By Natalia Drozdiak in Brussels and Jack Nicas in San Francisco
The European Union's antitrust watchdog has handed down a string
of big decisions in recent years against top U.S. technology firms,
in what might look to U.S. companies and officials like a trend by
Brussels to train investigations on large American companies.
EU officials deny any bias.
"We don't go against Google because it's an American company but
because it's a company abusing its dominant position in our
market.... If it were in Brazil, we wouldn't care," a senior EU
official said, referring to the EU's EUR2.42 billion ($2.71
billion) fine Tuesday against Google for unfairly favoring its
shopping ads in its search results.
EU competition officials are, to a large extent, constrained by
antitrust rules and legal precedents when making decisions against
any companies, be they American, European or otherwise. But unlike
Washington, where U.S. enforcers need to prove their cases before a
judge, the EU's competition directorate acts as prosecutor, judge
and jury in competition cases -- and only needs to convince
itself.
Experts say American tech companies are currently getting
increased scrutiny because they happen to dominate the industry.
This comes at a time when one of the top priorities for the
European Commission, the bloc's executive body, is to ensure the
EU's common market functions more efficiently online and across
borders.
Asked Tuesday about the perception by some American officials
and companies of an anti-U.S. bias in the bloc's decisions, EU
antitrust chief Margrethe Vestager said she had reviewed recent
cases in different enforcement areas and consistently found that
only a small number of the companies affected were American.
"I can find no facts to support any kind of bias," Ms. Vestager
said.
The EU's decision on Tuesday to fine Alphabet Inc.'s Google
follows other recent tough decisions against large tech firms.
The EU last August ordered Apple Inc. to pay Ireland EUR13
billion in allegedly unpaid taxes and in May fined Facebook Inc.
EUR110 million for providing incorrect information or misleading
authorities over the acquisition of its messaging unit WhatsApp. A
spokesman for Facebook, which didn't appeal the decision, said at
the time: "We've acted in good faith since our very first
interactions with the commission and we've sought to provide
accurate information at every turn."
The series of decisions come at a time when European tech firms
have fallen behind their U.S. counterparts. While Europe led the
way in the global smartphone push, it hasn't been able to foster
its own Apple, Facebook or Google.
That backdrop has critics of the EU's moves crying foul.
Apple said in December when it appealed the EU's tax decision
that regulators were unfairly targeting the company. "It's been
clear since the start of this case that there was a predetermined
outcome," an Apple spokeswoman said at the time.
Former U.S. President Barack Obama in 2015 said the EU's
investigations into U.S. tech companies like Google and Facebook
were "more commercially driven than anything else."
"Their service providers who, you know, can't compete with ours
-- are essentially trying to set up some roadblocks for our
companies to operate effectively there," tech news website ReCode
reported Mr. Obama as saying in an interview.
The European approach to regulating tech companies clashes with
that of authorities in the U.S., which have recently used a more
hands-off approach, experts say.
"The vast success of Silicon Valley has been fostered by a
deregulated marketplace, but this causes problems when these
businesses do business against the very different legal backdrop
operating in Europe," said Susan Hall, a Manchester, England-based
partner at law firm Clarke Willmott LLP who specializes in
intellectual property and information technology. Ms. Hall
represents clients ranging from multinationals, government
departments, universities to start-ups.
Particularly in cases involving tech firms' handling of personal
data, Europe's more ingrained sensitivities about privacy have
taken precedence over what, in the U.S., would be deference to the
First Amendment in regard to the freedom of speech and press. For
instance, French regulators have ordered Google and other search
engines to comply when a European asks the companies to remove
links in searches for their own name, if the information is old,
irrelevant or infringes on their privacy.
In the U.S., the Federal Trade Commission closed its own probe
into Google's search practices in 2013, after the company agreed to
voluntary changes. That decision came despite internal
recommendations by the agency's bureau of competition to bring a
lawsuit challenging three Google practices. A separate report from
the FTC's economic bureau didn't favor legal action.
The FTC appears unlikely to restart an investigation of Google
soon, in part because the commission's leadership remains uncertain
and three of the five commissioner slots are vacant. Acting
Chairwoman Maureen Ohlhausen, a Republican, voted to close much of
the antitrust investigation into Google four years ago. An FTC
spokesman declined to comment.
Still, Trump administration officials have considered Utah
Attorney General Sean Reyes, a vocal Google critic, for the
leadership post, and he has been backed by several firms opposing
Google, including Yelp Inc., Oracle Corp. and News Corp, the owner
of The Wall Street Journal and an interested third party in the
shopping case, meaning it can participate in the investigation.
News Corp has also formally complained to the EU about Google's
handling of news articles in search results. The EU doesn't have an
active case/probe of Google's handling of news stories.
The nominee for the Justice Department's antitrust chief, Makan
Delrahim, has also pledged to make international antitrust issues a
priority, but his nomination is one of many awaiting confirmation
from the Senate.
Some U.S. senators have also been critical of Google in recent
months. Sen. Richard Blumenthal, (D., Conn.) called on the FTC to
investigate the tech giant. The EU action is the latest "evidence
suggesting Google has repeatedly and consistently abused
international competition law," he said. "Here in the United
States, the FTC must confront the mounting evidence that Google is
manipulating search results in anticompetitive ways and possibly
running afoul of our antitrust laws."
Sen. Amy Klobuchar (D., Minn.) said Tuesday that dominant
internet platforms increasingly affect users' information and
shopping choices and small businesses' economic opportunities. She
said she is committed to ensuring "the internet is an engine to
increase economic opportunity and protect consumers in the 21st
century economy."
The beneficiary of the regulatory moves in Brussels often aren't
just European firms. Many of the complainants in the EU
investigations into Google, for instance, are U.S. companies that
have sought antitrust action in Europe after the FTC closed its
investigation of Google.
Yelp, Oracle, News Corp, Expedia Inc. and TripAdvisor Inc. have
all filed formal complaints in some of the EU's cases against
Google. And there are more unnamed U.S. companies lobbying European
regulators for action, said Luther Lowe, Yelp's head of public
policy.
"The not-so-well-kept secret of this process is that U.S.
companies have been doing the lion's share of the work," Mr. Lowe
said in an interview. Yelp has complained that Google's use of its
own user reviews in its search results, instead of those of Yelp or
other user-review sites, is bad for consumers.
Mr. Lowe said U.S. firms could push for action in their home
country, making the case that European internet users enjoy better
protections than American consumers. "Suddenly the FTC or state
attorneys general must be asking themselves: Why don't consumers in
my state or country have those same protections?" he said.
--Valentina Pop and Brent Kendall contributed to this
article.
(END) Dow Jones Newswires
June 27, 2017 20:00 ET (00:00 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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