Reuters logo
Breakingviews - Google clears deck for huge antitrust fight
September 28, 2017 / 8:13 PM / 2 months ago

Breakingviews - Google clears deck for huge antitrust fight

NEW YORK (Reuters Breakingviews) - Alphabet has cleared the deck for a huge antitrust fight. The holding company of Google is separating its European shopping unit and allowing rivals to bid for ads. That frees up Google to battle the EU over claims it uses its Android operating system to dominate online search.

The Google logo is pictured atop an office building in Irvine, California, U.S. August 7, 2017. REUTERS/Mike Blake

The European Commission fined Google $2.8 billion this summer after determining that Google acted abusively in shopping. It also added the prospect of a fine of 5 percent of its daily revenue each day if the company didn’t fix the problem by this Thursday.

Rival shopping comparison sites can now buy space on top of Google search pages and display a photo of a relevant good and a link to a retailer. Competitors complain this forces them to pay money to the search monopoly, thus violating the spirit of competitive markets. But the fix appears to solve the complaint that Google was unfairly promoting its own services.

Alphabet will also continue its appeal. That is important, as the idea that a dominant company cannot favor its own services at the expense of rivals is contentious and could lead to future suits against Amazon, Facebook and others.

But the real action is over Android. A majority of the world’s smartphones are powered by the operating system devised by Google. The company doesn’t charge manufacturers for it, but consumers value these phones because they can download apps. The Commission says Alphabet is acting abusively by giving financial incentives to manufacturers to exclusively use Google search and forcing them to set it as the default if they want access to the app store.

Close to 90 percent of Alphabet’s top line comes from advertising. And mobile will probably account for about two-thirds of its net digital advertising revenue this year, estimates eMarketer. Considering the existential threat if it were to lose its grip on mobile search, it’s little wonder Google wants as few distractions as possible to focus on this fight. 

Breakingviews

Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.


Sign up for a free trial of our full service at https://www.breakingviews.com/trial and follow us on Twitter @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors.

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below