The EU's Google Investigation: A Breakdown

The European Union has begun its investigation into Google's supposed antitrust violations. The inquiry -- being conducted by the European Commission, the regulatory arm of the EU, and based on complaints by competitive search-related companies -- accuses Google of "unfavorable treatment of their services in Google's unpaid and sponsored search results," the European Commission said in a statement. Here's a breakdown:

The Accusations

Google, which controls more than 80 percent of the online search market in Europe, is being accused of:

  • Placing its search rivals' services lower in Google search results
  • Giving its own services -- such as Google's product search -- which compares prices of consumer goods -- "preferential placement" in search results
  • Manipulating its Quality Score, the determining factor in how much advertisers pay Google to buy ads linked to a particular search keyword
  • Imposing exclusivity obligations that prevents advertising partners from placing certain types of competing ads on their websites
  • Imposing the same exclusivity obligations on computer and software vendors, with the aim of shutting out competing search tools
  • Instituting restrictions on the portability of online advertising campaign data to competing online advertising platforms

The investigation stems from complaints by:

  • Foundem, a British price-comparison service
  • eJustice, a French legal search tool
  • Ciao, a price-comparison service in Germany owned by Microsoft

It's somewhat ironic that Ciao has complained, given Microsoft's infamous battles with the European Commission over its own antitrust violations, which have resulted in multibillion-dollar fines.

Google's Response

In an e-mailed statement, Google disavowed any wrongdoing.

"Since we started Google we have worked hard to do the right thing by our users and our industry -- ensuring that ads are always clearly marked, making it easy for users and advertisers to take their data with them when they switch services, and investing heavily in open source projects. But there's always going to be room for improvement, and so we'll be working with the Commission to address any concerns," the company said.

A confidential Google source also whispered to TechCrunch that these problems were nothing new. TechCrunch's sources say that Google "is under an obligation to keep out spammy links from lame 'shopping' search engines."

The Potential Consequences

The EU can impose a fine of up to 10 percent of revenue for monopoly abuses. Google is currently worth more than $180 billion, which would make such a fine high.

It's worth noting that the investigation does not necessarily mean the European Commission has a smoking gun. The European Commission clarified in its statement:

"This initiation of proceedings does not imply that the Commission has proof of any infringements. It only signifies that the Commission will conduct an in-depth investigation of the case as a matter of priority."

The EU's investigation piggybacks off the same one administered in Texas earlier this year, though U.S. officials did not press formal charges.

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