Margarethe Vestager fines Google £2.1 billion in historic antitrust case, and she isn't done yet
The European Commissioner for Competition is on the warpath with the biggest technology companies in the world, and has become a champion of internet privacy and consumer protection in the process.
Margrethe Vestager, the irrepressible European Commissioner for Competition, handed down her much-anticipated verdict in the first of three antitrust cases against Google today.
EU officials have judged that the search giant "has abused its market dominance as a search engine by giving an illegal advantage to another Google product, its comparison shopping service". The Commission has handing down an abuse penalty of €2.42 billion (£2.1 billion). This is the biggest fine handed out by the commissioner since it billed Intel €1bn ($1.45bn) in 2009.
Google must now change the practice within its Shopping service within 90 days or face penalty payments of up to 5 percent of the average daily worldwide turnover of Alphabet, Google's parent company.
This decision also opens the gate for anyone that has suffered damage from Google's anti-competitive practices to bring civil actions in local courts.
Speaking at a press conference regarding the decision today, Vestager asserted bluntly that: "What Google has done is illegal under EU antitrust rules. It denied other companies the chance to compete on the merits and to innovate. And most importantly, it denied European consumers a genuine choice of services and the full benefits of innovation."
The European Commission was pursuing three antitrust charges against Google. The other two relate to its AdSense advertising business and another for abusing the dominance of its Android mobile operating system. All of the accusations essentially centre on Google using its dominance in search to promote its own products above others.
Regarding these other cases, Vestager said that the preliminary findings show that "both practices breach EU antitrust rules". No formal conclusion or punishment has been announced, however.
Vetsager finished her comments by stating that “today’s decision is a precedent", which opens the door for cases on images, maps, finance, Android and more. The battle lines have been drawn.
Kent Walker, general counsel at Google responded in a blog post, saying that Google shopping provides a service which gives consumers what they want, and that their practice is necessary for a competitive landscape which is increasingly dominated by Amazon.
"When you use Google to search for products, we try to give you what you’re looking for," he wrote. "Our ability to do that well isn’t favouring ourselves, or any particular site or seller--it’s the result of hard work and constant innovation, based on user feedback."
Google has said that it respectfully disagrees with the conclusions of the European Commission and "we will review the Commission’s decision in detail as we consider an appeal, and we look forward to continuing to make our case."
Since taking office in 2014 Vestager has proved herself as no patsy for the interests of the world's biggest companies - Alphabet, Amazon, Apple and Facebook - pursuing all of the Silicon Valley giants over issues from antitrust to corporate tax.
Vestager was responsible for demanding that Apple pay the Irish Government €13 billion in back taxes - which Apple and Ireland itself is appealing against - and is investigating Amazon's tax liabilities in Luxembourg.
The commissioner has a uniquely powerful role in that she is solely responsible for the direction the office takes in terms of prosecutions and can levy and enforce multi-billion-dollar fines herself. The difference is, where previous commissioners would have backed down to Tim Cook and his fellow CEO's, Vestager is willing to use her powers.
Washington, and even Barack Obama in the past, have accused Vestager and the European Commission for being biased against American companies. The US has accused Vestager of being politically motivated, or even a brazen advocate of European protectionism.
Responding to a question from the Washington Post she denied any allegations of bias against US companies though. "We have heard allegations of being biased against the US companies so I have been going through the statistics and I can find no facts to support any kind of bias.
"One of the things I do respect, and one of the reasons the working relationship with US authorities has been so good for decades, is they are based on the rule of law, and this is a case based on facts."
“In Europe, companies must compete on the merits, regardless if they are European or not", she added.
The truth is, when it comes to companies with cash reserves as overflowing as Google and Apple it is not the fines that really hit hard.
Where Vestager can make a truly world-altering impact would be to demand that Alphabet breaks up its business to stop it from being what is, frankly, already a search monopoly. This would require a drastic change in thinking around what the company is, essentially deciding to treat it like a utility as was the case with telecoms companies decades ago. Her office is already pursuing Facebook over its acquisition of WhatsApp, which in their eyes could deepen Facebook's hold over the mobile internet.
This would require a drastic change in thinking around what the company is, essentially deciding to treat it like a utility as was the case with telecoms companies decades ago. Her office is already pursuing Facebook over its acquisition of WhatsApp, which in their eyes could deepen Facebook's hold over the mobile internet.
Speaking to Wired for a cover story in April - a space so often reserved for the tech titans she is now attacking - the Danish commissioner spoke about her acute concerns over the dominance of the Google-Facebook duopoly.
She told Wired that technology can be an "enabler for supervision to a completely unforeseen degree. And for commercialising personal space to an unforeseen degree.”
“Dominant companies can't abuse their position to create an advantage in related markets,” she said.
Vestager's views on privacy and unfair competition are made clear in the interview, where she takes umbrage with Facebook's terms of service. “Do you realise that you allow Facebook to use any content, pictures or videos? And that it can sublicense them to others? If you terminate your account, you get your licence back - if you haven't shared it, and those with whom you have shared it still has it.”
In a world where Donald Trump, Theresa May and current Home Secretary Amber Rudd want to use technology to erode internet privacy for citizens, it is refreshing to see a high ranking politician take a stand.
Vestager's palpable disdain for the way Silicon Valley companies harvest and sell personal data to fill their own pockets with advertising dollars can only be a good thing for consumers who don't tend to know just how fragile their privacy is. Hopefully, she stays on the front foot.
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