If you're a big tech company, chances are the EU isn't your friend. Why? Just ask Intel or Microsoft. Targeted by the EU for antitrust violations, combined both companies have been forced to pay billions of dollars in fines. Other companies, like Oracle and Qualcomm, have faced EU antitrust scrutiny as well, but who eventually managed to escape with only a few minor bruises.
So it's probably no surprise that the EU is now eyeing another tech giant: Google.
As reported by The Telegraph, the European Commission has started investigating the search giant. The reason? A complaint by three European companies, claiming that Google is using its dominance to harm them. Apparently, the EU has the potential to violate these claims under the Lisbon Treaty’s "abuse of dominant position" authority.
The three companies that sparked the investigation are UK-based shopping comparison site Foundem, Microsoft-owned German shopping site Ciao and EJustice.fr, a France-based vertical search site. All three believe that Google is thwarting them in its SERPs because they compete, or could compete, with Google in some fashion.
Google, not surprisingly, believes that it hasn't done anything wrong. In a post on its blog, Senior Competition Counsel Julia Holtz responded to news of the investigation, stating "While we will be providing feedback and additional information on these complaints, we are confident that our business operates in the interests of users and partners, as well as in line with European competition law". Interestingly, she also linked to our previous post on Foundem's complaints about its Google rankings, in which Econsultancy Editor in Chief Chris Lake observed that Foundem might have itself to blame for poor rankings. As The Telegraph notes, Foundem is a member of ICOMP, a Microsoft-funded group that lobbies for a "competitive online marketplace". And Ciao is, of course, owned by Microsoft. So it's very clear that Microsoft is playing a leading role in pushing for antitrust scrutiny of Google.
All is fair in love and war, and Google will increasingly have to deal with the same antitrust issues as its rival. But it's disappointing to see companies forced to waste valuable resources dealing with antitrust investigations that, in my opinion and the opinion of others, are more about bureaucratic muscle flexing and lining the coffers of the EU than they are about keeping companies 'honest'.
If anything good can come out of the investigation against Google, perhaps it will be the realization of what a sham antitrust regulation has become. Bureaucrats love their powers, obviously, but the truth is that the companies they regulate secretly do too. Google, for instance, didn't hesitate to encourage the EU to penalize Microsoft over Internet Explorer's dominance. So Google is the pot calling the kettle black by trying to play up the fact that the investigation it's now facing is the work of Microsoft. Microsoft is simply returning Google's favor.
When it comes to favors, however, the real problem is that the EU's overzealous antitrust regulators have plenty of favors to give because of their broad powers. So long as they can take successful companies to task for just about anything, companies like Microsoft and Google will try to win favors from them. The irony in all of this, of course, is that there's hardly anything more anticompetitive than letting antitrust regulators do what you can't: beat the competition.
Photo credit: Redvers via Flickr.
Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.
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3:12PM on 24th February 2010
This is easy to sort out;
Microsoft's mechanism of abuse: Leverage market share of OS to squash competition in indivudual application spaces by tying their own apps into the OS, and using per-cpu licensing to coerce computer OEMs to provide Windows as the only OS option.
Intel's mechanism of abuse: Leverage marketshare of x86 microprocessors to squash competition in the processor space by using bribe-like loyalty rebates to coerce exclusive or near-exclusive arrangements with OEMs.
Google's mechanism of abuse: ???
Tech Reporter at Econsultancy
3:49PM on 24th February 2010
fastpathguru,
Actually, I think it's more like this:
Microsoft: too successful, lots of money.
Intel: too successful, lots of money.
Google: too successful, lots of money.
7:05PM on 24th February 2010
Why would the Commission care about the money? The EU does not financially benefit from these fines. They are not part of the budget and therefore handed back to the memberstates.
A working competitive market is the key for a healthy economy. Especially the IT sector is an endangered market due to technological reasons. Of course huge dominating multinational companies are powerful and they don't like it that someone is actually big enough to enforce the rules even towards them. I however see this favorably.
Tech Reporter at Econsultancy
9:19PM on 24th February 2010
That is not technically true. The fines support the EU budget, but reduce the total amount of the money member states need to contribute to the budget in the year after the fines are collected.
More importantly, financial motivations go beyond the fines. The actions of EU antitrust regulators are often blatantly driven by the desire to protect prominent EU companies. See a discussion of this in the Gonzaga Journal of International Law:
You say:
Yet EU regulators have been criticized for ignoring inconvenient evidence of the competition they say isn't present. For instance, in the case against Intel, EU regulators ignored evidence indicating that some computer manufacturers were choosing Intel over AMD because they concluded that AMD's products were lacking in quality. In other words, the regulators refused to believe that manufacturers were choosing Intel because it had better products even though that's what they were being told.
That really isn't surprising, of course. AMD operates its largest microprocessor facility in Dresden, Germany, where, ironically, the EU antitrust investigation into Intel began. Yet another example that companies that can't compete use government regulators to do their bidding, in the process harming true competition.