Google’s antitrust charges underscore EU’s battle on anti-competitiveness

Google’s antitrust charges underscore EU’s battle on anti-competitiveness

The EU’s antitrust regulator has accused Google of anti-competitive practices. A drawn out saga and heavy fines could follow, as Europe struggles to reconcile an era of a rapid change in the tech industry, the power of giant tech firms, and ‘big data’.

On 20 April the EU’s Competition Commission announced that it had “informed Google of its preliminary view that the company has, in breach of EU antitrust rules, abused its dominant position by imposing restrictions on Android device manufacturers and mobile network operators.”

The charges

The Commission has a number of complaints. Due to the preponderance of its market share (Android operating systems on mobile devices make up more than 90% of the total in EU member states) the Commission says that Google has effectively set up entry barriers to competitors. Likewise the pre-installed Google Play Store accounts for more than 90% of apps downloaded on Android devices in the EU. According to the Commission’s statement, users wanting to use a different operating system “face significant switching costs”.

The EU alleges that Google Play Store, Google Search and Google Chrome are being forced on manufacturers in return for financial incentives. It also cites ‘Anti-Fragmentation Agreements’ that manufacturers must enter into if it wants to pre-install Google apps, thereby preventing modifications to the Android operating system.

In summary, the European Commission has served notice to Google that it believes the company is inhibiting competition in order to maintain its dominant market share, impede consumer choice and thwart innovation in mobile operating systems.

Transatlantic differences

Many in the United States resent the EU’s approach and view antitrust action as an attack on American firms. Others, however, claim that US regulators should follow the EU’s lead.

Whatever the case, there is a genuine divergence between Washington and Brussels over whether markets are self-correcting and the role of regulation. This is rooted in historical experience and philosophical differences. In the post-war period American thinkers came to view light-touch regulation as preferable. Antitrust measures gave way to a more laissez faire approach.

The EU Competition Commission, though, reflects the continental liberal economic thinking (ordoliberalism) that guided post-war Germany, terrified of the cartels and monopolies that wrecked the Weimar Republic in the 1920s and 1930s. In this view, a central authority should act to prevent monopolies and cartels by restricting collusive and market-fixing behaviour.

With this in mind it is unsurprising that Competition Commissioner Margrethe Vestager has targeted Google. The EU has form on this issue. Perhaps most famously it ruled against the merger of General Electric and Honeywell in 2001 – saying it breached its competition rules – when future Italian Prime Minister Mario Monti was Commissioner. The ruling resulted in the merger being called off, such was the fear of punishment in the world’s largest trade area. This was globalization par excellence. More recently, in 2013, the Commission fined banks €1.49 billion for participating in cartels in the interest rate derivatives industry.

Ironically, Sundar Pichai – now Google’s chief executive – wrote to European officials in 2009 complaining that Microsoft had abused its then-dominant position in web browsers. Microsoft eventually paid more than $3 billion in fines. It can be of little surprise to Pichai that Google is now under fire.

For economic liberals, the tech industry, and its rapidly changing hierarchy of winners and losers, has been an advertisement for free markets. Those dominating these markets change quickly.

Nevertheless, there is concern that when the dust of this period of intense competition settles, a new breed of tycoon will exist, in a similar fashion to the US industrialists of the late 19th century. As a result, it is feared economic competition will decrease through obstructive practices and concentration of wealth and power. A recent article in The Economist identified the privileged position a number of American companies enjoy, speaking of a ‘corrosive lack of competition’. The European Commission may be interested in companies that enjoy greater than, as a rough figure, 40% market share. Google greatly exceeds this fraction.

No large company, let alone behemoths such as Microsoft and Google, can afford to ignore antitrust cases or judgements by the EU. This case, however, isn’t just about competition in markets. The EU is also concerned about Google’s role in the collection and use of big data.

Europeans, again for historical reasons, have a greater sensitivity to intrusion of privacy. There have already been EU complaints over the collection of big data by internet companies regarding privacy, one example leading to the ‘Right to be Forgotten’ initiative. Big data can also provide a feedback loop enabling Google to maintain its dominant position. Vestager has previously voiced concerns over the use of this information by tech firms in impeding competition.


Google has ten weeks to respond to the Commission’s complaints. It has other cases to answer also made by the EU, but the proceedings can drag on for years. The nature of the tech industry and the speed of change may mean that the charges lose relevance over time.

Commissioner Vestager has not exhibited the same preference for speedy settlements that was previously favoured by her predecessor Joaquín Almunia. If the case does go the distance, Google is likely to face a large fine. Commission rules state 10% of profits can be sought, although this would be very unlikely in Google’s case.

It will be hoped, however, that the case can be settled by actions that go some way in dealing with the EU’s charges. If the case proceeds, it may encourage similar commissions – in countries such as India, Russia and even the United States – to follow suit.

About Author

Robert Ledger

Robert Ledger is an analyst on European affairs, with a particular focus on the Balkan and Caucasus regions. He has an MA in International Relations from Brunel University and a PhD in political science from Queen Mary University London.