Google Braces For Early 2012 (400-Page) EU Antitrust Report

According to dealReporter (via the Financial Times), the first stage of the formal European antitrust investigation against Google is almost complete. Google will shortly receive a 400-page “statement of objections” presenting findings from the European Commission’s investigation. It will detail Google’s alleged “abuse of dominance” and presumably — this is drawing an inference from the 400 pages — it will find that there was abuse.

The European Commission investigation arose out of formal anti-competition complaints initially filed by three companies: Foundem, eJustice and Ciao (owned by Microsoft) last year. While each of these complaints appear to have dubious merit in isolation, they collectively create the perception of anti-competitive activity on Google’s part. Indeed, since they were filed several other European companies have joined, bringing the number of formal complaints filed against Mountain View to roughly 10.

Google Will Have Two Months to Respond

The document is expected early in 2012. Google will reportedly have two months to respond. However early settlement negotiations have probably already begun. According to the FT report Eric Schmidt will soon be in Europe to meet with European Commission Vice President Joaquín Almunia, probably about the Motorola Mobility acquisition. However there may be preliminary discussion of Google’s willingness to settle any claims of competition abuse.

I’m not familiar with the intricacies of the European antitrust legal process. Apparently the Commission has the power to impose fines of up to 10 percent of annual gross revenues, which would be in excess of $3 billion at this point for Google. However I would assume that Google would get redress to European courts to contest the findings if it believed they were incorrect or unjust.

European officials have long believed that Google is too powerful and have mounted several unsuccessful efforts to build their own competitive search engines. Russia’s Yandex is the closest thing to a viable European competitor to Google.

Europe Negotiations Could Influence US Outcome

It has been my belief from the beginning that despite the questionable merit of the three original claims, that Google was not going to get out of the EC antitrust process without making some concessions. It will be interesting to see what form those take because they will potentially influence the parallel US antitrust investigation. Google knows that it’s playing to a US audience as well in any negotiations with the European Commission.

I don’t believe that the European investigation included any claims about Android. However the US antitrust inquiry will encompass mobile as well as PC activity. It is thus quite possible that Google will face another investigation in Europe over Android at some point in the next year or so.