Google is an American Corporation, a worldwide giant but an enigma for the European Union’s Commission for Competition. The Commission has identified Google as a key violator of several antitrust laws and now wants Google to play ball or face legal action. Google, which is primarily an internet based advertising firm has on occasion tried to defend itself or offer remedial measures but these measures have been less than satisfactory for the Commission.
In fact, the Commission now warns that Google only has one last opportunity to make amend its business model or face stern legal action. Here is an overview of the tussle between the corporate giant and the European Union’s Commission for Competition.
An Overview of the Investigation into Google’s Antitrust Practices
The EU Commissioner for Competition is Joaquin Almunia. In 2010, he began investigating Google after a number of companies complained about monopolistic practices by the search engine powerhouse. These companies claimed that Google intentionally demoted them in search engine rankings in favor of similar products or services that Google offers. These companies further stated that these monopolistic tendencies put them at a disadvantaged position especially within Europe where Google has more than ninety percent of the search engine market.
Subsequent investigations into the claims by the EU Commissioner for Competition found Google culpable of a number of trade violations. To begin with, the Commissioner found that Google favors its own products and services when it comes to search engine results. In addition, Joaquin Almunia found that Google uses original content for third party websites in its search results. This use of original content from third parties stifles creativity as the search engine continuously recycles the same old content.
Moreover, the Commissioner discovered that Google prevents publishers that use its advertisements from showing other advertisements that come from its rivals. Finally, Joaquin Almunia also uncovered contractual hurdles that impeded the smooth export of advertising campaigns from Google’s search engine platform.
Various Attempts by Google to Sort out the Issues Raised
Google has on occasion tried to mend fences with the Commissioner’s Office but to no avail. More specifically, Google has put forth two proposals to the antitrust body but the EU Commission rejected both proposals. These rejections are not due to stubbornness by the Commission but are instead a reflection of similar rejections the complainants against Google. It is important to note that the Microsoft Corporation is among these complainants. Less notable but equally important complainants include Hot-Maps, the Premier League and Foundem.
In its last proposal, Google offered the complaints an advertising opportunity for their services and products that will appear as links in a box of sponsored just above the search results. However, the complainants felt that Google did not address the issue of favouritism for its products on search results. In addition, the complainants feel that it is unfair for them to pay Google for less favourable locations on search results while similar products from Google got better locations on the same search results free. Google is now preparing another proposal to sort out these grievances but the Commissioner of Competition in the EU warns that his Commission will go to court if this new proposal is unsuccessful.
Possible Impact of Legal Action on Google
Legal action could be detrimental to Google. This legal action would begin as a Statement of Objections. This is the first formal step in a long battle of antitrust litigation that could eventually see Google lose more than ten percent of its global revenues. This would amount to billions of dollars in fines and penalties. Therefore, it is highly improbable that Google will fail to reach an amicable solution with the antitrust commission before any legal proceedings begin.
It is also important to note that the EU’s Commissioner for Competition has launched similar antitrust cases against giant corporations such as Intel and Microsoft in the past. It won both cases with Microsoft paying up $794 million while Intel paid up $1.3 billion.
Some of the complainants have also noted that Google could circumvent this looming threat of legal action by simply rerouting its searches through data centres in other parts of the world as opposed to routing them through the European Union. This would effectively make Google immune to any restrictions that the EU can place on it. However, Google has not indicated whether it is contemplating such a move.