Google readies defence of EC antitrust action

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15 April 2015 | 0

Google said European antitrust regulators will issue a ‘statement of objections’ today on its display and ranking of certain search results, particularly of shopping, but said it had “a very strong case” against it.

A statement of objections is a formal step in the European Commission’s investigations into antitrust business practices, and can lead to bans on specific practices and fines.

The regulators are expected to charge the company with abusing its dominant position in Internet search in Europe, advancing a five-year investigation, according to news reports.

Precedent
In an internal memo obtained by Re/code and TechCrunch, the company told ‘Googlers’ that it believes the Commission will also open Wednesday a formal investigation into its Android operating system, but this will not necessarily lead to action against the company. It cited the opening and closing of an inquiry into Apple’s iTunes a few years ago.

Google told employees that competition to the company is “just one click away,” and it has “good arguments when it comes to better services for users and increased competition”.

The company has competition from players like Bing, Yahoo, Quora, DuckDuckGo, and a new wave of search assistants like Apple’s Siri and Microsoft’s Cortana, besides specialised services like Amazon, Idealo, Le Guide, Expedia and eBay, according to the memo. Users are also turning to Facebook, Twitter and other social networks for news and suggestions such as tips on eateries and movies.

Mobile apps are also providing competition to the company, with seven out of every eight minutes on mobile devices spent within apps, the company said.

Google also argued that Android provides customers a lot of choice. Apps that compete directly with Google such as Facebook, Amazon, Microsoft Office and Expedia are easily available to Android users, and even come preloaded in some devices like the Samsung Galaxy S6.

“We paid out over $7 billion in revenue over the past year to developers and content publishers,” Google said in the memo.

The company said the statement of objections to be filed by the European Commission is not a final finding but a set of preliminary arguments to which the company can respond.

Android woes
At the same time, the Commission also opened a separate antitrust investigation into Google’s mobile operating system Android. It suspects Google of abusing its dominant position by, among other things, requiring device manufacturers to bundle Google’s own services and applications with the open-source operating system.

The Commission has received two complaints concerning Android and will focus on three allegations. First, Google is said to have required that smartphone and tablet manufacturers exclusively pre-installed Google applications on their devices, which could be anti-competitive as it would prevent rivals from being successful.

Second, Google is suspected of having prevented manufacturers who want to use Google apps from developing and marketing modified and potentially competing versions of Android on other devices. This practice would be illegal as it would be prevent rival operating systems from entering the market, the Commission said.

Google is also suspected of having illegally prevented the success of rival apps by bundling its own apps and services on Android devices with other Google applications.

The EU investigation follows proceedings started against Android by the Federal Antimonopoly Service of the Russian Federation (FAS Russia) in February after Russian search company Yandex filed a complaint over Android app bundling.

The probe into Google started in 2010, following complaints that it favored its own services in search results, with a consequent reduction in the visibility of results for competing sites. Google tried to settle many times, and in February last year promised to give equal prominence to rival services. But that deal was shot down by many companies including Foundem, which offers a vertical search engine for various market categories, and filed the first complaint against Google in 2009.

Google could face fines of up to $6 billion, or 10% of its annual worldwide revenue.

John Ribeiro, IDG News Service

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