Coverage: Google hits back at the EU

On Thursday, Google fired back at the European Union’s antitrust claims in a lengthy response, calling out fellow tech giants eBay and Amazon in the process.

Salvador Rodriguez of The International Business Times laid out the day’s news:

In a 150-page response, Google refuted the European Union’s claims that it has violated antitrust laws by abusing its dominance over the search market, claiming the EU erred in its analysis of the online shopping market.

Google’s response, filed Thursday with the European Commission, is the latest chapter in a five-year saga of the EU probing the tech giant’s practices. In April, the EU formally accused the Mountain View, Calif.-based tech company with violating antitrust laws, and since then, numerous entities, including organizations in Europe and American companies like Microsoft and Yelp, have filed complaints in the case against Google.

“Economic data spanning more than a decade, an array of documents, and statements from complainants all confirm that product search is robustly competitive,” said Kent Walker, Google senior vice president and general counsel, in a blog post. The European Commission’s “preliminary conclusions are wrong as a matter of fact, law, and economics.”

Google pointed to the success of rivals eBay and Amazon as examples that the tech space remains competitive. The company did not address the fact that in Europe it holds 90 percent market share when it comes to search, which is well above the 65 percent share it holds in the U.S.

Juliette Garside of The Guardian summarized what the company’s attorney Kent Walker wrote in a blog post Thursday afternoon:

Google’s response, which runs to more than 100 pages, is confidential. But the company’s general counsel Kent Walker outlined his defence in a blog post published on Thursday, saying that far from harming rival shopping price comparison services, the Google had increased traffic to their sites.

“The universe of shopping services has seen an enormous increase in traffic from Google, diverse new players, new investments and expanding consumer choice,” Walker claimed. He said that over the last decade, the company had delivered 20bn free clicks to rival price comparison sites, with free traffic – as opposed to traffic acquired by paying for adverts on Google – increasing by 227%.

“Economic data spanning more than a decade, an array of documents, and statements from complainants all confirm that product search is robustly competitive,” said Walker. Google’s submission is understood to claim that in recent years several hundred new price comparison businesses have launched in a handful of larger European markets.

Google shopping uses a box at the top of the page to show photos, prices and shipping costs for a product when users type in a name. So a search for “Nike Air Max” will return a box featuring five pairs of shoes with links to different retailers.

UK price comparison site Foundem, a similar French service called Twengaand the US consumer reviews site Yelp are understood to be among the complainants which the commission has used to build its case. Its formal statement of objections, sent to Google on 15 April, is confidential.

Google claims the commission has defined its competitors too narrowly, and says Google shopping should be seen as operating in a field that includes big retailers like Amazon and marketplaces like eBay, where shoppers frequently go to compare prices. Far from being harmed by Google, these retail businesses are growing fast, the search company points out.

“The ways people search for, compare, and buy products are rapidly evolving,” blogged Walker. “Users on desktop and mobile devices often want to go straight to trusted merchants who have established an online presence.”

Wall Street Journal reporters Sam Schechner, Natalia Drozdiak and Alistair Barr pointed out this conflict isn’t Google’s first with the European Union:

The response comes amid multiple conflicts between EU regulators and U.S. technology companies on subjects ranging from antitrust to privacy. Facebook Inc. is facing privacy inquiries across Europe, while Google is clashing with France’s privacy watchdog, which has ordered the company to expand the EU’s “right to be forgotten” rule to its search engine globally.

Google also is facing a second EU antitrust inquiry over its control of the Android mobile-operating system, which powers roughly three-fourths of the world’s smartphones.

In the response in the search case Thursday, Google said regulators erred in their analysis of the fast-changing online-shopping business, misconstrued Google’s impact on rival shopping-comparison services, and failed to provide sufficient legal justification for its demands.

In particular, the company said the EU’s charges—detailed in a document called a Statement of Objections, or SO—fail to account for the fast growth of companies like Amazon.com Inc. and eBay Inc. Google executives have said these firms pose a competitive threat, undercutting the case that Google has harmed comparison-shopping companies like Nextag and LeGuide.

“We believe that the SO’s preliminary conclusions are wrong as a matter of fact, law and economics,” Google general counsel Kent Walker said in a written statement.

Mark Scott of The New York Times discussed previous antitrust cases the European Union brought against American technology companies:

The lengthy antitrust case is among recent investigations that European officials have brought against American technology companies. The region’s antitrust authorities are looking into whether Apple received preferential tax treatment in Ireland and whether Amazon received similar favors in Luxembourg. And several of Europe’s privacy watchdogs have questioned how Facebook uses customers’ online data.

That has raised concerns among some industry executives that Europe is focusing on American companies in a bid to bolster the region’s own technology sector. Policy makers in Europe reject those claims, saying they apply rules fairly to all companies operating in the region.

As part of its four-year investigation into Google, the European Union has initially focused its competition charges on the company’s comparison shopping site, claiming that Google favors its own services over those of rivals. The bloc, however, is also investigating potential antitrust abuses by Google in other so-called vertical searches for things like online restaurant and travel suggestions. Those inquiries may still lead to charges against the company, according to officials.

Google could face fines based on the revenue generated from European users on the company’s AdWords online advertising service, according to two other people with knowledge of the matter who spoke on the condition of anonymity.