Google faces long EU battle

The search gi­ant has a tough chal­lenge in coun­ter­ing an­titrust claims, an­a­lysts say.

Los Angeles Times - - BUSINESS - By James F. Peltz and Tif­fany Hsu

Google Inc. prob­a­bly faces a lengthy process in chal­leng­ing an­titrust claims brought by the Euro­pean Union, but the In­ter­net search gi­ant might be able to avoid pay­ing hefty fines or mak­ing big changes to its busi­ness.

“I don’t think this is go­ing to lead to some dra­co­nian ef­fect” for Google, said David Balto, an an­titrust lawyer in Wash­ing­ton and for­mer pol­icy direc­tor at the Fed­eral Trade Com­mis­sion.

Still, Google has its work cut out in coun­ter­ing Euro­pean reg­u­la­tors’ claims that the com­pany is abus­ing its on­line-search promi­nence to the detri­ment of its ri­vals, an­titrust ex­perts said Thurs­day.

The case, an­nounced Wed­nes­day by Mar­grethe Vestager, the Euro­pean com­pe­ti­tion com­mis­sioner, “is a very big deal,” said Jonathan Han­del, a lawyer at Cen­tury City law firm TroyGould.

“They’re look­ing at a big fight,” Han­del said of Google, and “they’re fac­ing large num­bers” in terms of po­ten­tial fines if a set­tle­ment can’t be reached.

The Euro­pean Com­mis­sion ac­cused Google, which had $66 bil­lion of rev­enue last year, of ex­ploit­ing its huge share of the search mar­ket to fa­vor its own com­par­i­son-shop­ping ser­vices over those of­fered by com­peti­tors.

Google’s search en­gine is more dom­i­nant in Europe than in the United States, with the com­pany hold­ing a 90% share in most EU na­tions.

Vestager’s of­fice also opened a sep­a­rate probe into whether Google, based in Moun­tain View, Calif., im­prop­erly lever­aged its widely used An­droid mo­bile op­er­at­ing sys­tem to hin­der com­peti­tors’ soft­ware and prod­ucts.

In the EU’s most re­cent high-pro­file an­titrust battle with a U.S. tech­nol­ogy gi­ant, a case against Mi­crosoft Corp., the process took a decade and ended up cost­ing the soft­ware gi­ant $2.1 bil­lion in fines.

Mi­crosoft, now a ma­jor

ac­cuser against Google, also had to ad­just some of its busi­ness prac­tices in the 28na­tion Euro­pean Union.

In the Google case as well, “the process in Europe could end up tak­ing a long time, though it is al­ways pos­si­ble that Google and the Euro­pean Com­mis­sion will reach a ne­go­ti­ated res­o­lu­tion,” said Robert M. Cooper, an an­titrust lawyer with law firm Boies, Schiller & Flexner in Wash­ing­ton.

But Balto said his read­ing of the EU’s com­plaint “shows there isn’t that much of a gap be­tween the ap­proach to run­ning the sys­tem that Google has and what the EU is look­ing for.”

“They’re not look­ing for a way to break up Google or to reg­u­late its [search] al­go­rithm,” he said. “What they’re seek­ing is a sys­tem to make sure that the best re­sults are prop­erly dis­played” for both con­sumers and Google’s ri­vals.

Google dis­puted the EU’s claims and said it looked for­ward to mak­ing its case in the com­ing weeks.

“Google will be able to ad­dress the ob­jec­tions point by point,” said Mario Mariniello, a for­mer econ­o­mist with the Euro­pean Com­mis­sion’s com­pe­ti­tion arm who’s now a re­search fel­low at Bruegel, a think tank in Brussels.

“The [EU’s] ob­jec­tions are laid down in a very sys­tem­atic way,” he said. “Google will see their anal­y­sis. Af­ter­ward, Google will as­sess how strong the com­mis­sion’s case is and then con­sider whether there’s a pos­si­bil­ity to set­tle.”

Oth­ers sug­gested Google not risk a drawn-out battle.

“I would ab­so­lutely set­tle,” said Robert Fell­meth, ex­ec­u­tive direc­tor of the Cen­ter for Public In­ter­est Law at the Uni­ver­sity of San Diego.

“The Euro­pean Union is a big mar­ket and the EU likely is go­ing to win in the courts” if Google ap­peals an ad­verse judg­ment, Fell­meth said. The com­pany has to “nip this in the bud.”

In nav­i­gat­ing its way through the for­mal process, Google will have to grap­ple with po­lit­i­cal and cul­tural dif­fer­ences that could in­flu­ence whether, or how quickly, it can find com­mon ground with EU reg­u­la­tors.

“The U.S. ad­van­tage in that [tech­nol­ogy] field is so enor­mous, it’s caused a lot of ill feel­ing in Europe,” said Curt Hessler, an ad­junct pro­fes­sor teach­ing com­pe­ti­tion and In­ter­net law at UCLA. “And that po­lit­i­cal prob­lem is what Google is wrestling with.”

TroyGould’s Han­del agreed that “th­ese kinds of cases are very po­lit­i­cal.”

“On the one hand, there’s the per­spec­tive that [Google] got there be­cause they fought the good fight and that’s what cap­i­tal­ism is all about,” Han­del said. “But on the other hand, once a com­pany gets that big, is abuse in­her­ent in the way things are han­dled?”

There’s an­other fac­tor that could prompt both sides to reach a set­tle­ment sooner than later: rapid changes in tech­nol­ogy that could make the cur­rent dis­pute ir­rel­e­vant.

“What’s dif­fi­cult for an­titrust reg­u­la­tors is that they’re al­ways chas­ing the tail of a fast-mov­ing tech­no­log­i­cal mar­ket,” Han­del said. “There’s al­ways this is­sue of what the rel­e­vant mar­ket is go­ing to be and whether it will change.”

Win McNamee Getty Images

GOOGLE is guided by Ex­ec­u­tive Chair­man Eric Sch­midt.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.