Google, EU Bring Battle Over $2.6B Antitrust Fine to Court

LUXEMBOURG (CN) – Search engine juggernaut Google faced off against the European Union on Wednesday over a $2.6 billion fine for squashing its shopping services competition.

European Union Commissioner for Competition Margrethe Vestager speaks during a media conference at EU headquarters in Brussels on Tuesday, June 27, 2017. The European Union’s competition watchdog has fined internet giant Google over its online shopping service. (AP Photo/Virginia Mayo)

The European General Court, the EU’s second-highest court, is holding three days of hearings in the so-called “Google Shopping” case to determine if Google abused its dominant position in the search market to undercut rivals of its Comparison Shopping Service.

Google’s parent company, Alphabet Inc., appealed one of the three fines it’s currently facing from the European Commission, the EU’s administrative body, totaling 8.25 billion euros ($9 billion.)

“Google reduced the visibility of results from rivals while at the same time increasing the visibility of its results,” the commission’s lawyer Anthony Dawes told the Luxembourg-based court Wednesday morning.

In a statement, Google said the EU is “is wrong on the law, the facts, and the economics. The tech giant argues that rather than being anticompetitive, it had merely improved its algorithm so customers were better connected with the products they wanted. Google has already paid the fine and adjusted the appearance of its search results.

The commission issued the 2.4 billion euro ($2.6 billion) fine, at the time the largest ever, against the Silicon Valley-based behemoth in 2017. That was topped by a 4.3 billion-euro ($4.7 billion) fine in 2018, also against Alphabet, for favoring its own apps in the Android mobile phone platform app store.

The EU has backing at the court of nine intervenors, or parties who have joined the litigation, including the German government, the European Consumer Organization and shopping-comparison site Kelkoo.

Google has only wrangled one intervenor, the tech lobbying group Computer and Communications Industry Association.

“Does Google have a duty, when it develops products, to ensure rivals have access to these innovations?” asked Google’s attorney Thomas Graf, of Cleary Gottlieb, in his opening statement. The company claims its only concern was relevance and it gave no favorable treatment to its own products, but has refused to release information about its algorithm, citing its proprietary nature.

Google critics have long argued the company uses its dominance in the search market to the advantage of its own products.

“There will be less innovation and a worse outcome for consumers if tech companies are disincentivized from improving their websites or adding new features,” said James Killick of White and Case, who is representing the the Computer and Communications Industry Association.

But the other side told the judges Google goes far beyond improving its product.

“Google could destroy competition in every market that it decides to enter,” attorney Thomas Höppner of Hausfeld, representing three trade groups who joined the case on the EU’s side, told the five-judge-panel Thursday.

The EU’s legal argument relies heavily on a 2007 decision against Microsoft involving a 1.4 billion-euro ($1.5 billion) fine for anticompetitive licensing practices.

In that case, which dragged on for nearly two decades, the court ordered Microsoft to stop bundling Windows Media Player, its audio and video player, with its Windows operating system, agreeing with the Brussels regulator that the bundling staunched competition.

The fine is just one of the many Margrethe Vestager, the commission’s antitrust czar, has brought against big U.S. tech companies, in a crackdown on what the EU sees as monopolies abusing their market position.

On Monday, more than 30 travel companies including Expedia and Tripadvisor sent a letter to Vestager criticizing Google for engaging in similar behavior with its vacation rental services.

Hearings will continue Thursday.

 

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