Europe accuses Google of illegally abusing its dominance

The EU's antitrust chief has formally accused Google of illegally using its dominance in internet searching to steer European consumers to its own in-house shopping services in the opening salvo of what is expected to be a defining competition case of the internet era.

Margarethe Vestager also announced the European Commission would open an investigation into Google's Android mobile platform amid allegations it forces wireless companies into uncompetitive contracts to use its software.

Ms Vestager made clear the case against Google Shopping was potentially just the first step in her case. She said her staff continued to investigate whether other Google services, like its travel search function, similarly advantaged the company's in-house service providers. She promised to widen the case if abuses were found.

"I am concerned that the company has given an unfair advantage to its own comparison shopping service, in breach of EU antitrust rules," Ms Vestager said. "Google now has the opportunity to convince the commission to the contrary."

In an outline of its so-called "statement of objections", the commission said that the US-based tech giant "systematically positions and prominently displays" its own shopping service in search results regardless of its merits, arguing the conduct started in 2008.

The Commission said the conduct enabled Google's service to achieve "higher rates of growth, to the detriment of rival comparison shopping services."

Google said in an internal email sent to staff on Tuesday ahead of Ms Vestager's annoucement: "We have a very strong case, with especially good arguments when it comes to better services for consumers and increased competition."

The commission's move comes after a torrid five-year investigation that Google came close to settling without charges last year. The draft deal collapsed after fierce objections were raised by ministers in France and Germany, and by some of the continent's most powerful telecoms and media groups.

In a further blow to the US group, the commission probe will examine whether Google imposes uncompetitive terms on handset makers that ultimately favour its own lucrative apps such as YouTube. Google rejects any allegations of wrongdoing and says Android is an open platform distributed free.

Confirming that it was also expecting a formal investigation into Android, Google said in its internal email to staff that consumers were free to choose for themselves which apps they wanted to download. "Many of the apps come preloaded on Android devices," for instance with Samsung's flagship S6 smartphone carrying apps from rivals like Facebook and Microsoft as well as Google, it added.

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A decision on charges is to be taken by the college of 28 EU commissioners on Wednesday. Some commissioners are concerned that Ms Vestager has, according to one source, restructured and narrowed the case she inherited from her predecessor Joaquin Almunia. As well as search issues, the investigation has looked at allegations that Google illegally scrapes content from rivals, locks some publishers into using Google search ads, and makes it hard for advertisers to move campaigns to rival search engines.

Although Google has faced antitrust questions on three continents for several years, the EU move is the first time the company has been accused of formal wrongdoing. It will be given 10 weeks to respond to the allegations and will have the opportunity to call a hearing to make its defence.

Ultimately, the commission has the power to levy fines of up to 10 per cent of Google's global turnover and can impose far-reaching curbs on its business practices. Almost 20 complainants against Google want the search engine to abide by strict rules that ensure its formula treats its own services - providing results for travel, shopping and maps - no differently from rivals. Google and the commission declined to comment.

According to two people familiar with the case, the regulators have narrowed their complaint to the way Google handles product searches. That could limit the impact of the case to online shopping and leave Google rivals in other specialised fields out in the cold.

Google confirmed the focus of the charges in its internal email to staff. The Commission's statement of objections would involve "the display and ranking of certain search results, in particular shopping", it said. "This is obviously very disappointing news, especially for the search team that has worked so hard to create a great experience for our users over the last 16 years."

It went on to show trends in traffic to various shopping sites since 2006 that it claimed proved that competition in the sector had not been harmed.

The company could still seek to settle the case even after the charges are brought. It could take at least a year and probably longer for the commission to make a final decision. Google would probably challenge any ruling that goes against it through the European courts, opening a legal war that could run for years.

The commission's long attempt to settle the case with Google under Ms Vestager's predecessor Mr Almunia made it one of the most fraught and politically charged antitrust cases to be dealt with by Brussels.

Google supporters feel the commission's volte-face on a settlement reflected politics rather than an independent assessment. No EU antitrust case has ever been extended to three settlement offers, or been revived after complainants were formally warned that their case was about to be rejected.

On top of the pressure from Brussels, this week Google is also under scrutiny in France where lawmakers are considering an initiative that would force it to hand over its secret formula for ranking websites.

The French senate is likely to adopt a bill this week which would allow the country's national telecoms regulator to monitor search engines' algorithms, with sweeping powers to ensure its results are fair and non-discriminatory. The French initiative will become law only if it is adopted by the senate and the lower house of parliament and will also require government backing.

Critics complain that Google's algorithm can be skewed to hurt rivals and want it published to ensure accountability. Google argues such transparency would make its search engine a target for spam and hand rivals its business secrets free.

Google in France said: "We're transparent about what ranks well on Google, including when we make changes, but by definition, not everyone can come top. Revealing our algorithms - our intellectual property - would lead to the gaming of our results, which would be a bad experience for users."

The amendment, proposed by the centre-right and attached to an economic reform bill assembled by economy minister Emmanuel Macron, has yet to secure the government backing needed to survive the legislative process and pass in the National Assembly.

But Catherine Morin-Desailly, chair of the culture, education and communication committee, told the Financial Times that discussions with the government were encouraging.

"The government is well aware of the issues," Ms Morin-Desailly said. "It's a question of ensuring fairness. Too many businesses view search engines as bottlenecks. The net is tightening around [Google]."

If approved, the proposal would give Arcep, France's telecoms regulator, powers to scrutinise any search engine that had sufficient power to "structure the functioning of the digital economy". Google would be required to provide links to at least three rival search engines on its homepage, and disclose to users the "general principles of ranking".

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