Google cannot be broken up into smaller companies without new EU legislation, the European Commission said today (20 May), after detailing two potential new antitrust investigations into the internet giant.
Competition Commissioner Joaquín Almunia was responding to comments made earlier this week by German’s Economy Minister Sigmar Gabriel, who said Google may have such a dominant market position that a break-up had to be “seriously considered.” Existing competition law was not powerful enough to split up the business, Almunia said.
The California-based company may yet face a separate antitrust investigation to the one ongoing since November 2012. Open Internet Project, a group of 400 European digital market members, made a different complaint (here) on Friday.
The complaint was being looked into, Almunia said during a press conference to announce that HSBC, JP Morgan Chase and Credit Agricole were being charged with rigging bank benchmark rates (here).
Deutsche Telekom has also written to the Commission, and it was being evaluated whether their letter constituted an official complaint or not. If it was, it would also be investigated, he said.
Open Internet Project’s complaint and the 2012 complainants accuse Google of abusing a dominant market position. Google has about 90% market share in the EU. The company is criticised for promoting Google Maps or Google Shopping when users enter a search query on the main Google website, while preventing rivals from claiming such spots.
Several of the 19 original complainants against Google have called for the search engine to be separated from Google’s other services.
“This idea of considering a search engine as an essential facility that needs to be unbundled or split from other kinds of services that can be transmitted through this essential facility […] if this was the case in the future, this would require legislation, it cannot be solved by an antitrust decision,” Almunia said.
Gabriel had written in a op-ed for a German newspaper last Friday, arguing that “A breakup, of the kind that has been carried out for electricity and gas grids, must be seriously considered here but it can only be a last resort. That’s why we are focusing on anti-trust style regulation of Internet platforms.”
Almunia said a more likely resolution to an ongoing investigation into the California-based internet giant was a series of legally binding commitments designed to reduce Google’s share of the European market. This would take place after the summer and after negotiations with the complainants.
“I think we will make a legally binding commitments decision but I cannot anticipate that,” he added.
Almunia said such settlements, made under article nine of EU competition law, were quicker and set a precedent, as opposed to the Commission making a prohibition order through article seven of EU competition law. The latter would have lasted for years and potentially lead to a fine on previous breaches of antitrust regulation. Such a fine is set at a maximum of 10% of a company’s one-year revenue on EU-based activities
“I think we can solve the concerns we identified in 2010, in my view with the route of article nine,” he stated. “If this is confirmed after our dialogue with the complainants then the decision will come. If, because of the arguments of the complainants, we consider that the proposals we have on the table are not enough, we would have to decide on the next steps.”
The Commission accepted a third proposal of concessions from Google in February (read here) but competitors and consumer groups criticised the deal.
Monique Goyens, director general of The European Consumer Organisation (BEUC), said at the time: “The Commission has today fallen far short of the aim of ensuring fair consumer choice in relation to online search in Europe. Consumers should be able to expect neutral search results. This is not a reality today due the nature of Google’s business model and we expected the Commission to remedy this.”
Today’s comments come a week to the day after a controversial European Court of Justice ruling against Google, which could lead to it being forced to remove links to news stories about individuals from its search results.
Judges in Luxembourg backing the so-called “right to be forgotten” said that Internet search engine providers were responsible for processing personal data appearing on web pages published by third parties, such as newspapers. The decision must be taken into account by national courts across the EU (more here).
In November 2010, the European Commission opened an investigation into Google’s activities in the EU market for internet search, after complaints by rivals that its dominant position was in breach of fair competition and antitrust regulations.
The Commission negotiated a “commitment decision” with Google (also called “Article 9 decision”), demanding concessions and testing those concessions in market tests and questionnaires involving rival companies. Such a deal must be confirmed by all 28 EU commissioners.
After two unsuccessful bids by Google, the Commission accepted the third proposal of concessions, thus avoiding a legal spat under the Article 7 procedure. The latter would have lasted for years and potentially lead to a fine on previous breaches of antitrust regulation. Such a fine is set at a maximum of 10% of a company’s one-year revenue on EU-based activities.
- Summer - Autumn 2014 Suggested time for settlement of 2012 antitrust investigation into Google