Google May Face a Harder Case Than Expected with EU Antitrust Authorities
Alphabet Inc (NASDAQ:GOOG), better known as Google, will be stuck in a long legal battle in Europe. The EU has accused Google of unfair promotion of its e-shopping services. They say Google has driven rivals away in the hunt for online search advertisers. (Source: “Google formally rejects EU antitrust charges,” The Globe and Mail, November 3, 2016.)
On November 3, Google produced the first documents in its defense, as it faces three charges brought forth by the European Antitrust authority. The documents intend to address the formal list of charges, which the company received in April 2016. The 150-page long defense response was to have reached the EU authorities last July, only to be postponed until now. (Source: Ibid.)
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The EU Commissioner for Competition, Margrethe Vestager, launched the case against Google. It came after FairSearch, a high-tech firm, complained that it felt disadvantaged by Google’s dominance. According to the EU, Google has violated European competition rules by abusing its dominant position in the online search field through the “Android” operating system.
Google has addressed these issues, but the case will be long. In the coming weeks, Google will have a chance to explain why, in its opinion, it has not breached any antitrust laws. Google thinks it can make a convincing case for itself by stressing that its competitors are free to offer their digital services to over 500 million European consumers. Still, if found guilty, Google could incur a penalty of up to 10% of its annual revenues (a maximum fine of $7.5 billion). The size of the fine would likely force the company to change its modus operandi in Europe. It would also have a negative effect on Google stock.
Google’s lawyer, Kent Walker, in a blog, rejected the EU’s charges, claiming they lacked any factual, legal, or economic basis. Walker said that any perceived antitrust action was the result of its users’ requests and not part of a deliberate plan to crush local (EU) competitors. “We never compromised the quality or relevance of the information we displayed. On the contrary, we improved it. That isn’t ‘favoring’ – that’s listening to our customers.” (Source: Ibid.)
As logical as Google’s defense might appear, some think the company risks losing the case. A professor from Rutgers Law School notes that as valid as Google’s point is about consumer-driven changes, “the Commission worries about the effect on rivals. This likely will outweigh the consumer point.” (Source: Ibid.)
