Making good on rumors that have been bouncing around for several months, the European Union officially filed anti-trust charges against Google on Wednesday. The Commission will formally investigate whether the tech firm has abused its dominance in search results, as well as within its Android operating system.
In the near term this doesn’t mean much—there will be a lengthy investigation and likely a trial. But in the long term, if Google were to be found guilty, it could face a fine of up to $6 billion (10% of its annual revenue) and various business-altering restrictions. Many pundits are comparing it to Microsoft in the late 90’s.
From the European Commission’s Statement of Objections:
- Google systematically positions and prominently displays its comparison shopping service in its general search results pages, irrespective of its merits. This conduct started in 2008.
- Google does not apply to its own comparison shopping service the system of penalties, which it applies to other comparison shopping services on the basis of defined parameters, and which can lead to the lowering of the rank in which they appear in Google’s general search results pages.
- Froogle, Google’s first comparison shopping service, did not benefit from any favourable treatment, and performed poorly.
- As a result of Google’s systematic favouring of its subsequent comparison shopping services“Google Product Search” and “Google Shopping”, both experienced higher rates of growth, to the detriment of rival comparison shopping services.
- Google’s conduct has a negative impact on consumers and innovation. It means that users do not necessarily see the most relevant comparison shopping results in response to their queries, and that incentives to innovate from rivals are lowered as they know that however good their product, they will not benefit from the same prominence as Google’s product.
And from its formal Android investigation press release:
- whether Google has illegally hindered the development and market access of rival mobile applications or services by requiring or incentivising smartphone and tablet manufacturers to exclusively pre-install Google’s own applications or services;
- whether Google has prevented smartphone and tablet manufacturers who wish to install Google’s applications and services on some of their Android devices from developing and marketing modified and potentially competing versions of Android (so-called “Android forks”) on other devices, thereby illegally hindering the development and market access of rival mobile operating systems and mobile applications or services;
- whether Google has illegally hindered the development and market access of rival applications and services by tying or bundling certain Google applications and services distributed on Android devices with other Google applications, services and/or application programming interfaces of Google.
It’s worth pointing out that none of this should have a direct effect on Google search results or Android within the United States and other countries. The Federal Trade Commission just concluded a two-year anti-trust investigation into the Mountain View company, and concluded that it didn’t violate US monopoly laws.
Source: European Commission