Google's EU showdown offers openings to competitors

Google's EU showdown offers openings to competitors

Start small, win quick, then move on to bigger issues.

That appears to be the European Union's strategy to pursue Google in a competition dispute by choosing to push a narrow set of charges around its shopping service, while opening another investigation of Google's Android mobile phone software.

Whether or not the EU succeeds in branding Google a market-abusing monopolist in web search - a big if, given that the competition authority has yet to publish its exact charges - the Internet giant could be pinned down for years to come in regulatory procedures and legal appeals.

A drawn-out process is likely to embolden existing and would-be interlopers to step up assaults on Google's wide range of businesses, if the history of Microsoft's antitrust battles with US and European regulators is any guide.

In accusing Google of anti-competitive practices against rival shopping sites, the EU competition authority said it is continuing to investigate other areas, including alleged "web scraping" to copy content off of rival travel and local business review sites, and Google's restrictive practices on advertising.

A quick EU finding that Google has abused its market power by favouring its own shopping services at the expense of non-Google websites, could set a precedent for new charges over how it handles hotels, flights and other services, experts say.

This, in turn, could renew politically charged debates over Google's tax avoidance moved and privacy safeguards.

"The concern is how broad does this investigation go?" asked Macquarie Securities analyst Ben Schachter, who tracks Google.

Google readily acknowledges it is the most used search engine in Europe, but argues that people find information on the Internet via many avenues, including social media, mobile phone apps, shopping sites and by going directly to popular sites.

"Allegations of harm, for consumers and competitors, have proved to be wide of the mark," Google said in a statement responding to the European Commission. "We respectfully but strongly disagree."

So far, nothing the EU proposed in its preliminary statement of objections suggests it is ready to force Google to change its business model, any hint of which would spook investors and be a threat to its ability to innovate and compete, analysts say.

"We see little long-term risk to the business model from regulators," Baird Equity Research analyst Colin Sebastian wrote in a note to investors. More likely, the EU will impose fines or set competitive restrictions on how Google features its own properties versus those of rivals, he said.

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