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Are EU charges of unfair practices against Google fair?

Posted by Nick Prag at 16 April 2015, 18:35 CET |
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Internet giant Google again came under EU fire this week when the European Commission formally charged it with abusing the dominance of its search engine, while at the same time launching a sensitive probe into its omnipresent Android mobile phone operating system.

The Commission says it will look into whether the Internet giant's search engine practices stifle competition and harm consumers by unfairly pushing its own shopping products under the guise of fair search.

Google gives systematic favourable treatment to its comparison 'Google Shopping' product in its general search results pages, e.g. by showing 'Google Shopping' more prominently on the screen. It can therefore appear to artificially divert traffic from rival comparison shopping services and hinder their own ability to compete.

The Commission says it is concerned that users do not necessarily see the most relevant results in response to queries - to the detriment of consumers, and with the result of stifling innovation.

But it is not paid search results that bother the Commission. Its main issue is with Google placing its services ahead of rival services - for example, in travel, companies such as Expedia, Edreams, Opodo or Ebookers.

It is not a great surprise that it is Expedia, along with Microsoft, Oracle and Tripadvisor that filed a complaint with EU competition authorities against Google at the end of 2010.

Maybe Google's main problem is its success, in particular in Europe, where it enjoys a super-dominant position, far greater than in the USA, and accounts for 90 per cent of Internet searches.

It is also no surprise that a key force behind complaints is Microsoft, the high-tech giant that for so long enjoyed a super-dominant position in so many other areas. Or that Microsoft's own, far-less used, Bing search engine does similar things but has not attracted the same complaints.

The other focus for EU charges is Google's Android system, which dominates the global mobile phone market. Here the probe will focus on whether Google entered into anti-competitive agreements or abused a possible dominant position in the field of operating systems, applications and services for smart mobile devices.

Android is an open-source system, meaning that it can be freely used and developed by anyone. Most smartphone and tablet manufacturers use Android in combination with a range of Google's proprietary applications and services. These manufacturers enter into agreements with Google to obtain the right to install Google's applications on their Android devices.

On both the counts, Google now has to convince the Commission that its practices are not unfair, and that they can make changes which make them fairer.

At least, Competition Commissioner Margrethe Vestager acknowledges that Android is hugely important and that it is vital it be open to all.


Maybe the main problem is that Google search is a free service. And consumers cannot be too surprised if free services also want to make money.

But if the investigation confirms EC concerns, Google will have to face legal consequences and change the way it does business in Europe. Under EU anti-trust rules, a company faces a fine of up to 10 per cent of its annual sales - in Google's case, $66 billion in 2014.

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Nick Prag

Nick Prag

Nick Prag is founder and managing editor of Prior to EUbusiness, he was senior editor at Europe Online SA in Luxembourg, where he played a major part in the launch of Europe Online International.