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The European Union escalated its four-year- old probe into Google Inc., accusing the Internet giant of abusing its dominance of the search-engine market and starting a new investigation into its Android mobile-phone software.
The European Commission said it sent a so-called statement of objections to Google, raising the prospect of fines. It says Google unfairly favors its own comparison shopping service above rivals. Regulators will also start looking at Google’s contracts with phone and tablet manufacturers to check if the company makes them use Google services and blocks them from using modified versions of Android.
“If the investigation confirmed our concerns, Google would have to face the legal consequences and change the way it does business in Europe,” EU Competition Commissioner Margrethe Vestager said in an e-mailed statement on Wednesday. “I want to make sure the markets in this area can flourish without anti- competitive constraints imposed by any company.”
The EU’s patience with Google has run out after three settlement bids failed to satisfy critics, who said the Mountain View, California-based company was wielding its power over search results to unfairly promote its own services and advertisements. The Android inquiry opens a new front that may hamper Google’s bid to gain a stranglehold on the mobile ad market.
More on Google and Competition:
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- FTC Staff Wanted to Sue Google for Ripping Off TripAdvisor and Yelp
Google has “a very strong case with especially good arguments when it comes to better services for users and increased competition,” General Counsel Kent Walker told employees, according to an internal memo obtained by Bloomberg News. Amazon.com.Inc. and eBay Inc. are among rivals that haven’t been harmed by Google’s shopping service, he said.
Google has 10 weeks to respond to the EU’s objections and can seek a closed hearing with regulators to make its case.
Sending antitrust objections, which lay out where the EU thinks Google is breaking the law, pushes the investigation into new territory. Apart from the risk of fines, it may result in demands for Google to change its behavior. Any order for it to change how search results are generated or how advertising is displayed may affect revenue.
The EU is continuing to investigate other concerns about Google’s search advertising, such as exclusivity requirements and “undue restrictions” on advertisers, it said. The EU is also looking at the legality of Google’s copying of rivals’ web content.
The European market contributes about 35 percent of Google’s revenue, according to Carlos Kirjner, a New York-based analyst at Sanford C. Bernstein & Co. Its market share in search exceeds 90 percent in most European markets, compared with about 65 percent in the U.S.
The EU’s move is a U-turn from earlier efforts to seek a settlement, which would have seen them drop the investigation if Google made minor changes to its search pages. Negative feedback from companies, as well as criticism from French and German politicians, forced the EU ditch an accord last year.
The EU has been probing allegations since 2010 that Google’s search page isn’t fair when people seek services online. Microsoft Corp., Expedia Inc., publishers and others have asked the EU to examine complaints that Google favors its own services over competitors and hinders specialized search engines that compete with it.
Regulators have been looking at Google’s Android software for mobile phones since 2013 after receiving a complaint from an industry group backed by Microsoft and Nokia Oyj.
The EU also got a complaint last year from independent record labels that targeted Google’s YouTube online video site, alleging that Google threatened to block artists’ videos during contract talks for a streaming service.
–With assistance from Brian Womack in San Francisco and Andrew Clapham, Stephanie Bodoni and Gaspard Sebag in Brussels.
This article was written by Aoife White from Bloomberg and was legally licensed through the NewsCred publisher network.