Google to be hit by new complaint from Brussels

Google to be hit by new complaint from Brussels
Alex Barker in Brussels, Robert Cookson in London and Richard Waters in San Francisco
June 27, 2016 6:25 pm

Brussels is to step up the antitrust pressure against Google next month with and a fresh official complaint and a sharpening of its first case against the company from last year.

Margrethe Vestager, the EU’s competition commissioner, is planning to issue two separate “statements of objections” against the company for allegedly abusing its market power in online advertising and shopping, said people familiar with the case.

The advertising charges — covering Google businesses such as AdWords — open a new front in the commission’s antitrust battle with the company and cover one of its biggest revenue-generating businesses.

The charge sheet on online shopping is a “supplementary statement of objections”, which builds on commission charges issued last year, which accused Google of misusing its power in internet search to steer European consumers to its own in-house shopping service and away from rivals.

The additional legal arguments and information would be used by the commission to make the case more watertight by clarifying the market definition, particularly relating to big ecommerce companies such as Amazon and eBay.

While some complainants will be disappointed that Ms Vestager is unable to move straight to a decision and possible fine, such supplementary charge sheets have been used in past antitrust battles that ended in negative decisions, including against Microsoft and Intel.

Google did not respond to requests for comment.

Google has long viewed the shopping charges as weak and will see the supplementary information from the commission as an effort to salvage its probe. By issuing an SSO, Brussels gives the company an opportunity to respond to changes in the commission’s reasoning or theory of harm.

Along with the shopping case, Google faces formal charges from Ms Vestager over its Android smartphone operating systems, as well as pressure from a host of other European authorities over a multitude of business practices ranging from data and privacy to tax.

Commission investigators have turned to companies that submitted information in its investigation into the online advertising market — a typical sign that charges are being prepared. The disclosure requests were first reported by Politico.

Some of the specific commission allegations of wrongdoing will cover past behaviour that Google has since stopped. The company has strongly denied any anti-competitive behaviour, either in online search or advertising.

Google generated 90 per cent of its $75bn of revenues last year from advertising. It sells ad space on its own websites, such as Google.com and video platform YouTube, as well as on third-party sites.

Controversy over Google’s business practices has mounted in recent years as online ad spending has expanded rapidly to account for about 30 per cent of the $570bn global market. Google is the largest company in the sector by some margin, ahead of Yahoo, AOL, Microsoft and Facebook.

Google’s advertising business extends well beyond search and includes a range of services for buying and selling text, display and video ads. Through services such as AdWords and AdSense, Google acts as a middleman between advertisers and more than 1m third-party sites.

In 2012, the commission raised concerns about Google’s contracts with websites to which it delivers search ads. These are the text-based ads that appear alongside search results when a user types a query into a website’s search box. The commission said the agreements resulted in “de facto exclusivity” for Google, “thus shutting out competing providers of search advertising intermediation services”.

Brussels also expressed worries at the time that Google restricts advertisers from moving their search advertising campaigns from AdWords to the platforms of competitors. In particular, it said Google imposed contractual restrictions on software developers that prevented them offering tools that allow the “seamless transfer” of search ad campaigns across AdWords and rival platforms.

Copyright The Financial Times Limited 2016


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