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Europe fined Google nearly $10 billion for antitrust violations, but little has changed

A visitor passed a sign featuring Google Inc.'s logo inside the company's UK headquarters at Six St Pancras Square in London.
A visitor passed a sign featuring Google Inc.'s logo inside the company's UK headquarters at Six St Pancras Square in London.Chris Ratcliffe/Bloomberg News

The European Union spent a decade pursuing Google on antitrust charges, ultimately fining the company nearly $10 billion for using illegal tactics to abuse its dominant position on the market.

But two years after the bloc’s biggest rulings, very little competition has emerged, in part because the EU largely left it to Google to fix the problems, antitrust lawyers and Google competitors say.

Google’s fixes included charging a fee to rival search engines that wanted to appear on a selection menu for Android phones, a step that drew howls of protest from competitors. Why should they have to pay Google to help it fix its anticompetitive behavior, they asked?

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''The bad actor gets to decide what their medicine is going to be. And that’s just crazy, right?'' Megan Gray, general counsel of rival search engine DuckDuckGo, said in an interview.

With the Justice Department filing its own antitrust case against Google last month, US government lawyers are scrutinizing the European results. Google continues to dominate more than 90 percent of Europe’s search-engine market, just as it did before the EU probes began in 2010, data from the analytics firm StatCounter show. Google competitors in the online shopping business, meanwhile, complain the playing field is still tilted in the tech giant’s favor.

Some veterans of the EU battle say the outcome shows the difficulty of restoring competition to a market that has already tipped under the control of one giant. They also say the European Commission was held back by a belief that Europe didn’t have the political standing to impose tougher measures, such as a breakup, on an American company.

''As a matter of politics, the European Commission is not going to break up an American icon. That just ain’t going to happen,'' said Thomas Vinje, an antitrust lawyer at Clifford Chance who advises an industry group that helped spark the commission’s investigation by filing a complaint against Google. The group, FairSearch, is funded by Oracle, TripAdvisor, and others.

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The Justice Department lawsuit hinted at possibly tougher measures, should the government win its case, asking the court to consider ''structural relief,'' which theoretically could include a requirement that the company sell a portion of its business.

''It’s more difficult to win a case in the US than in Europe. However, the US in the past has applied more far-reaching remedies, mandating divestitures and breakups,'' said Gene Kimmelman, former chief counsel for the Justice Department’s antitrust division, who now serves as senior adviser to the nonprofit tech-policy group Public Knowledge.

In a blog post after the United States filed its lawsuit, Kent Walker, Google’s senior vice president of global affairs, said consumers ''use Google because they choose to, not because they’re forced to, or because they can’t find alternatives.'' He called the Justice Department case ''deeply flawed' and said it ''would do nothing to help consumers.''

Google spokesman Jose Castaneda disputed the idea that the European Commission investigations have changed nothing, saying the bloc’s probe of Google’s role in the online shopping market led the tech giant to make changes that are ''subject to intensive monitoring'' and ''generating billions of clicks for more than 600 comparison shopping services.''

He declined to comment on Google’s continued dominance of general search queries. Google is appealing the EU rulings.

A European Commission spokeswoman said the bloc ''continues monitoring the market with a view to assessing the effectiveness of the remedies.''

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She added that the commission plans to propose new legislation to the European Parliament to help ''address more effectively'' competition problems in the tech sector.

Margrethe Vestager, who oversees competition policy at the commission, has said the bloc is considering proposing powers that would give it more flexibility to address ''structural competition problems.''

The EU’s former chief competition economist, who was involved in the Google cases, summed up the lackluster result with a rueful joke on Twitter last month.

''How it started, how it’s going,'' Tommaso Valletti tweeted, atop two slides: the EU’s 2010 announcement opening an antitrust investigation into Google and a chart showing the tech giant continuing to monopolize the search-engine market ever since.

Rivals Bing, Yahoo, Yandex, and DuckDuckGo have held steady with a small sliver of the market, according to StatCounter data.

US federal and state prosecutors have closely studied Europe’s pursuit of Google to try to draw lessons. Last year, a group of state attorneys general investigating the tech giant hired an adviser with long-running ties to one of the EU probes: Cristina Caffarra, a UK-based economist and consultant who previously advised Yandex, a Russian tech company whose complaints about Google helped kick off one EU investigation.

''When I started advising the AGs last year, I had my first meeting with them in Austin,'' Caffarra said in an interview. One of their big questions about the EU campaign was, ''Why hasn’t it worked?'' she said.

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Caffarra said she explained some of the ''limitations'' of the European response, including that it gave Google the power to design its own remedies. ''The state AGs were all looking at me, saying, ‘We are the government. We can break them up.’ ''

Many of the allegations in the Justice Department’s 60-page lawsuit mirror the findings of the EU’s biggest probe: that Google used illegal tactics to ensure its search engine and apps were widely adopted by phone manufacturers and mobile-network operators, which often determine the specs of phones used in their networks.