EU Hits Google With 2nd Antitrust Charge for Stifling Competition

Google CEO Sundar Pichai. (Photo: Reuters)

The European Union charged Google on Wednesday with using its dominant Android mobile operating system to squeeze out rivals, opening the second front against the US technology giant that could result in large fines.

EU antitrust regulators said that by requiring mobile phone manufacturers to pre-install Google Search and the Google Chrome browser to get access to other Google apps, the US company was harming consumers by stifling competition.

The EU’s move is the latest in a series of antitrust challenges Google has faced in both the EU and countries including India, Brazil and Russia. US regulators closed their most recent investigation of the company in 2013 without taking action.

The European Commission said Google’s Android licensing practices, which started in 2011 when the company became dominant in mobile operating systems and app stores, showed Google was seeking to shield its search engine, the world’s most popular, from competition.

Google is already facing EU charges over the promotion of its shopping service in Internet searches at the expense of rival services in a case that has dragged on since late 2010, despite three attempts to resolve the issues.

The stakes are higher for Google in the Android case as it made about $11 billion last year from advertising sales on Android phones through its apps such as Maps, Search and Gmail, according to estimates by financial analyst Richard Windsor.

“A competitive mobile Internet sector is increasingly important for consumers and businesses in Europe,” European Competition Commissioner Margrethe Vestager said in a statement.

We believe that Google’s behaviour denies consumers a wider choice of mobile apps and services and stands in the way of innovation by other players.

The European Commission said about 80 percent of smart mobile devices in Europe and the world run on Android and that Google holds more than 90 percent of the market for general Internet searches on Android in the European Economic Area.

Wall Street analysts were sanguine about the financial consequences of the EU’s action.

“In the near-term, we do not believe there will be any material financial impact,” Mark Mahaney, a prominent Internet analyst with RBC Capital Markets, said in a research note.

He added that there could be a material impact down the line as the case moved forward, but that it was “almost impossible” to gauge the likelihood of the company being forced to change its business practices.

Still, Mahaney noted that regulatory risk was “something of a ‘permanent’ investment risk” for Google. And there were some signs on Tuesday that the EU’s action could help rekindle antitrust investigations in the United Sates – potentially an even bigger threat.

Senator Richard Blumenthal, a Connecticut Democrat, said he hoped the action by European regulators prompts the Federal Trade Commission to take a close second look at whether Google is deserving of antitrust scrutiny in the United States.