Twilight in the Garden of Good and Evil and Hubris: Google Will Face at Least Two Antitrust Investigations in Europe

Good things come to those who wait
So just relax and wait for fate…

from Love You Madly by Duke Ellington and Billy Strayhorn


According to the Wall Street Journal (EU files formal charges against Google):

European Union regulators formally accused GoogleInc. of violating the bloc’s antitrust laws by abusing its dominance of online search, escalating a long-running case that had stalled for years despite three separate attempts at a settlement.

Wednesday’s move is the first time that any regulator has filed formal antitrust charges against the California search giant, putting the EU in the vanguard of a global debate over the regulation of giant Internet platforms.

In a statement, EU regulators said they had reached the preliminary conclusion that Google “systematically positions and prominently displays its comparison shopping service in its general search results pages, irrespective of its merits.” That conduct started in 2008, the regulators said.

The wheels of justice turn slowly, but they do turn.

According to the Financial Times:

A decision on charges is to be taken by the college of 28 EU commissioners on Wednesday. Some commissioners are concerned that Ms Vestager has, according to one source, restructured and narrowed the case she inherited from her predecessor Joaquín Almunia….[in other words, concerned that the EC had not gone far enough.]

Google supporters feel the commission’s volte-face on a settlement reflected politics rather than an independent assessment. No EU antitrust case has ever been extended to three settlement offers, or been revived after complainants were formally warned that their case is about to be rejected.

There is no question that it should have become increasingly apparent to Google–and this goes to the tippy tippy top of the Leviathan of Mountain View–that Google was never going to be allowed to get away with it like they had in the United States where Google has much greater control over the political environment thanks to Susan Molinari and Rachel Whetstone and a host of others inbetween.  So much so that Senator Mike Lee has opened a corruption investigation into how the FTC handled the U.S. version of the European case–a case that was collaboratively built by both U.S. an E.C. regulators, and investigation that will no doubt include both those names.

According to Reuters,

In a statement, Competition Commissioner Margrethe Vestager said the U.S. tech giant, which dominates Internet search engines globally, had been sent a Statement of Objections — effectively a charge sheet — to which it can respond.

“I am concerned that the company has given an unfair advantage to its own comparison shopping service, in breach of EU antitrust rules,” she said. “If the investigation confirmed our concerns, Google would have to face the legal consequences and change the way it does business in Europe.”

The Commission, whose control of antitrust matters across the wealthy 28-nation bloc gives it a major say in the fate of global corporations, can fine firms up to 10 percent of their annual sales — or a penalty of over $6 billion for Google.

If it finds that companies are abusing a dominant market position, the EU regulator can also demand sweeping changes to their business practices, as it did with U.S. software giant Microsoft in 2004 and chip-maker Intel in 2009.

She announced the moves on the eve of a high-profile visit to the United States, following five years of investigation and abortive efforts to strike a deal with Google by her Spanish predecessor, Joaquin Almunia, who handed over the politically charged dossier to the Danish liberal in November.

There has even been Members of the European Parliament raise the idea that Google should be broken up–one place to start would be to require Google divest itself of its YouTube data honeypot that masquerades as a video platform.

Anyone who has ever dealt with YouTube would likely give a loud “Huzzah!” to that idea.

There will be reams about this written in the coming days and weeks, but remember this about Google.

Masters of the Universe don’t have the best track record.  If you said to a roomful of MBAs in the 1980s that in a few years time Wall Street darlings Drexel Burnham Lambert would be bankrupt and Drexel’s junk bond king Michael Milken would be in prison, you would have been laughed out of the room.

And yet it happened.