Google Inc (NASDAQ:GOOGL) is facing heightened scrutiny from the European Commission about allegations of anticompetitive behavior and here are the facts you need to know about the ongoing investigation.
In a report for The Wall Street Journal, Lisa Fleisher reveals that regulators in Europe are preparing to move against Google Inc (NASDAQ:GOOGL) with an antitrust case. Indicators suggest that authorities in the region are heading towards a formal court case against the Internet search and advertising giant.
The complaint against Google Inc (NASDAQ:GOOGL) mainly argues that because it is such a dominant player in the search market in Europe, the company is abusing its power as the dominant search engine to suppress competitors, Fleisher says. As expected, Google denies any anticompetitive behavior.
According to Fleisher, competitors of the search giant are alleging that Google loads up the top of the search results with links to its own services thereby displacing links to competitors to lower parts of the page. This, competitors say, hurts their chances of competing because many most users only click the first few links on search results.
Fleisher notes that even though Google is a technology giant with varied interests such as mail, video streaming, driverless cars, maps, and others, search is still a core business for the company. This is particularly true in Europe, she says, where Google dominates with over 90% market share in search as compared to 75% in the United States.
The investigation is not new, however, as the European Commission has been investigating for five years, according to The Wall Street Journal reporter. In fact, Google and the EU authorities have been close to settling in the past in three instances, she adds.
However, a new European Commission administration is taking a harder stand on anticompetitive behavior. The head of the antitrust patrolling arm of the commission, Margrethe Vestager, said recently that settling should not be a habit and should not come at any price.
Google Inc (NASDAQ:GOOGL) has a few options to take about the issue, Fleisher says. It could resolve the problem, try to settle or have its day in court. Some people are of the opinion that Google may want this to go to court where it will take years to resolve giving the Internet behemoth more time to solidify its dominance in the market, Fleisher says.
The European Commission, however, can fine the web giant up to 10% of their global annual revenue which stood at $66 billion in 2014 and tell Google how to do business. Some politicians say that search should be forcibly separated from Google as a business.
However, Google Inc (NASDAQ:GOOGL) may win eventually as it did in the U.S. recently, Fleisher notes. The case, if it does come to fruition, would be the EU’s most high-profile antitrust case since the one against Microsoft a decade ago which ended up costing Microsoft $1.8 billion in fines, she adds.
Ken Fisher’s Fisher Asset Management owned 794,273 Class A Google Inc (NASDAQ:GOOGL) shares by the end of 2014’s last quarter.
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