Google rejects European Commission’s ‘incorrect’ antitrust charges

Google rejects European Commission’s ‘incorrect’ antitrust charges
Christian Oliver in Brussels August 27, 2015 4:30 pm

Google has rejected a European Commission proposal to change the way it ranks and displays search results, setting the stage for a protracted legal battle with Brussels in one of the most sensitive competition cases of the internet era.

The US technology group filed its formal response on Thursday to EU charges issued in April which said it abused its position of dominance in web search to promote its own retail services unfairly.

Google argued the case against it was baseless. In a blogpost, Kent Walker, its senior vice-president, said the preliminary conclusions in the EU’s statement of objections were “wrong as a matter of fact, law and economics”.

“The response we filed today shows why we believe those allegations are incorrect,” he went on.

Google’s unequivocal response throws down the gauntlet to the commission, which hopes to use the retail case as a precedent to resolve competition concerns in other areas of Google’s business, such as travel and maps.

If Brussels decides there has been wrongdoing, it has the power to exact a fine as high as 10 per cent of the previous year’s turnover — $66bn in Google’s case. However, lawyers involved do not expect any final sum would be anywhere near so high.

The European Commission is seeking a final remedy that ensures Google displays and promotes its own services under exactly the same terms as competitors.

Google on Thursday criticised such a solution as “peculiar and problematic” and said it would “harm the quality and relevance” of its search results.

Mr Walker said there was only a legal precedent for companies having to make such concessions towards competitors in sectors such as gas and electricity, where a company has a duty to supply rivals.

“Given the many ways to reach consumers on the internet, the statement of objections doesn’t argue that standard [for supplying rivals] applies here,” he said.

People close to Google added that it would be very difficult technically to ensure that the company’s algorithms treated all services in all sectors equally.

Thomas Vinje, legal counsel for FairSearch Europe, which acts for complainants in the case, said Google was using a familiar playbook.

“We have seen this movie before. Defendants in big European antitrust cases have made the same arguments,” he said. “The truth, as in previous cases, is that the commission has properly defined the market … and Google is perfectly capable of implementing a remedy that provides equal treatment both to its own product comparison service and to those of others.”

It is unclear how long the case against Google could drag on for, but lawyers and complainants have been pushing for a final ruling from Brussels by the end of the year.

The case is one prong of a broader effort to rein in the power and reach of the big US tech companies, reflecting growing concerns about their market dominance and handling of personal data, especially in the wake of the Snowden scandal.

Some US politicians have responded by accusing Europe of protectionism. President Obama said in February that Brussels’ scrutiny of Silicon Valley’s giants was driven by the “commercial interests” of the region’s tech companies, who struggle to compete with their stronger American rivals.

Google attacked the basic assertions about the harm done to competitors and disputed the market definition that the commission used to claim that Google was dominant.

Far from hobbling rivals, Google insisted it was provided data showing that companies in the sectors about which the commission was most concerned had seen traffic increases of 227 per cent in a given decade from the mid-2000s.

It did not, however, provide similar figures for the increase in its own business for comparable sectors, such as comparison shopping, over the same timeframe.

Google also disputed the commission’s grounds for describing it as dominant.

Brussels argues that Google has used dominance of web search, where it has about 90 per cent of the European market, to expand into the retail business. But Google asserted that it was a far smaller player when compared with Amazon and eBay in the retail sector.

This topic is highly contentious with complainants against Google saying that the US company specifically targeted small opponents in price comparison sites, not large retailers with their own warehousing, such as Amazon.

Google has chosen not to have an oral hearing, which is often a decisive moment in a competition case. The company’s opponents argue it is seeking to avoid the reputational damage of facing several days during which competitors could air their grievances.

Google v the commission

The charge

Is Google’s search formula equally fair to everyone?

The focus of the European Commission’s formal charge sheet on shopping. Google last year suggested a new page layout, giving greater prominence to rivals. But complainants were dissatisfied and felt that the bidding structure for advertising space would leave them even worse off.

Copyright The Financial Times Limited 2015.


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