Wednesday, April 15, 2015

Google Will Likely Face European Antitrust Charges

The European Union’s competition chief, Margarethe Vestager, is expected to make an announcement on Wednesday that U.S.-based internet giant Google has abused its dominant (90 percent) position on the search-engine market, according to a report based on statements by individuals with knowledge of the matter. The European Commission’s investigation of Google’s business, which has been ongoing for five years, has focused on whether its internet search engine gave preferential treatment to the company’s own products, for example, those for online mapping, shopping and travel. More than two dozen European companies and other organizations have filed antitrust complaints against Google. If Google does not answer any formal charges that may be filed, the maximum fine it could face is €6 billion (US $6.4 billion), which would represent about 10 percent of Google’s annual revenue. To date, the record fine levied by the EC for abuse of dominance is €1.1 billion against Intel in 2009.

The European government has been under a great deal of pressure to step up the pace of its investigation and to take action against Google. The impending announcement with regard to the abuse of dominance issue comes as Google prepares to make a significant inroad into the mobile service sector outside the U.S. Having announced the impending launch of MVNO services inside the U.S., Google last week reportedly entered into talks with Hutchison Whampoa to establish MVNO services in the U.K., Ireland, Italy and several other countries where Hutchison has networks, in which there would be free roaming—that is, the same rate charged no matter where the service is used. While the EC’s potential action is to be directed against Google’s search engine, there can be no doubt that a heavy fine and restriction of the company’s core business in Europe would have a negative effect on its ambitions to challenge MNOs in the region. While Google’s huge size and influence give it access to markets and the capital to innovate and enter new sectors, these very traits also make it an inviting target for anti-competition charges. 

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