Reports: EU To File Formal Antitrust Charges Against Google This Week

Google’s years-long quest to settle and avoid antitrust charges in Europe has apparently failed. Multiple news outlets are reporting that the company will face formal charges perhaps as early as this week.

This doesn’t come as a major surprise. Based on recent news and leaks the decision was anticipated.

The decision to press forward rather than settle echoes Europe’s efforts against Microsoft more than ten years ago. A formal EU announcement will likely come later this week or by early next week. At stake for Google are billions in potential fines and whatever damage the charges and proceedings might do to its reputation and market cap.

In many ways the decision to file formal charges indicates that EU antitrust chief Margrethe Vestager and colleagues have made up their minds that Google has violated antitrust laws in Europe. This is in most respects a “legal conclusion” rather than the opening salvo in a US-style adversarial judicial proceeding whose outcome is uncertain.

Google was several times on the cusp of settlement with Vestager’s predecessor, Joaquín Almunia. However he was unable to persuade critics and Google opponents to accept various “rival links” settlement proposals.

Formal charges do not preclude settlement. However any such move would probably have to be very different (and bolder) than the previously floated “rival links.” I speculated that a possible settlement might require the end of “universal search” in Europe.

Ultimately Google has a right of appeal of any European Commission decision to a European court in Luxembourg. However the outlook for such appeals is not favorable from what I understand. We’ll update the story as more information comes out.

Postscript: Re/code obtained an internal Google memo reacting to the news that the EU would file formal antitrust charges this week. It cites third party data and traffic to suggest that the company will present itself as an underdog in several vertical categories in Europe (e.g., shopping).

The memo also states the expectation that an Android investigation is also coming (vs. formal charges). This has been in process for some time and was already known however. The memo expresses confidence both about Google’s prospects in the search context and regarding any Android investigation:

We believe that the Commission will also open a formal investigation into Android tomorrow. This is just the start of a process and does not mean the EC will necessarily take action (for example they opened and closed an inquiry into iTunes a few years ago). We have a very strong case on Android as well . . .