Google Disputes EU Antitrust Charges - InformationWeek

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4/15/2015
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Google Disputes EU Antitrust Charges

Google insists that its conduct has been lawful and beneficial to the market.

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The European Commission on Wednesday formally accused Google of abusing its dominant position in the online search market and announced an investigation into the company's Android mobile operating system.

Margrethe Vestager, EU Commissioner for competition policy, said in a statement that she was concerned Google has given an unfair advantage to its own comparison shopping service, Google Shopping, to the detriment of rivals.

The European Commission began inquiring into Google's search business in 2010. In February 2014, Google agreed to settle the EU inquiry after also settling a parallel inquiry conducted by the Federal Trade Commission in the US. But last September, rather than approving the settlement proposal, the European Commission reopened its investigation after Google's competitors complained about the proposed terms.

In December 2014, The Financial Times reported that the European Parliament had drafted a proposal to break up Google, an unlikely scenario though one that increased pressure on the European Commission to act.

[ Check out what Google has planned for its new wireless service. Read Google's Wireless Service Taps WiFi And Cellular. ]

The European Commission's formal investigation into Android aims to determine whether Google has illegally hindered rivals by requiring or incentivizing hardware makers to exclusively install Google's mobile apps or services in conjunction with Android; whether Google has illegally stifled the development of Android variants by preventing hardware markers from installing its apps or services on forked versions of Android; and whether Google has illegally limited the development and market access of rival applications through the bundling of Google applications or services.

"The Commission's determination to investigate this is important because Google Android has used its dominance to move from an open system to a closed one, so it can exclude competitors to the benefit of its own businesses," said Thomas Vinje, FairSearch Europe Legal Counsel, in a statement.

FairSearch, a group supported by Oracle, Microsoft, Nokia, and assorted search industry competitors, has complained about Google's search business and the company's handling of Android.

(Image: Google)

(Image: Google)

Google has insisted that its conduct has been lawful and beneficial to the market. In a post on the Google Europe blog, Hiroshi Lockheimer, VP of engineering for Android, said that Android has led to increased competition, imporved choice, and reduced prices.

The company's agreements with partners are voluntary, said Lockheimer, and benefit Android developers and users. Anti-fragmentation agreements prevent apps that won't run on certain devices, and app distribution agreements ensure a positive user experience, he said, noting that the agreements are non-exclusive.

Amit Singhal, senior VP of Google Search, advanced a similar argument through the company's US blog. "While Google may be the most used search engine, people can now find and access information in numerous different ways -- and allegations of harm, for consumers and competitors, have proved to be wide of the mark," he said.

To support his claim, Singhal referred to four graphs depicting unique visitors at travel sites in Germany and at shopping sites in France, Germany, and the UK, all of which show other companies receiving significant online traffic. And he pointed to a recent Washington Post article about how Google's acquisition of travel technology firm ITA hasn't been the competition-killer that rivals feared.

"Any economist would say that you typically do not see a ton of innovation, new entrants, or investment in sectors where competition is stagnating or dominated by one player," said Singhal. "Yet that is exactly what's happening in our world."

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Thomas Claburn has been writing about business and technology since 1996, for publications such as New Architect, PC Computing, InformationWeek, Salon, Wired, and Ziff Davis Smart Business. Before that, he worked in film and television, having earned a not particularly useful ... View Full Bio

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Brian.Dean
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Brian.Dean,
User Rank: Ninja
4/16/2015 | 4:06:18 PM
Re: Build a better mouse trap
We are going to have to dig deeper to pin-point exactly the pain point that is concerning EU. If online shopping is the major area of concern then, by seeing the number of visitors it seems that Amazon and Ebay is in a duopoly position.
Li Tan
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Li Tan,
User Rank: Ninja
4/16/2015 | 2:28:47 PM
Re: Google
I agree - this is good news for both Google and the industry. It's hard to draw clear line between two closely interrelated areas. Hence it makes little sense to regulate it completely by law.
DDURBIN1
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DDURBIN1,
User Rank: Ninja
4/16/2015 | 9:28:56 AM
Build a better mouse trap
I don't understand the EU commission's logic here.  Unlike an OS, the market was and is retitled with search products.  They are not rare creatures.  The market had and has plenty of choices to choice.  Google built a better mouse trap.  Google search engine success is not based on maniulative market practices such as those once used by Intel aganst hardware manufactures that chose to use AMD in the past.  Instead the market chose to use Google.  As for Android, again hardware manufactures don't have to offer Android but the market, i.e. comsumers,  have demanded its use because of the success of Google Play.  Sure the success of Android is tied to the success of Google play but again there are plenty of other media purchasing services.  Google has not put a gun to the head of any user of their products.  The EU is wasting a lot of their time and money.  
Brian.Dean
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Brian.Dean,
User Rank: Ninja
4/16/2015 | 6:09:46 AM
Google
This is great news because it depicts a world that is defining "Search" as a separate category.

A long time ago, Microsoft was in a similar situation with antitrust laws, the firm tried to define software and an OS, in the same category. However, the courts decided to treat the two categories as different areas and the results have been quite good for the markets. 

As far as Google (the search) is concerned. I tend to agree to their statement -- since a long time, social media has also been entering the search space.
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