16 Apr 2015

Google accused of search abuse

10:36 am on 16 April 2015

The European Union has filed a complaint against Google over its alleged anti-competitive behaviour.

European competition commissioner Margrethe Vestager speaks on 15 April 2015 in Brussels.

European competition commissioner Margrethe Vestager speaks at the press conference in Brussels. Photo: AFP

The competition commissioner said she had issued a "statement of objections", stating that the firm's promotion of its own shopping links amounted to an abuse of its dominance in search.

Margrethe Vestager said Google now had 10 weeks to respond.

The firm said it "strongly disagreed" with the allegations and looked forward to making its case.

Ms Vestager also revealed that she had launched an investigation into whether the way Google bundled apps and services for its Android operating system was unfair.

The commissioner said the EU would also continue to monitor other activities by Google that its rivals had complained about.

It follows a five-year investigation into the company and marks the start of a formal legal process that could ultimately lead to billions of dollars of fines.

Google accounts for more than 90 percent of EU-based web searches.

Claim of preferential treatment

The European Commission has investigated the antitrust allegations - made by Microsoft, TripAdvisor, Streetmap and others - since 2010.

Among their complaints was an objection to Google placing adverts from its Google Shopping service ahead of others' links in relevant searches.

The EU has objected to the way Google promotes results from its own shopping service.

Ms Vestager said the commission's preliminary findings supported the claim that Google "systematically" gave prominence to its own ads, which amounted to an abuse of its dominant position in search.

"I'm concerned that Google has artificially boosted its presence in the comparison shopping market with the result that consumers may not necessarily see what's most relevant for them, or that competitors may not get the the commercial opportunity that their innovative services deserve," she told a press conference in Brussels.

Ms Vestager said that she was not seeking a wider redesign of Google's search results or asking it to change its algorithms.

But she added that the case could set a precedent that would determine how the EU handled other complaints about Google favouring its own mapping, hotels and flights services.

Google's office in Brussels

Google has rejected the European Commission's allegations. Photo: AFP

Google has rejected the idea its shopping service distorts the market.

"While Google may be the most used search engine, people can now find and access information in numerous different ways - and allegations of harm, for consumers and competitors, have proved to be wide of the mark," wrote its search chief Amit Singhal on the firm's blog.

"It's clear that: (a) there's a ton of competition - including from Amazon and eBay, two of the biggest shopping sites in the world and (b) Google's shopping results have not the harmed the competition.

"Any economist would say that you typically do not see a ton of innovation, new entrants or investment in sectors where competition is stagnating - or dominated by one player. Yet that is exactly what's happening in our world."

Many of Google's rivals welcomed the EU's action.

"Google's abuse of dominance distorts European markets, harms consumers, and makes it impossible for Google's rivals to compete on a level playing field," said lobbying group Icomp.

"We see this statement of objection as a crucial first step towards ensuring that European consumers have access to vibrant and competitive online markets."

New Zealand-based technology commentator Ben Gracewood told Morning Report the European Commission's accusations would be difficult to prove.

He said the EU would have to prove Google was causing harm to other companies such as Amazon and eBay.

But, he said, it was clear the prominent placing of Google's own products was to its benefit and the EU's case was not completely unfounded.

Google could ultimately face huge fines and be ordered to reshape its business in Europe because of the shopping complaint.

In recent years, the European Commission has imposed antitrust penalties on other tech giants, ordering Intel to pay €1.1bn ($1.55bn) in 2009, and Microsoft €516m ($725m) 2013.

However, Ms Vestager said she was "open" to Google's response, and would listen to its case before deciding how to proceed.


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