Google thought it had agreed last year with European competition regulators that the company’s 90% dominance of Internet searches was “not an illegal business.” But new European Union antitrust chief Margrethe Vestager sought to put Google in chains on Wednesday by accusing the company of abusing its dominance in web searches to the detriment of competitors.
This would be the first time that antitrust charges have been brought against Google. Under last year’s settlement, Google agreed to the harshest penalties it had yet received in an antitrust inquiry anywhere, but it escaped a fine and a finding of wrongdoing. That allowed the company to protect its secret algorithm from regulatory oversight and up to a $5 billion fine.
Vestager opened her investigation by focusing on whether Google’s Android smartphone “freeware” forces other phone makers to favor Google’s own search services and apps over other competitors. Vestager ominously stated, “If the investigation confirmed our concerns, Google would have to face the legal consequences and change the way it does business in Europe.”
Google argues that it gives away Android, one of its most valuable assets, for free, and that it does not make favorites of its own web search tools and apps. But by the EU filing formal charges, Google is now on a 10-week timetable to respond thoroughly to the search complaint of unfair competition.
The changes Google agreed to last year did not satisfy competitors whose formal complaints were the spark that launched the European antitrust inquiry. The investigation focused on whether Google’s 90 percent share of the search market in the EU was more insidious than the two-thirds share it enjoys in the U.S.
President Obama and the Democrats have a close relationship with Google and their Executive Chairman Eric Schmidt. Google employees donated $1.6 million to President Barack Obama’s two White House bids; the company’s search algorithm in the 2012 election was customized to improve results for Obama but not for Republican Mitt Romney; and Google execs that left to work in the White House included Obama’s chief technology officer. In addition, last week Hillary Clinton poached her new tech chief from Google.
In February, President Obama warned Europe against making “commercially driven” decisions to penalize companies like Google and Facebook. Tim Wu, a professor of antitrust law at Columbia who worked on the United States Federal Trade Commission’s antitrust case against Google, said the FTC investigated similar complaints against Google, but closed that inquiry in 2013 without reaching a formal finding of wrongdoing.
Breitbart reported last month that an inadvertently-leaked FTC staff report revealed that FTC staff found that to improve Google’s shopping results, the company allegedly “scraped ratings and user reviews from Amazon.com site.” Google also allegedly used Amazon’s product rankings to determine the order to rank products in Google Product Search. Although Google provided search services on Amazon’s website, which generated almost $170 million in revenue, Amazon shifted some search traffic to less-profitable Microsoft Bing in an effort “to try to foster a more competitive marketplace.”
In a devastating disclosure, the FTC staff report stated that search results were “not robustly competitive,” because “Google has been unilaterally reducing revenue share percentages to many of its syndication customers (in effect raising prices) with apparent impunity.”