Google Hurt Consumers and Competitors in Internet Search Case – EU      

More trouble has come the way of Google Inc. as the  European Union (EU) has accused the online search engine giants of cheating consumers and competitors by distorting Web search results to favour its own shopping service, after a five-year investigation that could see a change in the rules for business online.

The EU also launched another antitrust investigation into Google’s Android mobile operating system, a key element in the U.S. tech giant’s strategy to maintain revenues from online advertising as people switch from Web browser searches to smartphone apps.

Competition Commissioner Margrethe Vestager said Google, which dominates Internet search engine markets worldwide, had been sent a Statement of Objections – effectively a charge sheet – to which it has 10 weeks to respond.

Investigations into Google’s business practices in other areas would continue, with the shopping case potentially setting a precedent for concerns over Google’s search products for hotels, flights and other services.

Vestager, a Dane who took over the politically charged case in November, announced the moves on the eve of a high-profile visit to the United States. Her findings follow nearly five years of investigation and abortive efforts by her Spanish predecessor, Joaquin Almunia, to strike deals with Google.

“I am concerned that the company has given an unfair advantage to its own comparison shopping service, in breach of EU antitrust rules,” she said. Google could face fines, she warned, if the Commission proves its case that it has used its “near monopoly” in Europe to push Google Shopping ahead of rivals for the past seven years.

Google rejected the accusations. In its first reaction, the Mountain View, California-based company said in a blog post that it strongly disagreed with the EU’s statement of objections and would make the case that its products have fostered competition and benefited consumers.

“Android has been a key player in spurring this competition and choice, lowering prices and increasing choice for everyone (there are over 18,000 different devices available today),” it said of its free operating system for mobile devices.

The Commission, whose control of antitrust matters across the wealthy 28-nation bloc gives it a major say in the fate of global corporations, can fine firms up to 10 percent of their annual sales, in Google’s case up to 6.2 billion euros.

If it finds that companies are abusing a dominant market position, the EU regulator can also demand sweeping changes to their business practices, as it did with U.S. software giant Microsoft in 2004 and chip-maker Intel in 2009. Its record antitrust fine was 1.09 billion euros on Intel.

Google now had a chance to explain itself, Vestager said, and the case might be settled by it making further commitments to change its products. She wanted a change in the “principle” underlying searches rather than a redesign of current Web pages or tweaks to algorithms by which Google ranks results. That way, any remedy would be “future-proof” against technological change.

Of the formal investigation into Android, Vestager said: “I want to make sure the markets in this area can flourish without anticompetitive constraints imposed by any company.”

The focus on the ranking of searches for shopping sites did not address all complaints lodged with the Commission. Vestager stressed her antitrust staff would continue to investigate other areas of concern, including alleged “web scraping” to copy rivals’ content, and restrictive practices on advertising.

A final resolution – quite possibly involving court action if Google does not choose to settle – is likely to take many months and probably years, legal experts have said.