By Will Goodbody, Science & Technology Correspondent
So Google is back in the dock again in Europe. This time over competition concerns. The reality, however, is that it has never really been out of the dock on this one for the past five years.
What is all the fuss about?
Back in 2010, when Google was first hauled up by the EU on anti-trust issues, there were four topics of concern to the then Competition Commissioner, Joaquin Almunia. These were principally that in its search results, Google favours its own Shopping service ahead of services that are offered by its competitors, regardless of whether it is better than the others. Other issues troubling the European Commission revolve around Google’s exclusivity deals with advertisers, restrictions on moving online advertising campaigns to rivals, and allegations that it was involved in copying competitors content.
And what’s been happening since then?
The initial allegations were made by a number of companies including Microsoft and Expedia in 2009. Since then there has been a lot of back and forth, with no concrete resolution. Three concerted efforts have been made to resolve the problems. The first two failed when those making the complaints objected to the proposed remedies. While the most recent attempt, made in February last year, also fell at the last as a result of objections from rivals, despite Google pledging to give them prominence in search results. This forced the European Commission to once again resume examining the issues, and ultimately to today’s developments.
So what happened today?
After all the failed attempts to resolve the problems informally, the Commission has finally lost patience with Google. It has formally charged the internet giant with disadvantaging competitors by distorting search results to favour its own shopping service. For now, the other three concerns outlined in 2010 have not been followed up with charges, but the European Commission is not ruling that out.
Is that the only issue the EU is acting on then?
No. On foot of two complaints and its own investigation, the European Commission has also opened a separate investigation into Google’s Android operating system for mobile phones. Android is hugely popular, used on two thirds of smartphones across the European continent. But mobile phone makers must agree to certain conditions and practices set by Google – like pre-installing its apps and services – when putting Android on their handsets. And it is these agreements and practices that have come under the commission’s focus, amid claims they are anti-competitive.
Should we care?
That’s a good question. On the one hand, most people accept that competition is a vital component of every market. It keeps prices down, promotes standards and cultivates innovation. And the internet search and smartphone operating system markets are no different. So ensuring other companies are able to compete amid Google’s dominance is clearly important. On the other hand, many would argue that Google’s search service is far and away the best available, with 90 per cent of searches in Europe carried out using the engine. And its Android mobile operating system is also hugely popular. So the question could be posed, why intervene to reconfigure the market and risk damaging the effectiveness of great products?
What will it mean for Google?
If it is found guilty, it could be a very costly affair for Google. The sanction is a potential fine of up to 10 per cent of annual revenues, which would clock in at around €6bn – though a fine of that magnitude is unlikely. It could also be forced to change how it does its business, which in the longer run could cost it further revenues.
And what’s Google’s view on it all?
Naturally, Google says the EU’s concerns are unfounded. It says while it may be the most used search engine, people can now find and access information in numerous different ways. It stresses that people now have more choice than ever before when it comes to getting information, thanks to a variety of search engines, specialised services, growing social media use, people going directly to their favourite sites and mobile users going to chosen websites or apps. It also says Android has been a key player in spurring competition and choice, lowering prices and increasing choice for everyone.
Are there any other implications?
Some are calling this a defining moment for US/EU relations. Recently US President Barack Obama suggested the EU was pursuing an anti-American protectionist policy – a claim which was denied by the European Commission, which pointed out that about a quarter of firms which had complained to the EU authorities about Google were themselves US owned. Nevertheless, with plenty of focus also currently on the differences between the US and EU on privacy policy, this is another issue likely to challenge good relations.
So what happens next then?
Google has been sent a formal statement of objections setting out the Commission’s concerns. Google will have 10 weeks to study and respond to the document. It can also request a behind closed doors oral hearing at which complainants can give evidence. The company must then decide whether to offer binding commitments or refuse a settlement, which would most likely lead to sanctions and orders of changes to business practices from the European Commission. That outcome might also lead to an expansion of the EU’s investigation into the other areas – something Google will be more than keen to avoid.
Comments welcome via Twitter to @willgoodbody
