Google’s antitrust woes deepen as EU ramps up charges in search, advertising businesses

31 January 2017 9:54am

14 July 2016. By Matthew Newman.

Google is a long way from resolving its six-year antitrust battle with the European Commission.

The EU regulator today opened a new front in its probe into whether the Alphabet unit manipulated search results to favor its own shopping services, putting forward new charges that the company has abused its market power in online advertising.

In announcing the new Statements of Objections, EU antitrust chief Margrethe Vestager said the US search engine had developed many innovative products, but that didn’t give the company “the right to deny other companies the chance to compete and innovate.”

Vestager has also reinforced the regulator’s original probe into Google’s alleged bias toward its own services when users conduct Internet searches, sending the company a Supplementary Statement of Objections in this investigation.

“We have also raised concerns that Google has hindered competition by limiting the ability of its competitors to place search adverts on third party websites, which stifles consumer choice and innovation,” she said.

Today’s charges turn up the heat on the Mountain View, California technology giant for the second time in four months.

In April, Vestager filed antitrust objections to contracts Google has struck with smartphone makers that use its open-source Android mobile operating system. These agreements — under which Google Search is loaded as the default search engine on phones — may squeeze out rival makers of mobile operating systems and harm consumers by giving them less choice, the charge sheet said.

In today’s new charge sheet, the commission claims that Google may be violating EU antitrust rules by placing restrictions on websites that want to display rivals’ display advertising.

“The commission takes the preliminary view that the practices, which have been in place for 10 years, hinder competition on this commercially important market,” the regulator said.

Search engine bias

In April 2014, the commission sent the first Statement of Objections to Google, turning a page on three attempts by the company to settle the probe by offering to display rivals’ search results. In that charge sheet, the watchdog alleged that the company had broken EU competition rules by “systematically favoring its own comparison shopping product in its general search results pages.”

Google responded to the allegations last August. The company has argued that the commission has defined the search market too narrowly. Instead of focusing only on competition among companies that compare product prices, the commission should take a broader view and include online shopping sites and eBay, Google has argued.

In the Supplementary Statement of Objections announced today, the commission said it has “reinforced” its initial accusations.

In adding to the original charge sheets, the regulator is clearly seeking to strengthen its case against the search engine with “a broad range of additional evidence.”

The additional charge sheet addresses an argument by Google that EU officials have misunderstood the market for online shopping. The search engine says the market is broad enough to contain and eBay, and that the commission’s view of price-comparison services is too narrow.

Today, the commission said it stuck by its original stance that price-comparison services are different from merchant platforms. But its new charges say that, even if that argument is wrong, “comparison-shopping services are a significant part of that market and Google’s conduct has weakened or even marginalized competition from its closest rivals.”

Responding to the charges today, a Google spokesperson said the company believes that its “innovations and product improvements have increased choice for European consumers and promote competition.”

“We’ll examine the commission’s renewed cases and provide a detailed response in the coming weeks,” the spokesperson said.

Google and Alphabet have 10 weeks to respond to the Statement of Objections on advertising.

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