Leaked Memo Shows EU Resolve on Google Antitrust Abuses

Leaked Memo Shows EU Resolve on Google Antitrust Abuses

The EC would like to put this one behind them

While regulators at the European Commission have repeatedly ceded ground to Google in the investigation of its search-related antitrust infractions, a recently-leaked memo suggests the EU isn't just giving up. In it, the EU competition commissioner Joaquin Almunia promises Google competitors that he will continue pursuing Google via other investigations as well.

The memo, whose existence which was first reported by the New York Times, could be viewed one of two ways.

For those afraid that Google wields too much power over both the privacy rights of individuals and competitors, Mr. Almunia's memo promises that the online search giant will essentially never be free of antitrust oversight in Europe. This could be untenable for Google, which would have to continually watch its back as it moves forward into new markets.

For the more cynical—or perhaps realistic—audience, however, one might view the memo as an attempt to slipstream Google's current antitrust settlement terms past an untrusting cadre of competitors who will now only fall further and further behind. The issue: The settlement only places mild controls over Google's behavior and doesn't address the core issues that competitors originally raised with regulators.

"[The EU is prepared to investigate] many allegations, the various practices that they cover, and the new types of markets that are affected," Mr. Almunia writes in the memo, whose full contents have not been revealed. "It can be safely predicted that Google's compliance with EU competition law will be closely monitored for a long while."

The EU finally began investigating Google formally in 2010, responding to complaints from several European firms that accused the company of trampling intellectual property and privacy laws. An industry group called FairSearch, and backed by Microsoft, joined in the legal battle to help ensure the search giant wasn't let off lightly.

After two years of investigations, the EU arrived at an obvious conclusion: Google was illegally harming competitors with its online search business in Europe. But in mid-2012, Mr. Almunia offered Google a strange compromise: Settle the charges against it or be charged with antitrust violations that could result in up to $5 billion in fines and strict behavioral remedies. This settlement was supposed to be resolved in "a matter of weeks."

Instead, two years went by. First, the EU rejected two Google settlement proposals in 2013. But in early 2014, EU regulators provisionally accepted a third proposal, much to the dismay of the firm's competitors.

The issue isn't so much about the specifics of the current case, but rather that Google is the gateway to so much internet traffic. The firm can destroy competitors simply by turning a virtual switch that delivers search results in which those competitors are not listed.

"This settlement totally misses the big picture," lawyer Thomas Höppner told the New York Times. "The companies I represent lose traffic to Google or get demoted in its search engine every time they launch a new service for things like finding places to eat or viewing videos, and that problem just won't be addressed by this deal."

Mr. Almunia states in the memo that the current settlement agreement could still "be modified in some respects." But the EU is really trying to avoid prolonging the current case. It's arguing to critics that any other complaints should be part of a new case that can be investigated and handled separately. And it is promising that there will absolutely be future cases.

To be fair, I do believe that there will be future cases. But it's also readily apparent that the time to stop an illegal monopoly is to do so as soon as possible, not long after that firm has already destroyed the competition and prevented others from entering the market. The EU isn't afraid of acting, but it just moves too slowly. And once it latches onto a particular abuse, it then moves even more slowly to block that behavior. And by the time this particular case is settled, Google will have long since moved on to many other abuses. 

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