EU Parliament Calls on Regulators to Break Up Google

EU Parliament Calls on Regulators to Break Up Google

Ms. Vestager, tear down that search wall

It's official: Lawmakers in the European Union Parliament have called on antitrust regulators to break up search giant Google. And while the vote late last week was purely symbolic—the EU Parliament can't formally influence EU antitrust policies or laws in any way—it was also overwhelming, passing with 384 votes for and 174 against, and with 56 abstentions.

Under EU law, only the European Commission has the legal power to break up a corporation, and it has never done so. But in taking this unprecedented step—the EU Parliament has never before attempted to influence the EC's antitrust activities—European lawmakers are signaling that they are tired of sitting on the sidelines while an American tech giant runs roughshod over smaller European businesses.

The charge is simple enough: The EC has already determined that Google has illegally abused its search monopoly in Europe by harming both competitors and consumers. More specifically, it has artificially gamed its search results to promote Google services and hide competing vertical search services in a variety of industries. Doing so obviously hurts these other companies, but it also harms consumers by giving them fewer choices, and by steering them to Google services that may be less relevant than the services Google is hiding.

The EU Parliament votes comes in the wake of years of inaction by EU regulators, which under previous competition commissioner Joaquin Almunia inexplicably offered Google a sweetheart settlement deal instead of pursuing formal charges. This offer allowed Google to stall the EU for several years while it made superficial changes to its search results and several half-hearted settlement offers. But under mounting criticism from Google's competitors—both in the EU and elsewhere—EU lawmakers determined that the EC's proposed settlement would do nothing to curb the search giant's behavior. And they pressured Mr. Almunia into demanding more concessions from Google.

With Margrethe Vestager replacing Mr. Almunia as competition commissioner this past month, there is some hope that the EC will finally curb Google's behavior. Ms. Vestager has noted the outcry against Google's alleged anti-competitive practices, and has pledged to do the right thing. But part of that, she says, is focusing any settlement—or charges, should Google continue to balk at an agreement—on the actual competitive problems raised by the EC's investigation. In other words, the EC isn't particularly interested in turning the Google case into a political issue and expanding any remedies beyond the issues raised by this case.

And on that note, critics of Europe's anti-Google stance of late have focused on a key lawmaker behind the EU Parliament vote. Andreas Schwab, a German member of the European Parliament who drafted the resolution in question, has financial ties with a law firm that represents publishing companies that are among the many Google competitors complaining about the search giant's business practices. And he allegedly earns up to $75,000 a year consulting with the law firm.

Mr. Schwab says his ties to the law firm are both legal and unrelated to the Google resolution. "All transparency rules are fully respected," he wrote in an email to The New York Times. "You can be sure that the text of this resolution is based on a neutral assessment of the facts."

Regardless of these recent events, the EU will never formally call for the breakup of Google. The most likely scenario is that Google meets the needs of the EC via another settlement offer. Beyond that, the EC could simply handle the Google case as it has other antitrust cases, with a potentially massive fine—up to 10 percent of Google's worldwide annual sales, which is almost $6 billion—and behavioral remedies that Google would be forced to adopt to do business in the EU.

Google has not commented on the EU Parliament vote.

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