Google is accused of unfair practices, including blocking rivals in search advertising.
EU regulators have brought a third antitrust charge
against Alphabet Inc's Google, accusing it of blocking rivals in online search
advertising, a move that raises the pressure on the company to modify its
practices or face hefty fines.
The European Commission on Thursday also reinforced an
existing charge against the world's most popular internet search engine that
its search results favor Google's own shopping service over those of rivals.
"Google has come up with many innovative products
that have made a difference to our lives. But that doesn't give Google the
right to deny other companies the chance to compete and innovate,"
European Competition Commissioner Margrethe Vestagertold a news conference in
Brussels.
The Commission said it had sent two charge sheets
known as "statements of objections" to Google.
The first accuses Google of having abused its 80
percent market share in the placement of search advertising on third party
websites.
This relates to Google's "Aden's for Search"
platform, inwhich Google acts as an intermediary for websites such as those of
online retailers, telecoms operators or newspapers, with searches producing
results that include search ads.
"We have also raised concerns that Google has
hindered competition by limiting the ability of its competitors to place search
adverts on third-party websites, which stifles consumer choice and
innovation," Vestager said.
The second accusation, which built on a charge sheet
sent to Google in April last year, rejected the company's claim that the watchdog
had failed to take into account competition from online retailers Amazon and
eBay.
Google has 10 weeks to respond to the Aden's charge
and eight weeks to the shopping service case.
The company could face fines up to 10 percent of its
global turnover for each case if found guilty of breaching the bloc's antitrust
rules.
Google said it believed its innovations had increased
choice for European consumers and promoted competition.
"We'll examine the Commission's renewed cases and
provide detailed response in the coming weeks," a Google spokesman said.
U.S. CONCERNS
British price comparison site Foundem, whose complaint
triggered the EU investigation, urged the Commission to take speedy action.
"We are concerned that if it does not act
conclusively in the near future there may be little competition left to
protect," Foundem CEO Shivaun Raff said in a statement.
Lobbying group Fair Search, whose members Expedia
and TripAdvisor complained about Google, said the issue is global.
"At stake is fair competition across Europe and
beyond, because the online market and innovation are global," Fair Search
lawyer Thomas Vinje said in an email.
The EU's pursuit of Google, along with probes into
other U.S. multinationals over tax issues and control of personal data, has
caused irritation in Washington, with President Barack Obama last year accusing
Europe of veering toward protectionism.
Vestager, a former Danish economy minister who took
over as the EU's powerful antitrust commissioner in late 2014, insists she is
simply applying the law and promoting free competition.
Google's AdWords and Aden's programmes have been on
the Commission's radar since 2010, under Vestager's predecessor, after rivals
complained about unfair advertising exclusivity clauses and undue restrictions
on other advertisers.
They form the core of Google's business which posted
about $75 billion in revenue last year, generating 90 percent of Alphabet's
total annual revenue.
The latest round of charges underscores the European
Commission’s commitment to the case and signals that serious penalties against
Google are likely, said Albert Foer, a senior fellow at the American Antitrust
Institute.
“My sense is that we are talking about something more
substantial than a slap on the wrist, and also that’s why this has been going
on for so long,” he said.
The investigation has been dragging on for so long
that more serious action will be needed to restore competition in the market,
said Gary Reback, an of counsel at Carr & Ferrell LLP, who represents
complainants in the EU case.
“If you step in rapidly, you can take a rifle shot,
you can make a surgical incision and stop the bad behavior before it causes
enormous harm,” he said. Now, he said, “just stopping the harm is not good
enough.”
Enough competition remains that rivals could step in
to deliver ads alongside search results on third party sites, Reback said. But
there are few European alternatives for comparison shopping, he added.
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