The European Commission confirmed formal charges against Google for violating EU competition law by favouring its own comparison shopping services over rival services in Google search results. Google will have ten weeks to respond to the charges and try to reach a settlement of the charges. If the EC is not satisfied with its response, it may impose a fine equal to up to 10 percent of Google's revenues and require changes in Google's business practices.
This is one of the four areas previously outlined in the EU's investigation into possible abuse of Google's dominant position in the search market. The EC first started looking at the company's search practices in 2010. The EU's previous competition commissioner Joaquin Almunia tried to settle the allegations with Google last year, after the company proposed changes to how it presents search results. However, these were rejected in a consultation by the EC with other market players, who said they did not go far enough to reign in Google's dominance. The EC said it's still considering action in the other three areas of concern, over copying rivals' web content ('scraping'), exclusive advertising terms and undue restrictions on advertisers by Google.
Google said it "respectfully but strongly disagrees" with the statement of objections sent by the EC. It responded to the EC announcements with the publication on its blogs of data showing numerous competitors with higher markets shares in specialised search areas such as travel and shopping. "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," the company said. Companies such as Axel Springer, Expedia, TripAdvisor and Yelp have complained about Google’s practice of including its specialized results (Flight Search, Maps, Local results) in search, saying this significantly harmed their businesses. However, their growing traffic, revenues and profits tell a different story, Google said.
At the same time, the EC opened a new competition investigation into Google's Android operating system for mobile devices. The EC is concerned about Google's agreements with handset makers covering the installation of Google apps on their Android phones and whether this constitutes an abuse of Google's dominant position. The investigation was started following complaints from two unnamed market parties and the EC's own inquiries. In particular, the EC questions whether Google is hindering the market for other apps by tying its own services to Android and if its licensing agreements with manufacturers may be preventing the development of alternative versions of Android.
In a response on its Europe blog, Google stressed that the Android licensing agreements are not exclusive and voluntary - "you can use Android without Google". According to the company, the licensing deals offer benefits to Android users and developers, by ensuring apps work across all types of Android device and useful apps are available 'out of the box' after purchase of a phone. It also noted that there are far fewer Google apps pre-installed on Android devices than Apple apps on iOS phones.
