Sunday, November 30, 2014

(The Big Disrupt) Google: Is The EU About To Break Up Google? Don't Hold Your Breath

In what feels like a sustained attack on the search giant, the EU has once again ramped up the pressure on Google with the European Parliament passing a resolution for the breakup of the company’s search business which control 90%  of search advertising in the continent.
Google has been embroiled in a four year antitrust case with the EU over its dominant position in search[1]

The Silicon Valley giant has tried to settle offering a number of compromises but as things stand, the case is still open. Google hasn’t been the only company that has fallen foul of the EU’s tougher stance with Microsoft getting whacked for £613m “for monopolistic practices” last year[2]. Two months ago, the EC reopened its investigation into Google’s lucrative search advertising operation and was rumoured to targeting Google’s dominant position in the Smartphone OS space[3]

Bowing to the wave of criticism levelled at the body by ministers of from two of “big three”, other commissioners in the EC and Google’s competitors, the EC was forced open the long running investigation it clearly wants to put to bed. Almunia, clearly not keen on taking action on Google, refused to put a timeline on what has become a four year investigation as he said “we work in a rigorous way, as always, trying to understand the arguments of the complainants and trying to extract from Google solutions to these solid arguments. We are in this process.”[4]

The investigation has instead been passed over to new competition commissioner Margrete Vestager who seems just as cautious as her predecessor[5] . Stressing caution in her opening public remarks, Vestager told the European Parliament “"The issues at stake in our investigations have a big potential impact on many players, they are multifaceted and complex. I will therefore need some time to decide on the next steps”[6]. She has also ignored calls to widen the scope of the investigation by Google’s competitors as she insisted that she “will focus entirely on competition”[7]

However, Vestager, just a few weeks into her new role, has had a world of pressure foisted upon her by the European Parliament after the body put forward a draft proposal for the breakup of Google’s search business. “The European Parliament doesn't have the power to break up Google, but the motion could apply political pressure on the European Commission, which sets the region's legislative agenda. The Commission itself is investigating Google's competitive practices[8]

The United States was less than pleased with the news of the proposal concerned about its’ obvious political nature[9]. However the United States really has nothing to worry about as Vestager seems even more cautious than her predecessor who was prepared to squeeze concessions or a fine Google for its’ transgressions[10]. Nontheless, on the 27th, the proposal passed as a “non binding resolution” by a wide 210 vote margin

However, for all the bluster and headlines generated by the European Parliament proposal and subsequent resolution, it’s hard to see the EC taking Google to court never mind winning the case. What is more likely to happen is that the EC will try to squeeze more concessions out of Google and maybe even a hefty fine as the body clearly doesn’t want to increase political tensions between the EU and the US.

In sum, the EU maybe taking a tougher stance on the Google front but clearly not too hard a stance breaking up Google would set a precedent that neither the EC or its’ competition commissioner is willing to set.

[1] Ibid
[2] Ibid
[4] Ibid
[7] Ibid
[9] Ibid

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