Google and the Competition Commission

GoogleGoogle – the California-based company vying to shake off its “search giant” title by expanding into every technology known to man – is the world’s most well-known and widely-used search engine. It holds an almost unrivalled position of power and renown in the information era.

However, the behemoth may have met its match in the European Competition Commission, which has recently expressed renewed concern over Google’s dominance over the search engine sector.

According to Commission officials, last week Google submitted new proposals to the European Union in an attempt to settle their differences, the latest move in a history of wrangling between the two parties.

Joaquín Almunia, the EU Competition Commissioner, confirmed the submission in an interview with Bloomberg in Italy. “Once we have completed our analysis, once we will check that these new proposals are able to eliminate our concerns, we will tell Google what to do.”

If it turns out like the last time Google tried to make amends, it could end badly. In July, Almunia dismissed a proposal offering to make their own branded services more obviously tied to them and present the user with certain rival-operated search services.

“A firm signal”

This is not the first time the EU Competition Commission has challenged a major global company.

Joaquin Almunia - photo credit Agência Brasil

In 2004, the Competition Commission investigated Microsoft Corporation due to potential anticompetitive actions. It was claimed that Microsoft was limiting the competitive market due to royalty charges and for not offering web users in the EU alternatives to its flagship web browser Internet Explorer. While it implemented a screen providing a selection of options in 2010, it dropped the feature on the advent of Windows 7’s launch the following year.

The Competition Commission found that Microsoft had indeed been operating against the competitive interests of the market and fined them 561 million Euros.

While as heavy a fine is not as likely to be charged to Google, the European Competition Commission does have considerable power and the ability to heavily affect these multinational companies. Companies found to be guilty in anti-trust probes can incur fines of up to 10% of total annual revenue – for Microsoft, this may have hit 5.6 billion euros based on their 2012 reports, more than some countries produce in a year.

Speaking to the BBC, lawyer Tony Woodgate said the fine showed the Commission was “sending a firm signal in this first case of its type that it will not tolerate failure by a company to comply with the commitments it gave to settle an antitrust infringement procedure”.

   Notable cases

  • Nov 1994: MSG Media Group merger is blocked because of “creation of dominant market position”
  • Mar 2003: Takeover of Pharmacia by Pfizer Inc is authorised but depends on the new company dropping certain products in development and focusing on animal welfare issues
  • Oct 2007: Merger of ABN Amro and Fortis approved on condition that both cease certain activities

Microsoft itself is lobbying for harsher and more invasive punishments of Google in this case.

But it wouldn’t be in Google’s character to give up so easily. Spokesperson Al Verney told the Agence France-Presse that “[Google’s] proposal to the European Commission addresses their […] concern”.

Details of Google’s new plans are sparse, but with headquarters in Dublin, Ireland, and a massive European customer base to retain, it’s likely they’ll be keen to settle the argument as quietly as possible. While the Competition Commission has the power to impose fines, it can do worse, even forcing companies to alter their operating models in the EU.

It remains to be seen how the motion fares. Almunia will seek a speedy resolution, knowing time is of the essence. “It’s a very difficult one, we are dealing with new factors, we are dealing with a sector of activity that is moving very, very fast.”

by Stephen Karmazyn and Joe Sutherland

Photo credits: Joe Sutherland, Agência Brasil

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