Five years after the European Commission first began investigating Google's dominance of internet search, formal charges against the search giant have finally been filed, accusing Google of anti-competitive behaviour.
The EC's competition commissioner claims Google favours its own comparison of shopping products in search result pages over those of other shopping sites and has taken the view this infringes the EU's antitrust laws, stifling competition.
A separate case looking into Google's Android mobile operating system (OS) has also been launched to look at whether the company is abusing its dominance in the app and OS market. Margrethe Vestager, the EU commissioner in the case, said:
The Commission's objective is to apply EU antitrust rules to ensure that companies operating in Europe, wherever they may be based, do not artificially deny European consumers as wide a choice as possible or stifle innovation.
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.
I have also launched a formal antitrust investigation of Google’s conduct concerning mobile operating systems, apps and services. Smartphones, tablets and similar devices play an increasing role in many people's daily lives and I want to make sure the markets in this area can flourish without anticompetitive constraints imposed by any company.
Google responded to the claims by saying it offers "more choice than ever before".
"While Google may be the most used search engine, people can now find and access information in numerous different ways - and allegations of harm, for consumers and competitors, have proved to be wide of the mark," wrote Google search boss Amit Singhal in a blog post.
Singhal cited other search engines such as Bing, Yahoo, and DuckDuckGo and search assistants such as Apple's Siri as proof of the choices available, along with sites such as Amazon, eBay and Expedia for shopping.
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.
Yelp calls itself the “de facto local search engine” and has seen revenue growth of over 350 per cent in the last four years.
TripAdvisor claims to be the web’s largest travel brand and has nearly doubled its revenues in the last four years.
Expedia has grown its revenues by more than 67 per cent over the same period - and recently told investors: “We're seeing increased traffic coming through Google Hotel Finder. It is clearly getting more exposure. And in general … the product continues to improve. And Google has invested in it, we'll continue to invest in it … From our standpoint, we're 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 given their complaints).
Axel Springer continues to invest in search, including the French search engine Qwant, because as the company told investors, “there is a lot of innovation on the search market”.
The EU claimed Google has a market dominant position with a 90 per cent share of European search.
It issued what's known as a "statement of objection" (SO) stating the claims - Google now has 10 weeks in which to respond.
Vestager, who took over from Joaquin Almunia as the official in charge of competition in Europe, has taken a much harder line with the case than her predecessor.
In an internal memo sent to Google staff and published by Re/code, the California-based tech company said of the SO:
... it’s also an opportunity for Google to tell our side of the story. The back-and-forth over an SO can take some time (even a year or two), and in a number of cases has resulted in the Commission modifying their claims or settling the case. If the two sides cannot settle their differences, the Commission issues an infringement decision, which can be appealed in court.
Shares in Google were down 1.6 per cent in pre-market trading.