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 In a statement, Competition Commissioner Margrethe Vestager said the
U.S. tech giant, which dominates Internet search engines globally,
had been sent a Statement of Objections -- effectively a charge
sheet -- to which it can respond.
"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. "If the investigation confirmed our concerns,
Google would have to face the legal consequences and change the way
it does business in Europe."
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 percent of their annual sales
-- or a penalty of over $6 billion for Google.
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.
There was no immediate public response from Google, but an internal
memo to staff published by the blog re/code described the moves as
"very disappointing news" and said: "We have a very strong case,
with especially good arguments when it comes to better services for
users and increased competition."
Of the formal investigation into Android, used on smart phones and
tablets, Vestager said: "I want to make sure the markets in this
area can flourish without anticompetitive constraints imposed by any
company."
She announced the moves on the eve of a high-profile visit to the
United States, following five years of investigation and abortive
efforts to strike a deal with Google by her Spanish predecessor,
Joaquin Almunia, who handed over the politically charged dossier to
the Danish liberal in November.
However, the focus on the ranking of searches for shopping sites --
Google has its own service called Google Shopping -- did not address
all the complaints lodged with the Commission by competitors, large
and small, in Europe and the United States, who say Google has hurt
their business.
Google initially has 10 weeks to respond to the charges and can
demand a hearing. A final resolution -- quite possibly involving
court action if Google does not choose to settle -- is likely to
take many months and probably years.
CRITICS WELCOME
Google's critics welcomed the decision to pursue the U.S. giant,
though many industry experts believe the action is unlikely to
markedly shift existing business their way. Rather, by firing a
hefty shot across Google's bows, it may favor competitors in new
areas as technology develops.
That has been a priority for the new European Commission led by
Jean-Claude Juncker, which wants to promote a more dynamic digital
market in Europe and foster home-grown enterprises.
Juncker is also pressing for a free-trade treaty with Washington to
bolster growth and Vestager has stressed she is not seeking to
penalize American firms or large companies -- merely to avoid abuses
of dominant market positions.
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President Barack Obama accused the EU in February of taking a
protectionist stance against the U.S. tech industry.
American domination of the Internet and other new technology sectors
has prompted a mixture of admiration and anxiety in Europe in an
echo of similar mixed feelings about reliance on U.S. military might
for security against a resurgent Moscow.
Germany, backed by major companies in the EU's biggest economy, has
been particularly vocal in pressing the Commission to act against
Google, although major U.S. rivals including Microsoft and Expedia
also lodged complaints.
Axel Springer chief Mathias Doepfner told the German media group's
shareholders in Berlin on Tuesday that Almunia's efforts to
negotiate a deal with Google would have been a "shoddy compromise"
and praised Vestager for being "more determined, quicker and more
true to the facts".
Almunia, who launched the initial probe in 2010, last year yielded
to pressure from Germany and others to abandon a deal he had been
favoring.
Google has put forward three proposals to resolve the case. Most
recently, just over a year ago, it offered to give competing
products and services bigger visibility on its website, let content
providers decide what material it can use for its own services and
make it easier for advertisers to move their campaigns to rivals.
Almunia initially accepted that deal, only to reverse his decision
six months later and demand more concessions, leaving the ultimate
decision to his successor.
Microsoft has been hit with total EU fines of more than 2.2 billion
euros ($2.34 billion) over the past decade.
($1 = 0.9390 euros)
(Additional reporting by Francesco Guarascio, Tom Koerkemeier,
Robert-Jan Bartunek, Robin Emmott and Paul Taylor in Brussels, Klaus
Lauer in Berlin, Eric Auchard in Frankfurt and Foo Yun Chee; Writing
by Alastair Macdonald and Paul Taylor; Editing by Paul Taylor)
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