Why the European Union Is Taking on Google

iStock Editorial/Thinkstock(NEW YORK) — The European Commission has a couple of gripes with Google and on Wednesday, smacked the search giant with a statement of objections, alleging it abused its dominant position in search.

A second probe has been opened into Google’s open source Android operating system.

Google said it “strongly disagreed” with the allegations and looks forward to making its case. The company has 10 weeks to respond to regulators, who first opened the probe in November 2010.

Here’s a look at what comes next in a battle that is shaping up to be the biggest since the European Commission served Microsoft with a record fine in 2004.

Search

At issue is whether Google abused its dominance in search to serve its own Google Shopping advertisements in a more prominent position ahead of other search results.

The European Commission said this could drive away traffic from competitors and hinder them from competing. Consumers are also hurt, the commission alleged, because they do not always see the most relevant results to their searches.

In a blog post Wednesday, Google said consumers today have more choices than ever for where and how they search for goods.

“While Google may be the most used search engine, people can now find and access information in numerous different ways — and allegations of harm, for consumers and competitors, have proved to be wide of the mark,” the company said.

Android

A separate probe has been opened into Google’s open source Android operating system. The European Commission said the investigation will focus on whether Google has been operating unfairly in the way it bundles Android apps and services.

At issue are the partner agreements many device manufacturers enter into with Google in order to install Google’s apps on their devices. The commission will investigate whether these agreements have hindered competition and consumer choice.

“Our app distribution agreements make sure that people get a great ‘out of the box’ experience with useful apps right there on the home screen (how many of us could get through our day without maps or email?),” Google’s response said.

The company also pointed out that having these baseline apps allow makers of Android devices to better compete with Apple, Microsoft and other companies that come pre-loaded with similar baseline apps.

What’s at Stake

The European Commission also said it would continue to investigate other potential anti-trust violations. Google now has 10 weeks to formally respond to the Google Shopping complaint.

Wednesday’s filing marks the beginning of the formal legal process that could either lead to Google being acquitted of the allegations or saddled with a potential multi-billion euro fine.

Margrethe Vestager, the European Union’s commissioner in charge of anti-trust policy, said that Google could also be faced with having to change the way the company does business in Europe. The BBC noted, however, that Vestager said she would not seek a design overhaul of Google’s results nor would she ask the search giant to change its algorithms.

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