Google faces huge fine for “abusing search dominance”

The European Union is charging Google with abusing its dominant position in search to promote the company’s other services. The EU has been investigating complaints that Google allegedly diverts traffic from rivals in favour of its own services for several years, and has grown increasingly exasperated at Google’s failure to offer significant remedies. Now it appears the EU is preparing to hit the search giant with a massive fine for antitrust breaches. 

Google will today be served with a statement of objections from the EU, focusing in particular on the undue prominence given to Google’s Shopping results. The EU will also open a formal investigation into whether Google has abused its position with the Android operating system.

Google is by far and away the dominant search provider. Globally, Google accounts for around 62% of the desktop search market, according to NetMarketShare, and it accounts for around nine out of ten searches in the UK. Competitors in markets such as travel, shopping and rival search engines have complained that Google peverts its search results to give its own services an unfair advantage, depriving them of valuable traffic. 

Google says it plans to contest the charges, in a leaked memo acquired by Re/code. “We have a very strong case, with especially good arguments when it comes to better services for users and increased competition,” the memo to Google’s staff reads. “Competition online is thriving — despite what many of the complainants in this case allege. Indeed if you look at shopping, it’s clear that there’s a ton of competition (including from Amazon and eBay) that has not been harmed by Google’s own shopping service.”

The memo includes a series of graphs showing growth in the unique visitors to shopping sites in several European countries, including the UK. The graphs show Amazon and eBay have something in the order of ten times the traffic of Google Shopping.

Android angst

Google says it will also contest the accusations that it’s abusing its dominant position with Android, which had a 76.6% share of the smartphone market last year, according to analysts IDC. Google says Android has “lowered prices and choice for consumers” and can “be used free-of-charge by anyone”. 

Dealing specifically with the allegation that it bundles its own apps with the operating system – an echo of the Internet Explorer bundling issue that landed Microsoft in hot water with competition authorities at the turn of the century – Google argues that “consumers decide which apps they use and download on Android devices”.

“Apps that compete directly with Google such as Facebook, Amazon, Microsoft Office, and Expedia are easily available to Android users,” Google adds. 

A fine mess

If found guilty, Google will almost certainly face a hefty fine, potentially running into the billions, and restrictions on its future behaviour. Intel was fined over a billion Euros in 2009, when it was found to have abused its dominant position in the processor market to squash competitor AMD, including offering PC makers discounts to remove AMD from their line-ups. Microsoft has also been fined several times by the EU over the years, chiefly for bundling Internet Explorer with the Windows operating system and failures to properly implement the “browser ballot” that was designed to give users a choice of alternative browsers when first installing Windows.