Google faces years of EU oversight on top of record antitrust fine

BRUSSELS/FRANKFURT - Reuters

Beyond a headline-grabbing 2.4 billion euro ($2.7 billion) fine EU antitrust regulators have levelled against Google, the internet giant is likely to be shackled for years by Tuesday’s precedent-setting decision defining the company as a monopoly. 

The ruling opens the door for further regulatory actions against more crucial parts of Google’s business - mobile phones, online ad buying and specialized search categories like travel - while easing the standard of proof for rivals to mount civil lawsuits showing Google has harmed them.

So far, investors have shrugged off the EU’s threatened crackdown, with Google’s holding company Alphabet’s shares down 1.8 percent in early U.S. trade amid a continued selloff in technology stocks. The stock has doubled in the two years since European authorities vigorously stepped up investigations of it.

It trades just behind rival Apple as the world’s most valuable stock with a $666 billion market capitalization.

The real sting is not from the fine for anti-competitive practices in shopping search but the way the EU has thrown the issue back to Google to solve, meaning the company won’t be able to comply through an easy set of technical steps.

In effect, the Commission is forcing Google to demonstrate that rivals have made substantial inroads into its businesses before there is much chance of it being let off the regulatory hook. EU competition chief Margrethe Vestager promised Google was in for years of monitoring to guard against further abuses.

“Just being put on notice can limit Google’s strategic options into the future,” said Matti Littunen, a digital media and online advertising analyst with Enders Analysis in London.

The EU’s 2004 ruling that Microsoft Corp had abused its dominant market position in Windows and other markets is now seen as having curtailed the software giants moves over the subsequent decade to expand more quickly into emerging markets such as online advertising, opening the way for Google’s rise.

Putting the onus on the company underlines regulators’ limited knowledge of modern technologies and their complexity, said Fordham Law School Professor Mark Patterson.

“The decision shows the difficulty of regulating algorithm-based internet firms,” he said. “Antitrust remedies usually direct firms that have violated antitrust laws to stop certain behaviour or, less often, to implement particular fixes.

“This decision just tells Google to apply ‘equal treatment,’ not how to do that.”

The EU ruling is a warning shot for two on-going EU probes into Google’s Android mobile operating system and AdSense ad system, said Richard Windsor, an independent financial analyst who tracks competition among the biggest U.S. and Asian internet and mobile players, including Google.

“If the European Union turns around and says Google can no longer bundle its Google Play app store as a default feature on many Android smartphones, this opens up the market to other handset makers to put their own software and services front and center on their phones,” he said.