EU Ratchets Up Charges in Google Antitrust Probe

Google and its parent company Alphabet are facing new charges in the European Commission’s ongoing investigation of allegations that Google’s comparison shopping and online advertising platforms violated antitrust laws.

The EC on Thursday alleged that Google had abused its dominant position by systematically favoring its own comparison shopping service in search results. Further, it artificially restricted the ability of third-party websites to display search ads from Google’s competitors.

While Google has developed many innovative products, it doesn’t have the right to deny other companies the right to compete and innovate, said Commissioner Margrethe Vestager.

“Today we have further strengthened our case that Google has unduly favored its own comparison shopping service in its general search results pages,” she said. “It means consumers may not see the most relevant results in their search queries.”

The Commission also has “raised concerns that Google has hindered competition by limiting the ability of its competitors to place search adverts on third-party websites,” Vestager said.

Google responded to the allegations via Twitter.

In reaction to EC: We believe our innovations and product improvements have increased choice for EU consumers and promote competition (1/2)

— Google in Brussels (@GoogleBrussels) July 14, 2016

We’ll examine the Commission’s renewed cases and provide a detailed response in the coming weeks (2/2)

— Google in Brussels (@GoogleBrussels) July 14, 2016

Google and Alphabet have 10 weeks to respond to the charges.

Merchant Links

The Commission made a detailed examination of Google’s prior argument: that it shouldn’t consider comparison shopping services in isolation, but together with services provided by merchant platforms such as Amazon and eBay.

The EC has received several complaints about Google in a range of areas, including the company’s advertising business, according to an EU official who asked not to be identified.

The charges involving AdSense cover an area that the Commission already was aware of when it opened the investigation in November 2010, the official told the E-Commerce Times.

Dominant Position

Google has controlled about 80 percent of the market for search advertising in the European Economic Area over the past 10 years, according to the Commission.

A large percentage of the company’s revenue stems from agreements with Direct Partners, which might result in antitrust violations. Among the arrangements the EC considers problematic are exclusivity deals that prohibit search ads from Google competitors; premium placement of a number of search ads; and giving Google the right to authorize competing ads.

The EC charges are another step in leveling the playing field to achieve fair competition, said Foundem CEO Shivaun Raff, the lead complainant in the EC case against Google.

The Commission should be wary of Google’s attempts to use delaying tactics to reinforce its dominance in the market, he warned.

“While the Commission is clearly heading towards a robust prohibition decision,” Raff said, “we are concerned that if it does not act conclusively in the near future, there may be little competition left to protect.”

David Jones is a freelance writer based in Essex County, New Jersey. He has written for Reuters, Bloomberg, Crain's New York Business and The New York Times.

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