European Union Launches Investigation into Google's Business Practices

Strategic Insights -

Google's dominance in the online search market has triggered a formal investigation by the European Commission into allegations that the company's practices are stifling competition and favoring its own services. The probe, announced on Tuesday, marks the first major regulatory scrutiny of Google's business practices and could potentially result in billions in fines.

The investigation centers on complaints from several smaller online search providers, including Foundem, ejustice.fr, and Ciao, owned by Microsoft's Bing search engine. They claim that Google's search results have deliberately relegated their services to lower positions, while promoting Google's own services, such as online price comparison, in a way that disadvantages competitors. The commission will also investigate whether Google has prevented advertising partners from placing ads from rival companies on their websites and whether it has made it harder for customers to move data from their advertising campaigns to other ad platforms.

Key Takeaways:

  • The European Commission's investigation, announced on Tuesday, will examine whether Google's practices are stifling competition in the online search market.
  • The probe follows complaints from smaller online search providers, including Foundem, ejustice.fr, and Ciao, owned by Microsoft's Bing search engine, that Google's search results have deliberately relegated their services to lower positions.
  • The commission will investigate whether Google has prevented advertising partners from placing ads from rival companies on their websites and whether it has made it harder for customers to move data from their advertising campaigns to other ad platforms.
  • The investigation does not imply any wrongdoing by Google, which controls about 90% of the online search market in Europe, but rather a serious examination of the company's practices.
  • The commission has notified the US Department of Justice of its investigation, which is expected to take "at least a few months."
  • Google maintains it has done nothing wrong, stating that it has "worked hard to do the right thing by our users and our industry" and will cooperate with the Commission to address any concerns.
  • A fine of up to 10% of revenue could be levied against Google if the Commission finds it has abused its dominant position, which would amount to $2.4 billion based on 2009 earnings figures.

Statistics:

  • Google's market share in Europe: 90%
  • Number of companies that lodged complaints: 3 (Foundem, ejustice.fr, and Ciao)
  • Percentage of website content duplicated by Foundem: 79%
  • Potential fine amount (10% of revenue): $2.4 billion (based on 2009 earnings figures)

Sources:

  • The Associated Press
  • European Commission
  • European Parliament
  • Google (email statement)
  • ICOMP's blog post by David Wood, legal council