Google fac­ing huge EU fine over breach of an­titrust laws

The search en­gine gi­ant is ac­cused of throt­tling fair com­pe­ti­tion through use of its Ad­sense net­work

The Sunday Telegraph - Money & Business - - Business - By James Titcomb

THE EU is pre­par­ing to fine Google over its multi-bil­lion dol­lar ad­ver­tis­ing em­pire as a high-pro­file in­ves­ti­ga­tion into its An­droid op­er­at­ing sys­tem is pushed back to next year.

Mar­grethe Vestager, Europe’s com­pe­ti­tion com­mis­sioner, is gear­ing up to hit the web gi­ant with an an­titrust penalty over Ad­sense, its pow­er­ful ad­ver­tis­ing net­work, with a de­ci­sion ex­pected in the next few weeks.

It will be the sec­ond fine in less than a year af­ter Google was ordered to pay €2.4bn (£2.1bn) in June for abus­ing its in­ter­net search mo­nop­oly to pro­mote its on­line shop­ping ser­vice.

While June’s penalty was a record for a Euro­pean com­pe­ti­tion case, it was merely the first in a hat-trick of an­titrust in­ves­ti­ga­tions into Google. Last year the com­mis­sion is­sued two fur­ther “state­ments of ob­jec­tion”, claim­ing the com­pany at­taches oner­ous re­quire­ments to the An­droid op­er­at­ing sys­tem, and that it ties web­sites that use Ad­sense to ex­clu­siv­ity ar­range­ments that throt­tle com­peti­tors.

Google en­joys dom­i­nant po­si­tions in both mar­kets and any at­tempt to ex­ploit this is seen as a breach of an­titrust rules. The com­mis­sion was ex­pected to fine Google over its An­droid mo­bile soft­ware this year but, ac­cord­ing to Brus­sels sources, the in­ves­ti­ga­tion has taken a back seat as EU of­fi­cials go through ex­tra rounds of due dili­gence.

A fine for abus­ing the dom­i­nance of Ad­sense, the Google-run net­work of ad­verts that ap­pear on other web­sites, is now likely to come first. The com­mis­sion al­leges that Google’s con­tracts with other web­sites broke com­pe­ti­tion law by pre­vent­ing them from us­ing other firms’ ad­ver­tis­ing net­works within those web­sites’ search re­sults. The case is seen as par­tic­u­larly se­ri­ous be­cause it strikes at the heart of Google’s ad­ver­tis­ing busi­ness, which gen­er­ates the vast ma­jor­ity of the com­pany’s rev­enue.

It is un­clear how large any fine will be, al­though it can be ex­pected to run into hun­dreds of mil­lions, if not bil­lions of eu­ros.

How­ever, much of it re­lates to past con­duct, which may mit­i­gate any fine as well as any or­ders to change how it op­er­ates.

The Ad­sense fine is seen as more straight­for­ward than the An­droid case, which has a mul­ti­tude of com­plainants and mov­ing parts. Sources said the com­mis­sion is por­ing over doc­u­ments and de­mand­ing ex­tra an­swers from com­plainants in or­der to make sure its case is wa­ter­tight. A re­cent EU court vic­tory for In­tel, which ordered that a €1.1bn an­titrust fine from 2009 be re­assessed, is be­lieved to have spooked the com­mis­sion. “I’ve never seen them so care­ful,” said one source.

Google, which has fought back against an­titrust allegations and ap­pealed against the June fine, did not com­ment. The firm has pre­vi­ously said there is strong com­pe­ti­tion in ad­ver­tis­ing, and that it changed its poli­cies be­fore the com­mis­sion raised ob­jec­tions.

Ms Vestager has pre­vi­ously fined Face­book for break­ing com­pe­ti­tion law, and has de­manded Ap­ple and Ama­zon pay Ire­land and Lux­em­bourg re­spec­tively for years of un­col­lected taxes. A spokesman for the com­mis­sion did not com­ment.

Mar­grethe Vestager is plan­ning to hit Google with a mas­sive fine over al­leged mis­use of an ad­ver­tis­ing pro­gram

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