Google dismisses EU charges

A Google sign is seen at the company's headquarters in Mountain View. (Marcio Jose Sanchez, AP)
A Google sign is seen at the company's headquarters in Mountain View. (Marcio Jose Sanchez, AP)

San Francisco - Google has dismissed European Union charges that it abused its dominant position as Europe's top search engine, downplaying its role as gatekeeper of the internet.

"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 California-based company said on its official blog.

The EU 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 started another antitrust investigation into the Android mobile operating system, a key element in Google's strategy to maintain revenues from online advertising as people switch from web browser searches to smartphone apps.

EU Competition Commissioner Margrethe Vestager said the US company, 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.

Precedent

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 US. 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 charges. Its shares closed up 0.40% on Wednesday after earlier losing 1%.

Meanwhile, Google's rivals are pushing US antitrust enforcers to investigate the use of Android, two people with knowledge of the matter said.

Analysts said the EU charges were unlikely to hurt Google's evaluation because it reflected the regulatory risk. If recent history of EU probes into tech companies is an indicator, however, Google shares may have trouble moving forward until the issue is resolved.

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.

Fines

"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 €6.2bn.

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 €1.09bn on Intel.

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