The European Commission has issued a statement of objections to Google, alleging that it has abused its dominant position in both the internet search services market and the Android mobile operating system.
Earlier this week, the EC said it was close to a decision on whether Google would face formal anti-trust charges in Europe after a five-year probe into claims that it favoured its own services when returning results to internet users.
The first investigation alleges that Google systematically favoured its own comparison shopping product in general search results pages, which would infringe EU anti-trust rules by stifling competition and harming consumers.
“I am concerned that the company has given an unfair advantage to its own service,” said EU commissioner in charge of competition policy, Margrethe Vestager.
“Google now has the opportunity to convince the commission to the contrary. However, if the investigation confirms our concerns, Google would have to face the legal consequences and change the way it does business in Europe.”
The EC’s preliminary conclusion is that Google gave systemic favourable treatment to its Google Shopping comparison service by displaying it more prominently within search results, artificially diverting traffic from other services to the detriment of consumers.
Google was quick to refute the claim, producing a graph that purports to show that Amazon.de and eBay.de currently receive more than 20 million more unique visitors per month than Google Shopping.
“Companies like Axel Springer, Expedia, TripAdvisor and Yelp (all vociferous complainants in this process) have alleged that Google’s practice of including our specialised results (Flight Search, Maps, Local results, and so on) 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,” wrote Amit Singhal, SVP of Google Search.
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“Any economist would say that you typically do not see a ton of innovation, new entrants or investment in sectors where competition is stagnating or dominated by one player. Yet that is exactly what is happening in our world. Zalando, the German shopping site, went public in 2014 in one of Europe’s biggest-ever tech IPOs,” said Singhal.
“Companies like Facebook, Pinterest and Amazon have been investing in their own search services and search engines like Quixey, DuckDuckGo and Qwant have attracted new funding.”
Google will have 10 weeks to produce a response and seek a formal hearing.
Android on the block
The second investigation, into Android, will look at whether Google entered into anti-competitive agreements or abused a possible dominant position in the field of operating systems, applications and services for smart devices.
Here the EC claimed that Google hindered the development and market access of rival mobile operating systems, applications and products.
Vestager said: “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.”
Hiroshi Lockheimer, VP of engineering at Android, countered by saying people were building “almost anything with Android”, including tablets, watches, TVs and cars.
“Some Android devices use Google services and others do not. We paid out over $7bn in revenue over the past year to developers and content publishers,” he said.
“Apps that compete directly with Google, such as Facebook, Amazon, Microsoft Office and Expedia, are easily available to Android users. Indeed, many of these apps come pre-loaded onto Android devices in addition to Google apps.
“There are far fewer Google apps pre-installed on Android phones than Apple apps on iOS devices.”
It is thought that if the two cases do not go Google’s way, it could be looking at a fine equating to about one-tenth of its most recent annual sales figures.