EU accuses Google of illegally abusing its dominance

The EU’s antitrust chief, Margrethe Vestager, has formally accused Google of illegally using its dominance in online search to steer European consumers to its own in-house shopping services.

Margrethe Vestager also announced the European Commission would open an investigation into Google’s Android mobile platform amid allegations it forces wireless companies into uncompetitive contracts to use its software.

Google said it “strongly disagreed” with the allegations and looked forward to making its case.

Shopping was the first area in which the commission received a complaint over Google’s conduct, from the British price comparison site, Foundem. The complaints have since snowballed to include online travel services such as Expedia, as well as large players including Microsoft, and French and German publishers.

Google now has 10 weeks to respond and allay the commission’s concerns. It also has a right to a hearing in the coming months, normally attended by national representatives, in which all the main arguments can be aired.

Ms Vestager said the Commission’s preliminary findings supported the claim that Google “systematically” gave prominence to its own ads, which amounted to an abuse of its dominant position in search.

“I’m concerned that Google has artificially boosted its presence in the comparison shopping market with the result that consumers may not necessarily see what’s most relevant for them, or that competitors may not get the the commercial opportunity that their innovative services deserve,” she told a press conference in Brussels.

Ms Vestager said that she was not seeking a wider redesign of Google’s search results or asking it to change its algorithms.

But she added that the case could set a precedent that would determine how the EU handled other complaints about Google favouring its own mapping, hotels and flights services.

Google has rejected the idea its Shopping service distorts the market.

“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 its search chief Amit Singhal on the firm’s blog.

“It’s clear that: (a) there’s a ton of competition – including from Amazon and eBay, two of the biggest shopping sites in the world and (b) Google’s shopping results have not the harmed the competition.

“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’s happening in our world.”

Android inquiry

The EU has also launched a separate investigation into Google’s Android operating system, used by smartphones and tablets, which will focus on three topics:

  • claims that Google requires or incentivises manufacturers to pre-install its own search engine, apps and other services and exclude rival products
  • allegations that Google unfairly insists its services are bundled, meaning some cannot be pre-installed without including the others
  • complaints that the firm is hindering manufacturers from developing alternative versions of Android, which is open source.

“These issues are distinct from the Google comparison shopping case and the investigations will of course be different,” Ms Vestager said.

In response, Google stressed that Android devices could be offered without its services.

“It’s important to remember that are voluntary – you can use Android without Google – but provide real benefits to Android users, developers and the broader ecosystem,” said lead engineer Hiroshi Lockheimer.

“Our app distribution agreements make sure that people get a great ‘out of the box’ experience with useful apps right there on the home screen. This also helps manufacturers of Android devices compete with Apple, Microsoft and other mobile ecosystems that come preloaded with similar baseline apps.”

If Google’s defence is unsuccessful, it faces a large fine, theoretically as much as 10 per cent of the previous year’s turnover, some $66bn in 2014.