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Lucas Zallio
dominant position

The EU is charging Google with abuse of power

And the tech giant could be slapped with fines worth €6 billion – if the case ever gets that far.

Updated 11.50

THE EU HAS decided to go to war with Google over claims it abused its position as the unassailable search engine giant.

After a five-year investigation into the US tech behemoth, the European Commission today officially accused the company of breaking antitrust rules by distorting search results to favour its own price-comparison service.

The commission said its preliminary view was Google’s policies infringed on EU rules by stifling competition and harming consumers. That could result in fines of over €6 billion – as well as forcing the company to change the way it did business in Europe.

It also announced it was launching a separate competition probe into the tech company’s Android platform tolook at whether Google had abused its position to enter into anti-competitive deals or favour its own apps.

The commission’s anti-trust case centres on the search engine has been favouring its own price-comparison service – now called Google Shopping – by giving it more-prominent positioning in results over the past seven years.

It said Google’s actions harmed consumers because they weren’t necessarily getting the most-relevant information and it also stifled innovation by making it harder for competitors to enter the market.

The commission also claimed:

  • Google didn’t apply the same system of penalties to its own shopping service as it did those of other companies
  • Because of the favouritism its service went through higher rates of growth than rivals
  • Its first offering, Froogle, didn’t get any favourable treatment and, accordingly, didn’t perform well

Google enjoys well over 90% market share of the European search engine business, according to figures from StatCounter.

Stats Business Insider / StatCounter Business Insider / StatCounter / StatCounter

Billions in fines

As a result of the charges, the company could be fined up to 10% of its worldwide turnover – worth $66 billion (€62 billion) last year – although it’s likely the parties would agree a settlement before reaching that point.

Competition Commissioner Margrethe Vestager said the commission’s aim was to make sure companies didn’t “artificially deny European consumers as wide a choice as possible or stifle innovation” by giving themselves unfair advantages.

“Google now has the opportunity to convince the Commission to the contrary,” she said.

However, if the investigation confirmed our concerns, Google would have to face the legal consequences and change the way it does business in Europe.”

Belgium EU Corporate Tax EU Competition Commissioner Margrethe Vestager AP Photo / Thierry Monasse AP Photo / Thierry Monasse / Thierry Monasse

Tech blog Re/code published an internal Google email confirming the impending charges, although the document added the company had a “very strong case”.

“Competition online is thriving — despite what many of the complainants in this case allege,” the message said.

Indeed if you look at shopping, it’s clear that there’s a ton of competition (including from Amazon and eBay) that has not been harmed by Google’s own shopping service.”

Deal’s off

The tech firm already came close to striking a deal with the commission last year, but that collapsed after protests from powerful member states like Germany and France.

The Google email also said the company was aware the commission was about to launch a formal probe into its Android operating system over claims it favoured its own apps over those of competitors.

The charges are the latest salvo in Europe’s multi-front battle with US tech companies, which have come under fire for everything from tax avoidance to privacy concerns.

The commission is currently looking at claims Apple was handed a sweetheart tax deal in Ireland, while the UK has unveiled its so-called “Google tax” in a bid to stop multinationals diverting profits out of the country.

- With AFP; first published 10.05am

READ: ‘If I had done this in Ireland it would’ve taken 25 years’ – Facebook privacy campaigner >

READ: Explainer: Why does YouTube want to introduce a paid subscription service >

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