By Julia Fioretti
BRUSSELS (Reuters) - The European Commission charged Google Inc on Wednesday with cheating competitors by distorting Internet search results to favor its own shopping service, and opened a separate investigation into its Android mobile operating system.
If found guilty, the U.S. tech giant, which handles over 90 percent of web searches in Europe, could face billions of euros of fines and be forced to change its business practices.
WHAT IS GOOGLE ACCUSED OF?
When the investigation was opened in November 2010, then Competition Commissioner Joaquin Almunia set out four concerns.
The first, to which Wednesday's statement of objections relates, concerns the way in which Google allegedly positions its Google Shopping service above rivals' services, irrespective of its merits.
The other concerns - which could lead to similar charge sheets - relate to alleged "web scraping" to copy rivals' content, exclusivity arrangements with advertising partners, and restrictions on moving online advertising campaigns to competing platforms.
Competition Commissioner Margrethe Vestager, a Danish liberal, said Wednesday's decision to focus on Google's shopping service does not preclude following up with formal charges concerning the three remaining areas of investigation.
Proving that Google abused its dominance in online search could set a precedent for those future cases, she said.
The sending of a formal statement of objections setting out the Commission's concerns with Google's behavior starts a new phase in the five-year, politically charged investigation.
If found guilty, the U.S. tech giant could be fined up to 10 percent of its revenue, or $6.6 billion.
A statement of objections - which lawyers say usually leads to fines - allows Google to study the evidence against it, reply in writing within 10 weeks and request an oral hearing at which it can defend itself in front of the Commission's competition officials behind closed doors.
A redacted charge sheet is also sent to the complainants, which include Microsoft, Expedia and Foundem, a UK-based shopping comparison website. The complainants would have a right to give evidence at such a hearing.
Following a hearing, the company can either offer legally binding commitments to change its behavior - thereby avoiding a hefty fine - or refuse to settle, in which case the Commission can impose a fine and order it to change its business practices. The company can then appeal, which would likely result in court action that can take several years. In an earlier case against Microsoft, the Commission fined the offending company again for failing to implement the remedies it had ordered properly.
Almunia rejected three settlement proposals from Google following criticism from rivals and politicians, mostly in Germany, and opposition within the Commission.
The Commission's fresh probe into Google's Android mobile operating system, which powers the majority of smartphones in Europe, comes after receiving two complaints and conducting its own initial investigation.
Android, used on smartphones and tablets, is an open-source software meaning it can be freely used and developed by anyone. However, manufacturers must enter into agreements with Google if they want to install its applications and services.
The Commission will focus on three areas of concern:
- whether Google hindered the development of rival mobile applications and services by requiring manufacturers to exclusively pre-install its own applications and services, such as Google Maps;
- whether Google prohibited smartphone and tablet manufacturers from developing modified and potentially competing versions of Android on other devices;
- whether Google hindered the access of rival services and applications by bundling some of its products which are distributed on Android devices with other Google applications.
The Commission has no deadline to complete its investigation. If it finds enough evidence, it can send Google another statement of objections. In the meantime Google may try to reach a settlement by offering concessions to allay the regulator's concerns.
(Editing by Paul Taylor)