EU accuses Google Shopping of search 'abuse'

Google pitches its shopping service as a "matchmaker" between products and customers

The European Union has filed a complaint against Google over its alleged anti-competitive behaviour.

The competition commissioner said she had issued a "statement of objections", stating that the firm's promotion of its own shopping links amounted to an abuse of its dominance in search.

Margrethe Vestager said Google now had 10 weeks to respond.

The firm said it "strongly disagreed" with the allegations and looked forward to making its case.

Ms Vestager also revealed that she had launched an investigation into whether the way Google bundled apps and services for its Android operating system was unfair.

And the commissioner said the EU would continue to monitor other activities by Google that its rivals had complained about.

It follows a five-year investigation into the company and marks the start of a formal legal process that could ultimately lead to billions of euros of fines.

Google accounts for more than a 90% of EU-based web searches.

'Preferential treatment'

The European Commission has investigated the antitrust allegations - made by Microsoft, Tripadvisor, Streetmap and others - since 2010.

Among their complaints was an objection to Google placing adverts from its Shopping service ahead of others' links in relevant searches.

The EU has objected to the way Google promotes results from its own shopping service

Ms Vestager said the Commission's preliminary findings supported the claim that Google "systematically" gave prominence to its own ads, which amounted to an abuse of its dominant position in search.

"I'm concerned that Google has artificially boosted its presence in the comparison shopping market with the result that consumers may not necessarily see what's most relevant for them, or that competitors may not get the the commercial opportunity that their innovative services deserve," she told a press conference in Brussels.

Ms Vestager said that she was not seeking a wider redesign of Google's search results or asking it to change its algorithms.

But she added that the case could set a precedent that would determine how the EU handled other complaints about Google favouring its own mapping, hotels and flights services.

Google has rejected the idea its Shopping service distorts the market.

"While Google may be the most used search engine, people can now find and access information in numerous different ways - and allegations of harm, for consumers and competitors, have proved to be wide of the mark," wrote its search chief Amit Singhal on the firm's blog.

"It's clear that: (a) there's a ton of competition - including from Amazon and eBay, two of the biggest shopping sites in the world and (b) Google's shopping results have not the harmed the competition.

"Any economist would say that you typically do not see a ton of innovation, new entrants or investment in sectors where competition is stagnating - or dominated by one player. Yet that is exactly what's happening in our world."

Many of Google's rivals welcomed the EU's action.

"Google's abuse of dominance distorts European markets, harms consumers, and makes it impossible for Google's rivals to compete on a level playing field," said lobbying group Icomp.

"We see this statement of objection as a crucial first step towards ensuring that European consumers have access to vibrant and competitive online markets."

Google suggests that services including eBay ensure it does not distort the shopping search market

Android inquiry

The EU has also launched a separate investigation into Google's Android operating system, used by smartphones and tablets, which will focus on three topics:

• claims that Google requires or incentivises manufacturers to pre-install its own search engine, apps and other services and exclude rival products

• allegations that Google unfairly insists its services are bundled, meaning some cannot be pre-installed without including the others

• complaints that the firm is hindering manufacturers from developing alternative versions of Android, which is open source. These are commonly known as "forks", with Amazon's Fire OS and Xiaomi's Mi being two examples

"These issues are distinct from the Google comparison shopping case and the investigations will of course be different," Ms Vestager said.

Google says the way it distributes its apps ensures that Android smartphones offer a "great" experience

In response, Google stressed that Android devices could be offered without its services.

"It's important to remember that [our partner agreements] are voluntary - you can use Android without Google - but provide real benefits to Android users, developers and the broader ecosystem," said lead engineer Hiroshi Lockheimer.

"Our app distribution agreements make sure that people get a great 'out of the box' experience with useful apps right there on the home screen. This also helps manufacturers of Android devices compete with Apple, Microsoft and other mobile ecosystems that come preloaded with similar baseline apps."

Complex subject

Google could ultimately face huge fines and be ordered to reshape its business in Europe because of the shopping complaint.

Some searches cause Google Shopping's ads to be offset to the side of the screen

In recent years, the Commission has imposed antitrust penalties on other tech giants, ordering Intel to pay €1.1bn (£793m; $1.2bn) in 2009, and Microsoft €516m in 2013.

However, Ms Vestager said she was "open" to Google's response, and would listen to its case before deciding how to proceed.

One independent expert said that the matter could take years to resolve.

"I can't see that this will be a fast process given the complexity of the subject matter, what's at stake and the likely level of the fine," said Paul Henty, a lawyer at Charles Russell Speechlys who has previously worked for the European Commission.

International inquiries

The EU's investigation is not the only one Google is facing.

Investigators at India's Competition Commission delivered a report last week after carrying out a three-year probe into claims of unfair business practices.

Their counterparts in Russia, Brazil, Argentina, Taiwan and Canada have also opened investigations.

However, the US Federal Trade Commission dropped its own probe at the start of 2013 after Google made several non-binding commitments.