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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