With EU challenging Google, this time 'stakes are high'

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EU's antitrust charges against Google search could be costly and distracting


With the European Commission leveling antitrust charges against Google, the company should be bracing itself for a big – and potentially costly – fight over its dominant search business.

"This could be a dilly of a pickle for Google," said Dan Olds, an analyst with The Gabriel Consulting Group. "The stakes here are pretty high. I think this is the biggest outside threat that Google has ever faced. It's going to be all-hands-on-deck to battle the EU however they can. This means not just legal action, but also working hard on the politics of the situation in order to gain some allies. It's going to be an uphill fight, since Google is viewed as the dominant Internet player."

On Wednesday, the European Commission charged Google with using its dominant position in the search market to squeeze out online shopping comparison competitors by giving preference to its own Google Shopping service.

The commission, the executive body of the European Union, claims that Google's search infringes on the commission's antitrust rules, stifling competition and harming users.

The commission separately launched an antitrust investigation into Google's Android mobile operating system. The investigation would look into whether Google, as the maker of the OS, was, among other things, requiring device manufacturers to bundle Google's own apps with the open-source operating system.

"Google now has the opportunity to convince the commission to the contrary," Margrethe Vestager, an EU commissioner in charge of competition policy, said in a statement on the search charge. "However, if the investigation confirmed our concerns, Google would have to face the legal consequences and change the way it does business in Europe."

The antitrust charge is going to be a big challenge to Google, said Jeff Kagan, an independent industry analyst.

"Google must follow the rules and do business the way business is done in each area of the globe, and each area is very different from the next," Kagan said. "That is very confusing for a single company to have so many different masters to satisfy, especially for Google, which wants to be as powerful in Europe as it is in the United States."

This fight with the EU could also be a distraction for Google.

"The EU was unhappy that Google didn't seem to be taking them seriously, so they are escalating this," said Rob Enderle, an analyst with the Enderle Group. "This is at the heart of where Google gets its income, and Google is likely to be unwilling to compromise... For Google, this will be about control, revenue and profit, which will be a hard pill to swallow."

Antitrust issues aren't new to Google.

Early last year, the company settled a separate antitrust challenge from the EU with an agreement requiring Google to give comparable display to rival search services. That three-year dispute with the EU focused on competitors' claims that Google sank rivals in its search result rankings.

That 2014 agreement came about a year after Google settled a lengthy antitrust investigation launched by the U.S. Federal Trade Commission.

This time, Google was quick to respond to the EU's charges, saying that search users have more choice than ever.

"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 wrote in a blog post Wednesday.

The company goes on to note that it has strong competition from the likes of Zalando, a German shopping site, as well as Facebook, Pinterest, Amazon and DuckDuckGo.

Olds said the EU has spent more than five years investigating Google to determine whether it had a strong case against the company.

"The financial penalties resulting from an EU ruling could be massive, even for a company the size of Google," Olds said. "Some have said potential fines could top $6 billion. To put that in perspective, as a company, Google's profits for 2014 were around $14.44 billion. If the Europeans went whole hog on penalties, it could take a huge chunk out of Google's profits."

This antitrust issue could give Google's competitors a ray of hope in an area where it's been tough to get a foot-hold against the search giant.

Will it be enough to take a bite out of Google's market share?

"Competitors will take interest but it might not make a whole lot of difference," said Olds. "Most users today just automatically use Google search and aren't even thinking of Bing or Yahoo. It's hard to imagine any fallout from this antitrust suit that would cripple Google search enough to change that consumer behavior."

Information from the IDG News Service was included in this report.

This story, "With EU challenging Google, this time 'stakes are high'" was originally published by Computerworld.

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