GOOG Alphabet Inc

By Natalia Drozdiak and Sam Schechner 

BRUSSELS-- Snowed under by formal antitrust charges leveled at three different areas of its business, Alphabet Inc.'s Google may be increasingly tempted to reopen previously unsuccessful negotiations with the European Union's competition authorities to settle the cases.

Google on Thursday fired off its response to the third set of formal charges issued by the European Commission, the bloc's antitrust regulator--this time rebutting the EU's allegations that the search giant abuses its dominance with its mobile operating service Android. The statement follows tech giant's response last week to allegations in two other cases related to its shopping search service and to one of its niche advertising products.

In a blog post Thursday, Google general counsel Kent Walker said "Android hasn't hurt competition" but rather has "expanded it."

If the EU deems Google guilty, the regulator could impose hefty fines in each of the three cases and require that Google overhaul its operations in parts. But such a finding by the EU could also cause further damage for Google.

The tech giant would likely also face costs associated with years of legal battles, against the EU as well as private litigants seeking compensation for damages.

Settling the cases with the commission could wipe out some of those problems. Google would have to pledge to significant changes to its operations and would only get hit with a fine if it goes back on its promise. It would also absolve Google from admitting guilt, making it harder for private litigants to claim damages.

But it is unclear to what extent the option is feasible after Google for years haggled with the previous antitrust commissioner, Joaquín Almunia, about how to present search results in Europe in various attempts at a settlement with the regulator. Those previous efforts failed, after Google rivals complained that the proposed settlements wouldn't have required significant changes in Google's practices.

The EU's antitrust chief, Margrethe Vestager, who lodged formal charges against Google in April 2015, has said the settlement option is open. But she has indicated that any fresh proposal would need to differ substantially from the three earlier attempts.

"If it didn't work under Almunia, my sense is that it wouldn't work now under Vestager who is really trying to make a point," said Michael Carrier, an antitrust professor at Rutgers Law School.

While the commission may be eager to reach a guilty decision in the Google case to deter other firms from pursuing anticompetitive behavior, a settlement in some or all of Google's three cases would free much-needed resources in the antitrust regulator's department.

Some rivals say they wouldn't in principle oppose a settlement between Google and the commission.

"If there is scope for truly effective remedies, then many of the complainants would likely welcome it," said Thomas Vinje, a Brussels-based partner at Clifford Chance who represents complainants against Google. "We have no interest in a fine, it's the conduct that matters."

Google has said it doesn't rule out any options. The company's immediate priority, however, is to respond to the EU's charges and submit evidence to refute the regulator's allegations.

Google may find it easier to change behavior in some cases rather than others. In the EU's advertising case, Google said it has already phased out some of its most restrictive requirements for Google ads in its AdSense for Search contracts.

But as the EU delves deeper into Google's core business areas, such as Android, "the less likely Google would want to voluntarily give what it sees as its way of making money in the future," Mr. Carrier said.

Since its launch in 2007, Android has grown into a behemoth, running more than 80% of the world's smartphones, with a much bigger presence in Europe than in the U.S. market.

The EU accuses Google of abusing that dominance to force phone makers into favoring the Google search engine and Chrome browser on their devices. Those apps ensure consumers see Google's search advertisements--its cash cow--when they look things up on their smartphones.

The case has led some lawyers to draw direct links to the commission's successful 2004 decision condemning Microsoft for bundling products into its Windows software.

"Realizing that, the rational thing to do is to settle," said Nicholas Economides, an economics professor at New York University Stern School of Business.

Google rejects the comparison to the Microsoft case, arguing that nothing restricts phone makers or telecom companies from installing other apps on phones.

"No manufacturer is obliged to preload any Google apps on an Android phone," Google's Mr. Walker said in Thursday's blog post. "But we do offer manufacturers a suite of apps so that when you buy a new phone you can access a familiar set of basic services."

Stu Woo contributed to this article.

Write to Natalia Drozdiak at natalia.drozdiak@wsj.com and Sam Schechner at sam.schechner@wsj.com

(END) Dow Jones Newswires

November 10, 2016 10:15 ET (15:15 GMT)

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