A perfect storm is brewing between Google and the European Union as the search giant has been issued formal antitrust charges for abusing the dominant position of its Android operating system, alleging it has breached EU competition law.
Margrethe Vestager, European competition commissioner, said today that Google has 12 weeks to respond and if found guilty, faces changes in its practice and a fine of up to 10% of annual revenues, or $6.6 billion.
At issue, Google is accused of too rigorous requirements for use, which stifle competition—including requirements on mobile manufacturers and operators to preinstall some of its own products and even in some instances set them as default or exclusive options on handsets.
Google’s run-ins with EU regulators date back to 2009 when competitors first filed complaints. The following year, the EU launched a formal antitrust probe of Google’s search business that is still ongoing.
In 2014, European politicians passed a non-binding resolution for the break-up of Google’s search engine business from the rest of the company and the next year Vestager charged Google with distorting search results and favoring its shopping services over the competition—leading to the probe of Google’s Android business.
Kent Walker, Google’s SVP and general counsel, told the BBC, “Android has helped foster a remarkable and, importantly, sustainable ecosystem, based on open-source software and open innovation,” and that Android was “good for competition and good for consumers.”
As Microsoft used its Windows operating-system to garner dominance and profits, many fear Google is in a similar position now. Google currently handles in excess of 90% of web searches in Europe and is thus the sweet spot for advertisers to land.
Google Executive Chairman Eric Schmidt said in an internal staff memo that the company has a “very strong case” to make against all the allegations. Meanwhile, Günther Oettinger, the EU’s digital commissioner, said it was necessary to “replace today’s web search engines, operating systems and social networks,” according to The Economist. “Much of the world’s digital territory has in effect been ceded to America without a fight. Our online businesses are today dependent on a few non-EU players. This must not be the case again in the future.”
Europe is “belatedly discovering its failure to develop many of the platforms underpinning the online economy,” continues The Economist. “If Europe wants to be America’s equal in the creation of new technological platforms, it needs to recognise the importance of scale. America, with its large and open domestic market, has it. Europe does not.”
Upon issuing the 12-week deadline for Google to respond to the complaints issued against it, Vestager said Google could easily address the EU’s concerns, reports Bloomberg. “The remedy in this case is basically quite simple—it’s to stop these practices.”
While perfect storms have historically involved weather, the current battle brewing between Google and the EU broadens the metaphor to challenge the basics of borderless digital manifest destiny.