Europe May Charge Google with Abusing Its Search Monopoly Soon

The FTC decided to ignore Google's monopolistic tactics, but it looks like Europe won't.

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Mar 23 2015, 1:18pm

​Image: ​Mikael Miettinen/Flickr

​Google's rivals have long complained bitterly that the search giant has abused its dominant market position to harm competitors like Microsoft, but the tech titan has thus far escaped any serious sanctions over its conduct.

That may be about to change.

Europe's new antitrust commissioner may be poised to formally accuse Google of antitrust violations in the internet search market after a five-year investigation, according to The Wall Street Journal.

News of the possible charges comes after the Journal revealed new details from a 2012 Federal Trade Commission staff report that concluded that Google's behavior harmed its competitors and stifled online innovation.

The FTC staff report, which found that Google's conduct "has resulted—and will result—in real harm to consumers and to innovation in the online search and advertising markets," has prompted calls for the US agency to reopen its probe, and appears to have emboldened European officials who have been investigating Google for nearly five years.

"This new element and evidence is crucial and could not come at better time," Catalonian lawmaker Ramon Tremosa i Balcells, a member of the European Parliament who has called for aggressive antitrust action against Google, said in a statement emailed to Motherboard. Referring to Google's alleged practice of demoting the search results of rivals like Yelp, Amazon, and Ebay in favor of Google-owned services, Tremosa said he had been "denouncing this for the past year."

Tremosa added that he had publicly reiterated his concerns to new European antitrust chief Margrethe Vestager two weeks ago during a plenary session of the European Parliament.

Jean-Baptiste Soufron, a Paris-based lawyer who teaches digital law at Sciences Po and previously served as General Secretary of the French National Digital Council, said that Vestager faces a crucial choice.

The antitrust commissioner will either settle "at the last minute, or she will have to charge Google with antitrust violations."

"Google has tried to negotiate for years, but those negotiations seem to have failed," Soufron told Motherboard. "Now, there's a new antitrust commissioner, and either she accepts an agreement at the last minute, or she will have to charge Google with antitrust violations."

Some of the FTC staff report's conclusions—contained in a document accidentally released in response to an open records request—differ sharply from the ultimate finding of the five FTC commissioners who decided in early 2013 not to sue Google for antitrust violations after a two-year probe.

It's worth noting that the 2012 FTC staff report did not recommend charging Google over the central issue of the investigation, accusations of so-called "search bias," which many observers have long chalked up to "sour grapes" on the part of rivals that Google trounced in the open market by simply building a better mousetrap, or in this case, search engine.

"It's an old DC adage that if you cannot win in the marketplace, try to win through political influence," Glenn Manishin, a leading US antitrust expert, wrote in an influential 2012 series of articles on the FTC's probe.

It's also worth noting that having a monopoly in a market is not, by itself, illegal, as Manishin observed. What's illegal is seeking to achieve or maintain a monopoly through anticompetitive practices. Google's defenders have long argued that the company built a dominant market position not through anticompetitive methods but rather through the merits of its superior search product.

Google's rivals, however, have insisted that the search giant used its dominant market power to harm competitors, particularly in high-traffic categories like travel, jobs, health, and real estate. Google was also accused of unfairly demoting its rivals' search results in order to steer users toward Google's own competing products.

But the FTC, led by then-Chairman Jon Leibowitz, declined to sue Google, as part of an agreement in which the tech titan agreed to make relatively modest, voluntary changes to its search engine.

"Even though people would like us to bring a big search-bias case, the facts aren't there under the law," Leibowitz said when the decision was announced, adding that American antitrust laws "protect competition, not competitors."

That verdict was a major vindication for Google and a stinging defeat for Microsoft and its allies. The decision spared Google from what would have been the most dramatic antitrust action taken by the US government against a major technology company since the Department of Justice sued Microsoft in the 1990s.

In order to avoid a FTC lawsuit, Google gave its rivals the ability to remove small pieces of text known as "snippets" from Google's search results pages, and gave advertisers more flexibility to manage their data for use on rival search engines like Microsoft's Bing.

At the time, many of Google's critics dismissed the settlement as little more than a minor slap on the wrist.

One such critic, FairSearch.org, a consortium of Google rivals including Microsoft, Expedia, Hotwire, and TripAdvisor, seized on the newly disclosed FTC staff report, which found that search giant's behavior "helped it to maintain, preserve and enhance Google's monopoly position in the markets for search and search advertising."

It seems highly unlikely that the FTC will reopen an investigation that ended two years ago

"The report confirms the ongoing consumer harm that FairSearch.org and other interested parties have long warned about, and debunks Google's repeated claim that the FTC found no evidence of wrongdoing or harm once and for all," FairSearch.org legal counsel Matt Reilly said in a statement.

Kent Walker, Google's general counsel, disputed that assessment. "Speculation about potential consumer and competitor harm turned out to be entirely wrong," Walker said in a statement. "Since the investigation closed two years ago, the ways people access information online have increased dramatically, giving consumers more choice than ever before."

It seems highly unlikely that the FTC will reopen an investigation that ended two years ago, unless new evidence of wrongdoing by Google is uncovered. The newly disclosed FTC staff report does not constitute new evidence, but rather the recommendation of one bureau inside the FTC that agency commissioners declined to act on.

Still, the report could provide potent political ammunition for European officials, who have been investigating Google since 2010.

"EU politics are decided by the EU Council of the heads of states, and the Commission in Brussels is following their guidance," said Soufron, the Paris-based tech lawyer. "Given the amount of pressure that several EU governments have publicly put on US web giants like Google recently, pressing charges would only be logical."