Google's never-ending legal problems

In recent years, the Internet search giant Google has been suffering from a bunch of legal headaches. First, Oracle or American Society of Media Photographers sued the giant for patent and copyright infringements. Then later it was confronted with number of antitrust probes into its acquisition of companies. Now the search powerhouse faces investigations into violation of the EU and U.S. competition rules for abusing its dominant position on two continents in parallel. The dominant market position is illegal neither according to the EU rules on competition and nor according to the US antitrust law.

What is unlawful is the abuse of such position aiming to stifle the competition. But does Google really carry on a predatory business?

Google has a strong position in the U.S. and an even stronger one in Europe. Its share of online searches accounts for two-thirds in the U.S. and more than 80% in Europe. It comes therefore as no surprise that the giant’s success caused anxiety among its competitors and attracted enormous attention of regulators. A testament to these concerns has been the most recent complaint surrounding the damage other companies say they have suffered by being relegated in Google’s search rankings compared to Google’s own services.

The U.S. Federal Trade Commission and the European Commission launched investigation into Google’s business practices related to its online search and advertising business. The authorities are investigating whether Google does not abuse its dominant position in manipulating search results in favor of search results of its advertising partners coupled with an alleged unfair advantage to Google’s own web services at the expense of its competitors and welfare of consumers. Search providers such as Ejustice, British Foundem, or Ciao (owned by Microsoft, ironically) complain that their websites come out at the bottom of the search results. Recent development in the US, in particular the hiring of high profile outside lawyer, seems to suggest that the investigation has reached the final and crucial stage. It is very likely that the evidence found is strong to sue Google.

It may look obvious but logically not every website can come out at or near the top of Google’s search results, and so there will always be a party who is unhappy about their rankings. Moreover, and more importantly, Google is a company like any other with the purpose to maximize profits via excelling its business practices i.e. online searching and advertising. It should not be therefore shocking that it would want to prefer its own products or products of its partners to the ones of its competitors. Otherwise, we could soon appear in the absurd situation when regulators launch investigation into allegations that; for instance, Mercedes does not sell cars of BMW or Audi. Furthermore, unsatisfied consumers have choice to turn into a different search engine such as Yahoo or Bing. Therefore, the allegations with regard to Google’s abuse of its dominant position have weak grounds and are contrary to the business rationale.

Yet it seems that Google’s legal battles are a never-ending story. In March, France asked the European authorities to scrutinize Google’s new privacy rules. In addition, recently the European Commission approved Google’s proposed acquisition of Motorola Mobility which is sued by Samsung, and since April it has been also investigated by the EU’s competition authorities for possibly abusing its patents following complaints by Microsoft and Apple. If Google closes the deal with Motorola Mobility it will effectively get itself into another EU antitrust investigation.

The gathering legal proceedings could have significant adverse economic impacts on the search group, similar to the ones in the landmark antitrust case against Microsoft. The multi-front war against several competition authorities at the same time will not be easy to win. There are too many complainants who will not be satisfied with mere promises.

Geiger is managing partner of EU lobbying firm Alber & Geiger

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