In a Washington awash with gray-suited finance ministers and central bankers attending the annual meetings of the International Monetary Fund and World Bank, one Danish woman stood out.
Margrethe Vestager, the European Union’s top antitrust enforcer, outlined the reasoning behind her decision earlier this week to send a statement of objections to Google about alleged abuse of its Internet search dominance that could lead to billions of dollars’ worth of fines against the tech giant.
“Europe has taken Google to heart,” Vestager said in an address at the Petersen Institute for International Economics. The company should be congratulated for winning a roughly 90 percent share of the EU market for search — higher than its U.S. share. But “if you create a situation where you abuse a very powerful market position,” she added, “then we have a problem.”
The European Commission complaint, which follows more than four years of investigations, alleges that Google systematically favors its own comparison shopping service, Google Shopping, in its search results, potentially diverting traffic from rival shopping services. The commission also opened a separate antitrust inquiry into allegations that Google has used its clout with smartphone and tablet makers to unfairly promote the use of its apps and services and discourage the development of rivals.
Open and fair competition in the EU’s single market is one of the best tools Europe has to revive economic growth, Vestager said, and she made clear she was determined to enforce that competition — as Europe sees it. “We want consumers to have the full choice, and we want innovation to be incentivized to take place,” she said.
The complaint has frustrated Google and perplexed much of the U.S. technology industry. Amit Singhal, senior vice president of Google Search, pointed out in a blog post that Google was an also-ran in online shopping traffic in Germany and France. The company has ten weeks to formally respond to the antitrust complaint.
A succession of industry representatives, antitrust specialists and academics peppered Vestager with questions and outright statements, asking how consumers were being harmed — a key requirement for a U.S. antitrust finding — when online shopping was dominated by the likes of Amazon.com and eBay while Google itself had a low single-digit market share.
“Consumers control the market, not the company,” said Edward Black, president and CEO of the Computer and Communications Industry Association, a trade body whose members include Google.
Under EU competition law, though, Vestager pointed out, the key question is whether Google has abused its dominant position in search to favor its results, not whether it actually sells more shoes or airplane tickets than rival sites. She also insisted that the commission wasn’t targeting a deep-pocketed American company; 25 percent of the companies that filed complaints with the commission about Google’s behavior were U.S. based.
“In all our cases we are indifferent to nationality,” she said. “We have no grudge. We have no fight with Google.”
An economist by training and longtime parliamentarian for Denmark’s centrist Social Liberal Party, Vestager, 47, served as Minister for Economic Affairs and the Interior for three years before moving to Brussels as head of Competition in the European Commission, the EU’s Brussels-based executive agency.
U.S. industry executives may think little of Vestager’s rationale, but they won’t dismiss her lightly. “She is very impressive, articulate and substantive,” Black said after her speech.
She also carries a big stick. Under EU rules, the commission can impose fines of up to 10 percent of global revenue for antitrust violations. For Google, which posted revenue of $66 billion in 2014, that could be a big number. The commission imposed more than €2 billion ($2.2 billion) in fines on Microsoft in a series of judgments from 2004 to 2013 over the bundling of the company’s Media Player and Internet Explorer software with its Windows operating system.
See also “At IMF–World Bank Spring Meetings, Risks Preoccupy Policy Makers.”
Follow Tom Buerkle on Twitter at @tombuerkle.
