European Union vs. Google

Short description: EU's anti-trust campaign against Google

Since 2010, the European Union has launched three separate antitrust investigations into Google for violating the EU's competition laws due to its dominant position in the market. These cases have resulted in formal charges against Google related to Google Shopping, Google AdSense and the Android operating system. To date, Google has been found guilty of antitrust behavior in the cases related to Google AdSense and Android, and has been fined over €8 billion. In addition, the European Union has also launched a full investigation of Google's proposed acquisition of the fitness tracker and wearable health company Fitbit, under the EU Merger Regulation. The final decision on this investigation is expected to be announced by December 9, 2020.[1][needs update]

## Contents

* 1 Google Shopping charges
* 1.1 Decision and impact
* 2 Google AdSense charges
* 3 Android and mobile apps charges
* 3.1 Prior complaints
* 3.2 EU's investigation
* 3.3 Decision and impact
* 4 Proposed acquisition of Fitbit
* 4.1 First Phase Investigation
* 4.2 In-depth Investigation
* 4.3 Decision
* 5 See also
* 6 References

## Google Shopping charges

On 10 November 2010, the European Commission opened a formal investigation under Article 9 of Regulation 1/2003 into Google's search practices, following a complaint by Foundem and a number of complaints issued by the Initiative for a Competitive Online Market Place (ICOMP) and smaller companies such as Streetmap that Google's Universal Search algorithm change promoted Google's own products in search engine results pages and downgraded the placement in results of competing products. The core claim being that Google was anticompetitively discriminating in the presentation of search results and depriving end users of competition on the merits of the products and services so promoted.

The EC's investigation also considered if there were issues with Google's terms of use for Google AdSense that prevented those using AdSense to not use advertising from Google's competitors.[2]

On 15 April 2015, five years into the investigation, the EC issued its first Statement of Objections towards Google related towards its preferential treatment of its Google Shopping product (including Google Product Search) in search results.[3]

The specific complaints issued by the EC included:[4]

* Google's search results predominately display Google Shopping results regardless of the merits of how well the Google Shopping results met the results of the search query.
* Google does not apply its system of penalties, a predefined set of parameters to lower the placement of shopping results, to its own Google Shopping results as it did to other competitors.
* Google had already attempted a shopping product, Froogle, but which it did not give any preferential treatment, and as a result, performed poorly. In contrast, Google Shopping was given favorable placement in Google's search result, allowing the service to achieve higher rates of growth.
* Google's favoring of Google Shopping thus had a negative impact on consumers and innovation.

### Decision and impact

On 27 June 2017, Google was found guilty and was fined €2.4 billion (about US$2.7 billion), the largest such antitrust fine issued by the EC.[5] Google has denied the European Union's accusations against them and made a statement claiming “its services had helped the region's digital economy grow”.[6] The fine represented just over 2.5% of Google's 2016 revenue.[7]

Those who are in competition with Google are pushing for their company to be individually monitored, for fear of losing more business to the dominant search engine. This would include investigating and overviewing Google's most prized search page algorithm, PageRank. The EU's Competition Commission decided to monitor their decision and Google's compliance with it, due to its obligation to report to the EUCC on a regular basis (every four months). Although the issue seems like it is at a close, the European Commission believes it will continue for some time.

In order to comply, Google is effectively separating its comparison shopping service into its own company after the fine. The Google Shopping service still will be a part of Google, but will run completely separately with its own revenues and profits. This move will allow Google to avoid further fines, according to Bloomberg, as it complies with the European Union's order of allowing even treatment to businesses, no matter if they compete with Google or not.[8]

However, even though Google is complying in part, the company is still appealing the decision. Google responded in its appeal papers to the EU Antitrust Fine by stating that the EU chair misstated facts and did not show enough evidence to prove that their site hurt rivals. Google wants the fine either overturned or reduced. The appeal was based on six arguments, with two of them being that the court did not prove that Google favored its own shopping service by placing paid ads on top the search results. Two of them stated that the courts misstated facts and evidence, and the other two argued that a fine was not warranted as a possible penalty.[9]

## Google AdSense charges

While investigating the case related to Google Shopping, the EC found additional evidence related to potential antitrust issues related to Google AdSense, and issued a Statement of Complaints on 14 July 2016. These complaints were centered on how Google licensed AdSense to their direct partners:[10]

* Google required direct partners to exclusively use Google's AdSense and could not engage with Google's competitors;
* Google required that partners take a minimum number of Google ads and predominately place them above any other advertising, nor could place ads from other services above or alongside Google's ads;
* Google required partners get confirmation from Google before making any changes for how they displayed Google's competitors' ads.

On 20 March 2019, the European Commission imposed a fine of 1.49 € billion on Google for abusive practices in online advertising.[11]

## Android and mobile apps charges

### Prior complaints

The EC's actions to investigate Google's approach to the Android operating system was predicated on two complaints it had received. The first complaint came from FairSearch. FairSearch was established in 2010 as a coalition of travel-related web companies including Expedia and TripAdvisor to try to fight against Google's proposed acquisition of ITA, which had developed airfare search software.[12] The group shifted towards becoming more of a Google watchdog group, looking at all instances of Google's activities which they considered were potentially anti-competition. Companies like Microsoft, Nokia, and Oracle joined the group to support this broader effort.[13] Prior to their attention to the Android system, FairSearch issued complaints to the EC over how Google's search engines would preferentially weight results from Google's own services or its partners over others, as part of antitrust investigations conducted by the EU since 2010.[14] In April 2013, the European branch of FairSearch filed a formal complaint to the EU, who were still investigating Google from previous complaints, citing that Google's practices with Android violated various EU's antitrust laws. The complaint identified that Google required any original equipment manufacturer (OEM) wanting to install Google's suite of Android apps, including access to the Google Play Store, had to license the entire suite and feature them predominately on the mobile device.[14]

A second anti-trust complaint against Google was filed by Aptoide in June 2014, an alternative marketplace for Android apps. Aptoide asserted that Google's approach to Android made it difficult for alternatives to the Google Play store to be installed, and that some of the components that were once part of Google's Android Open Source Project were moved into the Google Mobile Services suite, including Gmail, Google Maps, and the Play Store.[15]

### EU's investigation

On 15 April 2015, the European Commission started an official investigation against Google following on the complaints filed by FairSearch and Aptoide and its own internal evaluation of these complaints over about a year. The EC stated that the company may have taken unlawful actions to maintain Google's dominant position in the mobile market by how it licensed its suite of Android applications. The new investigation was announced alongside the EC's findings in its antitrust investigation into Google's search engine practices, but otherwise treated as a separate action against Google.[16]

The Commission identified three points of concern in the first Statement of Objections:[17]

1. Whether Google actions impede development of the market of mobile devices and access of competitors thereto by demanding or encouraging smart phone manufacturers to pre-install Google apps and services on their devices.
2. Whether Google suppressed attempts of smart phone and tablet PC manufacturers willing to install Google apps on their devices to run on modified and potentially competitive versions of Android.
3. Whether Google unlawfully impeded the market development by way of tacking the installation of certain Google apps with the use of other apps of this company or its software interface.

Google countered to this investigation that their practices with Android were no different with how Apple, Inc. or Microsoft bundles their own proprietary apps on their respective iOS and Windows Phone, and that OEMs were still able to distribute Android-based phones without the Google suite of apps.[18]

During the investigation, Google formed Alphabet Inc., a holding company for Google's various subsidiaries, with Google becoming one of Alphabet's subsidiaries.[19]

A year after, on 20 April 2016, the European Commission announced the issue of the second Statement of Objections, now addressing both Google and Alphabet within its charges.[20] The new set of complaints, amending those of the first Statement of Objections, asserted Google violated EU's antitrust laws by:[21]

* by requiring mobile manufacturers to pre-install Google Search and Google Chrome browser and requiring them to set Google Search as default search service on their devices, as a condition to license certain Google proprietary apps;
* by preventing manufacturers from selling smart mobile devices running on competing operating systems based on the Android open source code;
* by giving financial incentives to manufacturers and mobile network operators on condition that they exclusively pre-install Google Search on their devices.

The potential fines for the case, if Google were to be found violating antitrust laws, has a maximum amount of 10% of the company's annual revenue, about US$7.4 billion at the time of the issuing of the Second Statement of Objection.[22]

### Decision and impact

On 19 July 2018, EU has fined Google €4.3 billion (about US$5 billion). Google responded it would appeal the fine, which it did in October 2018.[23] According to company spokesperson Al Verney "Android has created more choice for everyone, not less". To date, this fine is the biggest ever imposed by European Union on a company for anti-competitive behaviour.[24] European Union Competition Commissioner Margrethe Vestager, who was part of the decision against Google, stated that only after the EU found against Google in the search anti-trust case in 2017 did Google attempt to settle on the issues of the Android anti-trust issues, which was far too late after the EU filed the initial charges against Google.[25] In October 2018 Google revamped how it would distribute its Google Play Store with Android in the future: Charging a licensing fee for the store, without requiring installation of Google apps, but making it free to pre-install the Google apps if they want.[26] Furthermore, Google's hardware partners will be allowed to market devices in the EU that run rival versions of Android or other operating systems.[26] In March 2019 Google announced that it will give European users of Android phones an option of which browser and search engine they want on their phone at the time of purchase to further comply with the EU's decision.[27]

## Proposed acquisition of Fitbit

On August 4, 2020, the European Commission announced that it would be launching an in-depth investigation into Google's proposed acquisition of the fitness tracker and health platform, Fitbit, under the EU Merger Regulation.[1] The commission expressed its concern that the acquisition would further entrench Google's dominant position in the online advertising market, with the potential augmentation of user health and fitness data from Fitbit.[28][29][30]

### First Phase Investigation

At the end of the first phase investigation, the EU Commission expressed concern that the transaction would raise the barriers to entry for new entrants to the online advertising market due to the data advantage that Fitbit's fitness and health data would provide in addition to Google's existing personalization data, thus, disadvantaging advertisers and publishers by lowering choice and increasing costs.[28]

The commission announced that it finds Google to be dominant and holding strong market positions in the online search and advertising services, supply of online display advertising services, and supply of advertising technology services in most of the EEA markets.[28]

The commission also announced that it considered Google's data silo solution to be insufficient to dismiss the committee's concerns. Google had as a part of its initial submission, indicated that it would create a data silo, where data collected through wearable devices would be kept, and handled separately from any other data set in Google that was used for advertising and targeting.[28][29]

### In-depth Investigation

The commission announced that it would now launch an in-depth investigation to validate its findings from the first phase of the investigations. In addition, this phase would study the combinatorial impact from Fitbit, and Google's databases, and also if the interoperability controls with rival wearables with the Android operating system, once the Fitbit acquisition is completed.[28]

### Decision

The commission announced that it had 90 working days, until December 9, 2020, to take a final decision.[28]

## See also

* Russia antitrust case
* Microsoft Corp v Commission

## References

1. ↑ 1.0 1.1 Vincent, James (2020-08-04). "EU launches full investigation into Google's Fitbit acquisition over health data fears" (in en). https://www.theverge.com/2020/8/4/21353947/google-fitbit-acquisition-eu-investigation-antitrust-health-tracking-data.
2. ↑ Kanter, James; Pfanner, Eric (30 November 2010). "Europe Opens Antitrust Inquiry Into Google". The New York Times. https://www.nytimes.com/2010/12/01/technology/01google.html.
3. ↑ "EU accuses Google Shopping of search 'abuse'". BBC. 15 April 2015. https://www.bbc.com/news/technology-32315649.
4. ↑ "Press corner". http://europa.eu/rapid/press-release_MEMO-15-4781_en.htm.
5. ↑ Olsen, Stefanie (8 October 2007). "Google buys Android" (in en). CNET. https://www.cnet.com/news/google-buys-android/.
6. ↑ Scott, Mark (27 June 2017). "Google Fined Record $2.7 Billion in E.U. Antitrust Ruling" (in en-US). The New York Times. ISSN 0362-4331. https://www.nytimes.com/2017/06/27/technology/eu-google-fine.html.
7. ↑ Kottasová, Ivana (27 June 2017). "EU slaps Google with record $2.7 billion fine". https://money.cnn.com/2017/06/27/technology/business/google-eu-antitrust-fine/index.html.
8. ↑ Guynn, Jessica (26 September 2017). "Google rolls out shopping ad changes to appease European Union antitrust regulators" (in en). USA TODAY. https://www.usatoday.com/story/tech/2017/09/26/google-create-shopping-unit-appease-european-union-antitrust-regulators/706277001/.
9. ↑ Drozdiak, Natalia (30 October 2017). "Alphabet's Google Responds to EU Antitrust Fine" (in en-US). Wall Street Journal. ISSN 0099-9660. https://www.wsj.com/articles/alphabets-google-responds-to-eu-antitrust-fine-1509388512.
10. ↑ "Press corner". http://europa.eu/rapid/press-release_IP-16-2532_en.htm.
11. ↑ "Antitrust: Commission fines Google €1.49 billion for abusive practices in online advertising". http://europa.eu/rapid/press-release_IP-19-1770_en.htm.
12. ↑ Wasserman, Elizabeth (24 February 2011). "DOJ threatens to nix Google merger". Politico. http://www.politico.com/news/stories/0211/50147.html.
13. ↑ Savov, Vlad (12 April 2013). "What is FairSearch and why does it hate Google so much?". The Verge. https://www.theverge.com/2013/4/12/4216026/who-is-fairsearch.
14. ↑ 14.0 14.1 Blagdon, Jeff (8 April 2013). "Microsoft and others file EU antitrust complaint over Android app bundling". The Verge. https://www.theverge.com/2013/4/8/4203684/microsoft-others-file-eu-antitrust-complaint-over-android-bundling.
15. ↑ Westaway, Luke (17 June 2014). "Google is abusing its Play power, says third-party Android app store CEO". CNet. https://www.cnet.com/news/google-abusing-its-android-power-says-third-party-app-store-ceo/.
16. ↑ Kanter, James; Scott, Mark (16 April 2015). "Europe Challenges Google, Seeing Violations of Its Antitrust Law". The New York Times. https://www.nytimes.com/2015/04/16/business/international/european-union-google-antitrust-case.html.
17. ↑ Antitrust: Commission opens formal investigation against Google in relation to Android mobile operating system, europa.eu (15 April 2015).
18. ↑ Lumb, David (16 April 2015). "Read Google's Defensive Response To European Antitrust Charges". Fast Company. https://www.fastcompany.com/3045132/read-googles-defensive-response-to-european-antitrust-charges.
19. ↑ Chen, Angela (10 August 2015). "Google Creates Parent Company Called Alphabet in Restructuring". Wall Street Journal. https://www.wsj.com/articles/google-creates-new-company-alphabet-1439240645.
20. ↑ Scott, Mark (20 April 2016). "E.U. Charges Dispute Google's Claims That Android Is Open to All". The New York Times. https://www.nytimes.com/2016/04/21/technology/google-europe-antitrust.html.
21. ↑ Antitrust: Commission sends Statement of Objections to Google on Android operating system and applications, europa.eu (20 April 2016).
22. ↑ Rankin, Jennifer (20 April 2016). "AEU accuses Google of using Android to skew market against rivals". The Guardian. https://www.theguardian.com/technology/2016/apr/20/eu-commission-google-android-skew-market-competition-antitrust-vestager/.
23. ↑ "Google challenges record $5 billion EU antitrust fine" (in en). Reuters. 2018-10-09. https://www.reuters.com/article/us-eu-alphabet-inc-antitrust-idUSKCN1MJ2CA.
24. ↑ "Google fined €4.3 billion by EU regulator" (in en). 18 July 2018. https://www.dw.com/en/google-fined-43-billion-by-eu-regulator/a-44719609.
25. ↑ White, Aoife; Bodoni, Stephanie (22 July 2018). "The Story Behind Google's Secret Offer to Settle EU's Android Probe". Bloomberg LP. https://www.bloomberg.com/news/articles/2018-07-22/the-story-behind-google-s-secret-offer-to-settle-android-probe.
26. ↑ 26.0 26.1 "Google to charge smartphone makers for Google Play in Europe" (in en). Reuters. 2018-10-18. https://www.reuters.com/article/us-eu-google-antitrust-idUSKCN1MQ2DI.
27. ↑ Byford, Sam (March 20, 2019). "Google will give Android users a choice of browser and search engine in Europe". The Verge. https://www.theverge.com/2019/3/20/18273888/google-eu-browser-search-choice.
28. ↑ 28.0 28.1 28.2 28.3 28.4 28.5 "Press corner" (in en). https://ec.europa.eu/commission/presscorner/home/en.
29. ↑ 29.0 29.1 Kelion, Leo (2020-08-04). "EU launches major probe into Google-Fitbit deal" (in en-GB). BBC News. https://www.bbc.com/news/technology-53647570.
30. ↑ Hadas Gold. "EU launches antitrust probe into Google's Fitbit takeover". https://www.cnn.com/2020/08/04/tech/google-fitbit-antitrust-eu/index.html.

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