BRUSSELS, (Reuters) – The European Union accused Google Inc yesterday of cheating consumers and competitors by distorting Web search results to favour its own shopping service, after a five-year investigation that could change the rules for business online.
It also started another antitrust investigation into the Android mobile operating system, a key element in Google’s strategy to maintain revenues from online advertising as people switch from Web browser searches to smartphone apps.
EU Competition Commissioner Margrethe Vestager said the U.S. company, which dominates Internet search engine markets worldwide, had been sent a Statement of Objections – effectively a charge sheet – to which it has 10 weeks to respond.
Investigations into Google’s business practices in other areas would continue. The shopping case, on which the EU has had the most complaints dating back the longest time, could potentially set a precedent for concerns over Google’s search products for hotels, flights and other services.
Vestager, a Dane who took over the politically charged case in November, announced the moves on the eve of a high-profile visit to the United States. Her findings follow nearly five years of investigation and abortive efforts by her Spanish predecessor, Joaquin Almunia, to strike deals with Google.
“I am concerned that the company has given an unfair advantage to its own comparison shopping service, in breach of EU antitrust rules,” she said. Google could face fines, she warned, if the Commission proves its case that it has used its “near monopoly” in Europe to push Google Shopping ahead of rivals for the past seven years.
Google rejected the charges. Its shares closed up 0.40 percent on Wednesday after earlier losing 1 percent.
Meanwhile, Google’s rivals are pushing U.S. antitrust enforcers to investigate the use of Android, two people with knowledge of the matter said.
Analysts said the EU charges were unlikely to hurt Google’s evaluation because it reflected the regulatory risk.
If recent history of EU probes into tech companies is an indicator, however, Google shares may have trouble moving forward until the issue is resolved.
In its first reaction, the Mountain View, California-based company said in a blog post that it strongly disagreed with the EU’s statement of objections and would make the case that its products have fostered competition and benefited consumers.
“Android has been a key player in spurring this competition and choice, lowering prices and increasing choice for everyone (there are over 18,000 different devices available today),” it said of its free operating system for mobile devices.
The Commission, whose control of antitrust matters across the wealthy 28-nation bloc gives it a major say in the fate of global corporations, can fine firms up to 10 percent of their annual sales, in Google’s case up to 6.2 billion euros.
If it finds that companies are abusing a dominant market position, the EU regulator can also demand sweeping changes to their business practices, as it did with U.S. software giant Microsoft in 2004 and chip-maker Intel in 2009. Its record antitrust fine was 1.09 billion euros on Intel.
Competition lawyer Bertold Baer-Bouyssiere at DLA Piper in Brussels said: “Even more than Microsoft, this case will shape the landscape for the digital sectors in the years to come.”
“NOT ANTI-AMERICAN”
Rejecting suggestions – recently from President Barack Obama himself – that the EU was pursuing an anti-American, protectionist policy, Vestager, a liberal former economy minister, said about a quarter of the firms which had complained to the EU authorities about Google were themselves U.S.-owned.
