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U.S. Tech Giants Duke it Out in Europe (3/11)     Print Email

By  Caitlin Del Sole, European Affairs Editorial Assistant

The European Union is becoming a prime arena for the latest tussles between  two U.S.  technology giants Microsoft and Google.  With Google and another internet browser competitor Opera as whistle blowers, the EU competition authority has issued Microsoft a €561 million fine for failing to adhere to its 2009 settlement with Brussels

In order to comply with the EU’s strict competition laws. Microsoft had agreed to a voluntary antitrust pact which would allow purchasers of Windows computers to have a choice of which web browser to use, instead of defaulting to its own Internet Explorer. This latest blow thrown by Google followed Microsoft’s  charge that  Google was violating competition law, thereby prompting an ongoing EU investigation.

Google’s case with the EU began in late 2010, following complaints from competitors, including Microsoft, that Google shuts out competition in its search results, directing users to its own services and companies.    CNIL, a French privacy watchdog, led the probe that discovered Google’s alleged violations of EU competition laws in four areas, including favoring its own services in specialized search results and placing restrictions on advertisers that want to move their business to other search engines. There are also criticisms related to Google’s privacy policy, particularly that users are not made aware of what data is stored and how it is used by the company.  Google says that it has  cooperated with the European Commission since the beginning, that it has taken significant  steps to address concerns, and  that its privacy policy complies with European law.

CNIL, which had set a deadline of January 2013 for more remedial action, asserts that Google has an excessive and uncontrolled amount of personal data, and has not limited the shelf-life for the personal data it stores and has not distinguished between sensitive data, such as credit card numbers, and innocuous data such as search terms. 

The Commission investigation, headed by Joaquin Almunia, the European commissioner for competition, could result in fines of up to 10% of Google’s worldwide revenue.

In a battle over similar issues in the U.S., Google gained a victory when the Federal Trade Commission found  that Google had not violated any US anti-trust or anti-competition laws.  Competitors, including Microsoft, and critics of the decision are afraid the U.S. ruling will encourage aggressive behavior by Google.    

The company did agree to change a few practices, but overall, the FTC found there was no malicious intent. These changes are in response to some criticism the FTC found legitimate, including the claim Google has not made its mobile phone technology available to competitors, has used information from competitors’ websites on their own sites which they promote over the others, and has restricted businesses from moving advertising to competing search engines.

If the EU Commission finds that Google did violate EU competition  and privacy laws, one important impact would be the  apparent dissonance between EU and US standards for anti-competitive behavior.  This could complicate issues in the EU-US free trade negotiations that are set to launch this year. Privacy is already flagged as a contentious issue, and with recent cases on both sides of the Atlantic resulting in contradictory findings, the heat could rise.