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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