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Will Vestager Cost Google Billions?

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Will Vestager Cost Google Billions?

June 26 2015, 07.40am GMT


Margrethe Vestager is a Danish politician who is a former economics minister as well as a former deputy prime minister with a well-deserved reputation for toughness.

This has resulted in her often being referred to as the “Iron Lady of Denmark.” She has been in office as the European Commissioner for Competition since 1 November 2014.

Her predecessor in office, Joaquin Almunia, had initially opened an investigation into Google (GOOG, -0.49%) in 2010. The European antitrust regulator announced in mid- April that a formal charge would be brought against Google Inc. for violation of antitrust laws. This is set to become the biggest competition battle since the epic European pursuit of Microsoft a decade ago, with Google facing a potential $6.6 billion or 10% of annual revenue in fines if found guilty.

Vestager has also initiated antitrust enquiries into other American companies such as eBay (EBAY, -0.02%), Starbucks (SBUX, +0.67%) and Amazon (AMZN, -0.17%) as well as into the Russian energy giant, Gazprom. These enquiries have elicited charges by U.S. sources that Vestager is anti-American on the one hand and on the other hand, by Russia that she is conspiring with the U.S. to bring Russia to its knees. The conflicting accusations might be an indication of the impartiality she claims to practice.

The charges against Google are two pronged; one, an abuse of its dominance in the market while the other relates to allegations that Google uses its Android role to favor its own apps and services. 

MarketWatch conducted an interview with Vestager to find out her reasons for opening investigations into what is felt to be an excessive number of U.S. majors active in the tech world. Her response to this was that the majority of tech and IT companies active in Europe are U.S. based which skews the statistics to make it appear as if only U.S. corporations are being targeted.

During the interview, the antitrust Commissioner said while it was obvious that Google enjoyed enormous success in Europe that in itself was not the problem. Vestager believes they have data that supports their suspicion that the company is abusing its dominant position and have laid this all out in writing to Google for their response, which was still being awaited. She added that the communication from Google has been very low and that the “the ball is now in their court.”

The Wall Street Journal reported on 24 June that Google had not yet responded to the European antitrust charges. The company was given ten weeks to respond to the charges which were filed in mid-April. Because Google wasn't immediately granted access to the case documents, they still have time to respond even though the ten week period has elapsed. Google also has the right to request an extension or to ask for a hearing in front of regulators in order to verbally explain their position.

Marketing Land reported three days ago that Getty Images had released a statement saying that they had been added as an “Interested Third Person” in the antitrust charges against Google. Getty is accusing Google of building its own image search vertical, using Getty’s content, while demoting Getty-owned images in search results.

The next move in this saga will have to come from Google as they have consistently said that they are not in breach of the antitrust laws since the time the investigation commenced. They will now have to show why they are not in breach.

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