Google distorts search results, says EU

The European Union has accused Google of cheating consumers and competitors by distorting Web search results to favour its own shopping service, after a five-year investigation that could change the rules for business online.

It also launched another antitrust investigation into the Android mobile operating system, a key element in the US 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. Google faces fines of more than €6 billion.

Investigations into Google’s business practices in other areas would continue. The shopping case, on which the EU has had the most complaints dating back the longest time, could potentially set 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 withGoogle.

“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 GoogleShopping ahead of rivals for the past seven years.

Google, whose shares lost 1%, rejected the charges. In its first reaction, it 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% of their annual sales, in Google’s case up to €6.2 billion.

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 US software giant Microsoft in 2004 and chip-maker Intel in 2009. Its record antitrust fine was €1.09 billion on Intel.

Competition lawyer Bertold Baer-Bouyssiere at DLA Piper in Brussels said: “Even more than Microsoft, this case will shape the landscape for the digital sectors in the years to come.”

Rejecting suggestions - recently from US President Barack Obama himself - that the EU was pursuing an anti-American, protectionist policy, Vestager, a liberal former economy minister, said about a quarter of the firms which had complained to the EU authorities about Google were themselves US-owned.

She insisted that political pressure had played no part in her decision to accuse Google. Nationality or successful market domination were not issues for her, only the abuse of market power.

In a mark of the emotion US tech hegemony evokes among Europeans who fear economic eclipse, the EU parliament last year voted a non-binding resolution urging the Commission to consider breaking up Google. The EU action so far is unlikely to have such a dramatic effect, though it could crimp future business.

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 Googleranks results. That way, any remedy would be “future-proof” against technological change.