Stakes are rising in Google’s antitrust fight with Europe
GOOGLE is locked in a sixyear battle with Europe’s antitrust officials. And the stakes for both sides are getting higher. For Google, Europe’s lengthy effort to rein in how the search giant operates in the region represents a potential threat to the billions of dollars it earns annually from selling online advertising and other, often dominant, digital services across the Continent and beyond.
For Margrethe Vestager, the Danish politician turned European competition chief, the three cases against Google make up the most public – and long-standing – antitrust cases in the region. And they will very likely define Europe’s at times frosty relationship with Google and other US tech giants like Facebook, Amazon and Apple for years to come.
“For the European Commission, it’s a case of Russian roulette,” said Christian Bergqvist, a professor of competition law at the University of Copenhagen. “If they lose or merely settle the case, they will look weak. They have to be seen as doing something to stop Google.”
The latest twist in this episode is expected to begin on Thursday, when Google officially starts responding to European charges that it has hamstrung competitors and limited consumer choice.
The separate but closely linked rebuttals to European claims are expected to be submitted to competition authorities in Brussels in quick succession over the next few weeks.
The cases relate to Android, Google’s mobile operating system, some of its dominant online search services and some of its advertising products.
While each response will be couched in legalese, Google’s main argument is that its business practices do not fall afoul of the region’s tough antitrust rules and that competitors can freely offer their own rival digital services to Europe’s more than 500 million consumers.
“Our search engine is designed to provide the most relevant results and most useful ads for any query,” Kent Walker, Google’s general counsel, wrote in a blog post when previously rebutting some of Europe’s antitrust charges. “Users and advertisers benefit when we do this well. So does Google.”
Not surprisingly, the company’s detractors – small European startups, some local politicians and American heavy hitters like Oracle – do not agree.
“Google has taken its best shot, but the European Commission has decided that it’s still on the right track,” said Thomas Vinje, a lawyer for FairSearch Europe.
Whatever happens, battle in Europe will overnight.
European officials must first review the company’s rebuttals, and a final decision in any of the cases is not expected until midway Google’s not end through 2017, at the earliest.
If found to have breached the region’s rules, Google faces fines totalling up to $7.5 billion, or 10 percent of its annual revenue, and may be forced to change how it operates in the 28-member bloc. While any antitrust fine is not expected to reach the maximum possible, the company is likely to appeal any European ruling, further lengthening the process.
Lucrative business model
Yet it is this death-by-a-thousandcuts regulatory limbo that arguably represents the biggest headache for Google.
As it deals with the uncertainty over how it will be allowed to operate in Europe, still one of the company’s largest markets, the search giant is increasingly fighting a battle with other global technology behemoths over how people will use the internet in the future.
Consumers are shifting their on- line habits to mobile devices, and with that shift, Google’s dominant position in desktop online search (it holds, for example, roughly a 90 percent market share in Europe) is becoming less certain.
And as other rivals like Facebook and Amazon double down on nextgeneration technologies like virtual realit y and artificial intelligence, Google’s regulator y woes in Europe represent an unwanted distraction – one that may eventually hamper its existing, highly lucrative, business model.
Google may face tougher competition in the smartphone world if Europe forces the company to open up Android to rivals, a possibility if the search giant loses its antitrust case in the region.
Further down the line, the company is still struggling to turn its vast array of so-called moonshots, like self-driving cars and internet-connected balloons, into viable standalone businesses.