Jordan Den Herder
The greatness of Google is certainly nothing new to news. Since its initial public offering, everyone views it as a young, large, continuously growing and prospering company. The question is, is it doing so legally?
The European Commission does not seem to think so, given that it has been investigating the company since early 2010. The European Commission seems to believe it finally has substantial evidence that Google has been violating antitrust laws to boost its own products. Margrethe Vestager, the European Union’s competition chief, said April 15 that charges were officially being filed.
In Europe, Google has a much larger hold on consumers than here in America, hard as that may be to believe. According to StatCounter, Google controls 92 percent of the search market. This means more than 90 percent of online searches are dictated by Google, in turn meaning that Google can promote certain products or sites that it is affiliated with rather than being a truly unbiased search engine. The primary example of this is Google Shopping. When a customer searches a product, the claim is that Google places its product above other search results that may be more relevant to the query.
“Consumers depend on us to make sure that competition is fair and open, and it’s my responsibility to make that happen,” Vestager stated.
A few times since the investigation began, Vestager’s predecessor had tried to create a settlement with no success. Vestager, however, has decided to take this case upon herself and has taken a more direct and assertive route to bring the issue to fruition. This route is called the statement of objections, and it includes all the accusations laid on Google.
If the statement of objections is found to be true, it could seriously hinder Google’s strong standing. Not only would there be a heavy fine upwards of $6.4 billion (around 10 percent of its 2014 revenue),but Google’s stronghold over the search engine would be broken down. The search engine industry would have to be more dispersed among other engine providers such as Yahoo and Bing. To make matters more unstable for Google, Vestager commented that her office is also doing side research into accusations that the company has restricted certain advertisers from working with competitors and that Google allegedly “scraped” content from other websites.
How Google will react can be a big indicator of how this case will go, and it has been given 10 weeks to respond to the news. And if Google thinks the investigation will go poorly, it will surely try to reach a settlement to minimize damages. Regardless ,the stock (GOOGL) may be in a precarious position given the possibly devastating circumstances. Nothing conspicuous has happened thus far, but the situation should be watched closely. The next few weeks will be significant to Google’s future.