Google has been besieged with one allegation after another in regards to its business practices over the past few years in Europe as well as in the US. The UK authorities charged the company with tax evasion last year after a multi-year investigation, and the company eventually agreed to pay £130 million to settle that case with the HMRC (Her Majesty’s Revenue Service), the UK equivalent of the IRS. The company has also faced allegations of abusing its position of dominance with regard to Android as well as its internet search service, and the European Union’s Competition Commission under former Danish Deputy Prime Minister, Ms. Margrethe Vestager, has already been investigating the company on that front for years now.
Worryingly for Google, though, allegations that some of its practices are tantamount to monopolistic bullying are not just restricted to the EU either. Earlier this year, Google lost its case against Russia’s anti-monopoly watchdog, FAS (Federal Anti-monopoly Service), who started investigating the company’s practices based on a complaint from the country’s largest internet company – Yandex. While the search giant has vowed to appeal against that verdict in Russia, the company will still have to deal with issues closer home, where the US FTC (Federal Trade Commission) has been investigating the company for alleged monopolistic trade practices because of the search giant’s insistence that its own apps and services, must be installed by its OEM partners on every Android device if they want to have access to Google Play.
Meanwhile, as mentioned already, the European Union’s Competition Commission is already investigating the exact same issue, alleging that the practice violates the region’s stringent anti-monopoly regulations. While some sections of the media believe Google may eventually escape censure in the US by arguing that closer integration of its apps and services with Android helps end-users have a better overall experience, the Silicon Valley tech giant may not have such luck in convincing the more hawkish EU Commission that has already charged other American tech giants for what it considers breaches of regulatory guidelines prevalent in the region. A case in point would be the €2.2 billion ($2.5 billion) fine it slapped on Microsoft after a long investigation into the company’s business practices.
While the EU regulator recently charged Google in its antitrust investigation regarding Android, it is an earlier case against the tech giant that might be coming towards a conclusion in the coming months. That case has been dragging on since 2010 and relates to whether Google unfairly and unlawfully favors its own shopping service in its search results in Europe. However, the tech giant apparently isn’t too keen on reaching an out-of-court settlement with the EU Competition Commission in the matter. According to some observers, Google’s insistence on going the distance rather than giving in to the demands of the EU antitrust watchdog might actually suit the company, because even if it ends up having to pay a fine, chances are it will still be significantly lower than the profits it stands to accrue from carrying on with business as usual.
“From a pure profitability perspective, it is better off dragging out the competition case, continuing its practices for as long as possible, and ultimately paying a fine that will be smaller than the profits it generates by continuing the conduct”. That’s according to Mr. Thomas Vinje, a lawyer who’s said to have advised other tech companies on similar issues. Not that everyone is on the same page with him on this one, though. Mr. Ioannis Kokkoris, Professor of Law and Economics at Centre for Commercial Law Studies, Queen Mary University of London, UK, cites the example of Microsoft and its aforementioned multi-billion dollar fine to argue that the strategy of going to trial does have its pitfalls if the gamble does not pay off. According to him, “You are entering a long battle, an expensive battle; and if you go to court, the outcome would not necessarily be better”.
It remains to be seen which way the cookie crumbles in the end, but for now, it looks increasingly likely that Google may well have to fork up a significant amount of cash as fines and penalties irrespective of whether it chooses to settle or go to trial. Now whether the company chooses to brush off those fines as a cost of doing business in the EU will be a different matter altogether, but the search giant will also need to remember that whatever happens in this case, may not only set a precedent for other regulators around the world to follow, a long drawn-out trial may also do the company a great disservice with respect to its already-strained relations with Ms. Vestager and her team, especially with the more financially significant case against Android still brewing in the background.