It’s official: on Wednesday, in a formal Statement of Objections, the European Union’s antitrust chief formally accused Google of abusing its dominant position in the web search arena.
The European Commission is focused on Google’s alleged practice of skewing search results to divert users of Google’s search engine to other Google-owned websites, products, and services, particularly travel, shopping, and navigation websites. In addition, the EC is separately investigating allegations of alleged agreements between Google and mobile device manufacturers related to Google’s Android platform – it is claimed that such phone manufacturers that agree to use Google’s open-source Android platform face contractual obligations to place Google’s other apps in prominent positions on the mobile devices. Furthermore, Margrethe Vestager, the competition commissioner, has indicated that the inquiry may expand over time.
Notably, Google has staggering dominance in the two challenged areas. Google’s search function is reported to control over 90 percent of Europe’s search market. In addition, Google’s Android operating system for mobile devices is reported to be the world’s largest operating system, with an 81 percent market share (compare that to Apple’s 15 percent market stake).
Google is now faced with the largest antitrust case in Europe since Microsoft was scrutinized in the 2000s, which resulted in fines approaching €2 billion for Microsoft. (In fact, it has been reported that Microsoft’s was one of the loudest voices challenging Google’s practices in Europe.) In the unlikely event that Google fails to rebut the Statement of Objections, Ms. Vestager could levy a fine exceeding €6 billion, or about 10 percent of Google’s annual revenue. Alternatively, Google could opt to settle the matter, or dispute the Statement of Objections and request a formal hearing, a process that could take several months. A final decision by the regulators could be expected by the end of this year; that decision could then face legal challenges in the courts that could take years to resolve.
Google appears to be ready for battle, and a preliminary internal memo from Google GC Kent Walker responding to the allegations has been published by TechCrunch and is available here. In it, Walker notes that the Statement of Objections is “not a final finding” but rather presents an opportunity for the company in question to respond. Substantively, Walker’s memo focuses on the competition in the search engine arena, where competing offerings include Bing and Yahoo!, as well as nontraditional search engines like Apple’s voice-activated Siri product, and where more and more searches are being conducted through mobile apps such as Yelp, which tie search results to a user’s geographic location.
This promises to be not only a case of interest to antitrust practitioners, but also a case with profound real-world consequences for the daily lives of users of search engines and mobile devices. Simply put, millions if not billions of consumers encounter Google’s challenged conduct every single day, and the result in Europe will surely have profound implications around the globe.