Search for a solution in Google dispute
Fears that dispute with internet giant could be a protracted affair.
Google’s efforts to persuade the EU that it has not abused its dominance of the internet and advertising market suffered a setback on Sunday (29 April) when a report by US regulators found that the giant’s US division had collected internet data without users’ consent and had been unco-operative with investigators.
The report focused on privacy issues, while an ongoing EU investigation is limited to competition rules. Nonetheless, the US report’s findings add to the significance of concerns about Google’s use of its power and technologies.
The report by the Federal Communications Commission (FCC) showed that Google intentionally collected internet data as it compiled photos for its Street View mapping programme. It also stated that, while Google broke no laws, it had “wilfully and repeatedly” obstructed the investigation. It fined the firm $25,000 (€19,000).
The report revealed that the Google engineer designing Street View told colleagues in 2007 that it could collect private and sensitive information such as passwords, emails and internet browsing history – so-called payload data – for possible use in other Google projects. The company admitted publicly in May 2010 that it had collected the data.
“For more than two years, Google’s Street View cars collected names, addresses, telephone numbers, URLs, passwords, email, text messages, medical records, video and audio files, and other information from internet users in the US,” the report said.
The report has one direct connection to Europe: Google was found to have collected similar data from users in Europe, including in France, the Netherlands and the UK.
But its indirect impact may prove greater, given the EU’s current investigation into Google’s approach to competitors.
Since November 2010, staff working for Joaquín Almunia, the European commissioner for competition, have been looking into complaints that Google was in breach of competition law. Since then, a steady flow of companies – now thought to number around 14 – have brought forward similar complaints, about Google’s activities in the markets for travel, search, advertising and mapping.
In March, Almunia said that he would be reviewing the provisional conclusions of his team investigating Google “after Easter”, but now there are likely to be further delays before any announcement.
Although there is a growing belief among lawyers and others close to the Commission investigation that Google may seek to come to a formal settlement to avoid a major clash and a huge fine, there are fears that the affair could yet turn into a re-run of the protracted Microsoft affair, the case that in many ways defined the Commission’s image as a regulator in the field of IT competition.
In 2008, the Commission fined Microsoft a record €899 million after it failed to comply with a 2004 ruling that it abused its dominant market position by not providing software codes to rival producers. This penalty was in addition to a €280.5m fine imposed in July 2006 and €497m million in March 2004. A Commission investigation had concluded in 2004 that Microsoft was guilty of freezing out rivals in products such as media players, while unfairly linking its Explorer internet browser to its Windows operating system at the expense of rival servers.
European dominance
The issue of Google’s dominance is particularly relevant in Europe. Whereas in the US the alliance of Microsoft and Yahoo! has about a quarter of the websearch market, it is estimated that, in Europe, Google accounts for about 95% of it. If Almunia does not go down the formal settlement route and decides to pursue legal proceedings, Google could be fined up to 10% of its annual turnover (about $38 billion, or €29bn, last year). But the experience of the Microsoft struggle will not necessarily have increased the Commission’s appetite for taking the case through the courts.
Becket McGrath, an anti-trust lawyer at the London law firm Edwards Wildman, who is not involved in the case, said: “There’s little doubt that in these complicated and difficult cases, settlement is an outcome that would suit both sides.” McGrath said that the Commission and Google were likely to see formal settlement as “mutually beneficial” and preferable to drawn-out legal proceedings.
Al Verney, Google’s spokesman in Brussels, said: “Our size and success rightly generate scrutiny, which is why we’ve worked hard to explain how our business works, co-operating with the European Commission since this investigation began. Because there’s always room for improvement, we’re happy to discuss any concerns the Commission might have.”
The latest complaints against Google came from Expedia and Tripadvisor, two travel websites, with Expedia saying Google’s behaviour “harms competition” and consumers. Google has developed its own flight-search service that competitors believe is unfairly pushing them out of the market.
The grievances expressed by the companies who have filed official complaints are complex. They include concerns about how their services show up in Google’s search results. Google maintains that its search system is not skewed and merely produces results in the order that is most relevant.
Microsoft’s complaints against Google, which were filed in March 2011, range from the claim that Google restricts other search engines from finding YouTube, which Google owns, to blocking websites from using search boxes that are not Google and discriminating against would-be competitors by making it more costly for them to attain prominent placement for their advertisements.
Last month, BEUC, the European consumers’ organisation, joined the chorus of complaints. Monique Goyens, the organisation’s director-general, urged Almunia “to protect the principle of search neutrality according to which search results should be impartial and based solely on their relevance to consumers’ queries” and called on the Commission to exercise “its powers to sanction dominant companies who abuse their position to the detriment of consumer welfare”.