The European Commission's decision to issue charges against Google marks a dramatic escalation of an inquiry into the company's search business that started in 2010. Brussels will have to decide whether the company abused its market dominance to hobble competitors in areas such as maps, travel and retail. Google, which now faces a large fine, denies any wrongdoing.
How dominant is Google in the EU? With a share of more than 90 per cent in web searches, it commands even more of the market in the EU than in the US. Still, Google argues the 90 per cent figure is misleading. Instead, the market should be measured differently to show that competition is more open in different sectors such as hotel booking or online shopping, it argues.
And is being dominant illegal? No, but dominance requires you to take special responsibility that your business model does not distort competition in the market by, for example, preventing small businesses from growing.
What are the exact concerns in Google's case? We do not yet know precisely. Since 2010, there have been four areas that the previous competition commissioner, Joaquín Almunia, sought to address in back-room settlements, but these were unsuccessful. The speed of the emergence of a new charge sheet from his successor, Margrethe Vestager, suggests that Brussels could well be narrowing its focus.
The four original concerns were:
1) Is the search formula equally fair to everyone? Google's rivals say that the algorithm unfairly promotes Google's own sponsored services and products above competitors, who appear lower on the page. In a settlement offer last year, Google was willing to change the page lay-out to display rivals' products more prominently. The complainants were dissatisfied and felt that the bidding structure for advertising space would leave them even worse off. This area is very likely to be the focus of a more specific case now. The complainants want search protocols to be steered by broad principles guaranteeing parity rather than specific alterations of page lay-out.
2) Scraping. This is the practice of harvesting useful material - for example customer reviews from rival travel sites - to improve the quality of results for Google's own services. Google last year said that it was happy to let rivals opt out from allowing this material to be used or "scraped".
3) Exclusivity. The commission feels that websites that show (and earn money from) advertisements through Google are locked in to using Google exclusively. Brussels wants Google to let website publishers source their search ads elsewhere and Google last year agreed.
4) Portability. The commission has been concerned that advertisers who designed campaigns on Google's AdWords platform (the one used for search ads) find it too difficult to rejig software to transfer those campaigns to a rival service. Google has agreed to no longer impose obligations that prevent ads from being easily used elsewhere.
How big can a fine be? Theoretically, this could be as much as 10 per cent of the previous financial year's turnover, which was $66bn in 2014. But lawyers reckon that it is very unlikely that Brussels would ever demand anywhere near the full potential sum.
Who are the complainants? They range from the likes of Expedia, an online travel service, and Streetmap, a mapping company, through to Microsoft and French and German publishers.
Can't Google say competition is just a click away? That is technically true. It is easy to go to yahoo or bing. But this is where the argument becomes broader with complainants saying that they can never rival Google because its dominance gives it enormous data flows. This flow of inputted data gives Google a real edge, enabling it to tailor advertisements more effectively.
Google retorts that there is nothing in this selling technique that rival search engines cannot mirror using readily available data. Several of the complainants want the value attached to data to come into an anti-trust inquiry. But it is not clear whether that is possible, particularly in the context of a narrowed investigation.
Copyright The Financial Times Limited 2015
