By Samuel Stolton
Google is set to be hit by another attack from European Union watchdogs, paving the way for a hefty fine and an order to change its business model unless the US giant takes rapid action to give more prominence to rivals across its sprawling search empire.
EU officials are preparing a formal chargesheet against the Alphabet Inc. unit under the bloc’s Digital Markets Act, targeting how the company displays rival product results across its different search services, such as Google Flights and Google Hotels. The company could face hefty penalties of up to 10% of global annual revenue if its fails to step into line with the rules.
The EU’s preliminary findings could be issued before the end of October, according to people familiar with the matter who spoke under condition of anonymity. The people added that the timing could slip with the upcoming changeover of top level officials at the European Commission, and Google still has some time to offset the EU authority’s concerns. A final decision in the case is due to come before the end of March next year.
Google’s lawyers met with EU commission officials behind closed doors this week in a bid to ease the watchdog’s concerns over compliance with the rules. One proposal floated by the firm includes introducing a new design into Google’s search tabs, that would give users the option of navigating to alternative search platforms or direct suppliers such as hotel websites and airlines, according to other people familiar with the matter.
A Google spokesperson said the firm has tried to balance the needs of different types of websites, while still respecting users’ choice. The commission in Brussels declined to comment.
The EU’s landmark DMA lays out a series of dos and don’ts for some of the world’s largest tech platforms. The upcoming warning comes on the heels of a major court win for the commission against abusive behavior on Google Search. Last week, the Mountain View, California company lost its court bid to topple a once-record €2.4 billion ($2.7 billion) fine over EU allegations that it had abused its monopoly power to crush rival shopping services. This week, the company had better success, managing to overturn a €1.5 billion EU fine for thwarting competition for online ads, in a dispute over behavior that the firm says finished in 2016.
The shopping case was one of four that have marked the centerpiece of EU competition chief Margrethe Vestager’s efforts to crack down on the growing power of big tech companies. She’s fined Google more than €8 billion to date and has also echoed the US Department of Justice’s suggestion that Google’s advertising technology business should be broken up. Vestager is coming to the end of her decade-long stint at the EU and is soon to be replaced by Spain’s Teresa Ribera.
Google is set to join Apple Inc. and Meta Platforms Inc. in facing formal DMA complaints. The bloc first hit out at Apple’s app stores rules in June, and then issued a warning about Meta’s subscription model for ad-free services on Instagram and Facebook. Just this week, Apple was pressed to make changes to its iPhone operating system in order to step into line with the rules.
© 2024 Bloomberg L.P.
First Published: Sep 20 2024 | 11:45 PM IST
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