competition.
So it is usually a complex issue, which has required evidence to be collected over years, analysed to see if it stands up. The problem is that some large companies are larger than many countries and behave as though they are above the law (as do some governments), and the EC appears to be the only organisation that is prepared to uphold the rule of law.
Take the arguments to the extreme – do you want to live in a world where large corporations run it, unchallenged, or where democratically accountable governments run it? It may surprise many people to know that there are elected representatives in the European Parliament of the Pirate Party who, amongst other things, do not believe in intellectual property. This is much more pluralistic than the two party politics of some countries.
Has it ever occurred to anyone, that sooner or later there will be a backlash toward Google’s massive influence on our lives? Look at Microsoft – we tolerate the bully in the business world because we have to in order to interact with each other, but at the same time we continue to look at available options, possibilities, hopes of being free from those who dictate what our options are. When does too good of a thing become a curse to us all?
Google doesn’t ever force me to use their products. I can use them or use a competitor. Simple. They aren’t pushing anyone around.
Google is a free service for crying out loud! How can anybody complain about how they do business?!
Why are we punishing innovation for being good, or rewarding less successful products for being worse?
“Why are we punishing innovation for being good, or rewarding less successful products for being worse?”
Simple – tax revenue. All of these huge billion dollar fines you are seeing around the world are the latest way governments raise taxes without “raising taxes”. Governments are addicted to this free corporate money and I believe you will see a huge fine levied against Google as one outcome of this action.
I don’t see how Google can do anything to push countries around. There are a lot of search engines on the Internet. Nobody can force you to use one over another. Did these people ever use a search engine before Google? Searches used to be horrible. You’d get 10,000 matches and spend hours trying to find what you actually wanted. Then Google came along and it worked great. These people should thank Google for making it possible to find what you want on the Internet.
I went onto the Amazon website today, and they were advertising the Kindle Fire on the home page. Is that anti-competitive, too?
Google provides a free service, and to do this, needs advertising revenue. Take away the revenue, lose the free service.