Google stands accused of boosting its ad services while suppressing rival ad vendors

A host of small competitors -- including TripAdvisor (Mass., U.S.), Opodo (pan-European), Hotmaps (German), Foundem (UK), and eDreams (UK) -- have filed complaints against Google Inc. (GOOG) before antitrust regulators in the European Union accusing the smartphone operating system and search giant of manipulating search results to boost its own offerings.  Google offers a variety of services, which are monetized through advertising.

Microsoft Corp. (MSFT), an online advertising rival of Google's, is the largest firm to have complained to the EU about the alleged abuses.  Currently there are 16 complaints against Google.

Stat Owl [source] and Net Market Share [source] both estimate Google to control roughly 81 percent of the search market.  Microsoft's Bing is thought be in second place with nearly 9 percent.  In Europe Google's market share is estimated to reach even higher -- approximately 86 percent, according to comScore, another online statistics service.

An EU antitrust probe against Google was first launched in 2010, looking into the claims of search abuse.  EU Competition Commissioner Joaquin Almunia says that like Google, the European Commission -- Europe's antitrust watchdog -- is eager to avoid fines or trouble from non-compliance.

Search on Google
The EU is concerned Google is abusing its dominant search position.
[Image Source: Google Images/Unknown]

The EU investigation found signs that Google did indeed abuse its dominant position.  But the EU is willing to avoid formal charges if Google vows to change it ways and commits to a closely monitored program of compliance.

In a letter Eric Schmidt, Google's executive chairman, Mr. Almunia writes:|

Google Inc. has repeatedly expressed to me its willingness to discuss any concerns that the Commission might have without having to engage in adversarial proceedings. This is why I am today giving Google an opportunity to offer remedies to address the concerns we have already identified.
In this letter, I offer Google the possibility to come up in a matter of weeks with first proposals of remedies...

If Google comes up with an outline of remedies which are capable of addressing our concerns, I will instruct my staff to initiate the discussions in order to finalise a remedies package. This would allow to solve our concerns by means of a commitment decision – pursuant to Article 9 of the EU Antitrust Regulation - instead of having to pursue formal proceedings with a Statement of objections and to adopt a decision imposing fines and remedies.

David Wood, a lawyer for lobbying group ICOMP whose members include Microsoft, Foundem, and Hotmaps, explains that non-compliance or failure to respond convincingly will likely bring on formal charges.  He tells the Associated Press, "This is effectively the Commission demanding remedies, failing that there will be a statement of objections (EU charge sheet)."

Last chance, Jabba
EU regulators say this is Google's "last chance". [Image Source: LucasFilm, Ltd.]

Europe's antitrust laws allow regulators to fine up to 10 percent of a violator's global revenue.  While the EU is best known for its massive billion-plus dollar fines of Intel Corp. (INTC) and Microsoft Corp. (MSFT) for persistent antitrust violations, the region's regulators have also made peace with other investigation subjects.

As Mr. Almunia points out in his letter/threat to Google, International Business Machines, Inc. (IBM) faced a similar investigation in 2011, but was able to resolve it without formal charges being filed.  While Google disputes wrongdoing in the case, it may wish to follow IBM's lead in order to avoid painful fines.

IBM sign
IBM wisely avoided EU fines in a similar probe, while Microsoft and Intel
"did things the hard way". [Image Source: Reuters/Rick Wilking]

Even if Google settles, Mr. Almunia says it will still face some other probes, such as an investigation into complaints that Google "snooped" on private communications on unsecured networks, using its "Street View" cars.

Sources: Europa [EU Press Release], AP

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