European Competition Commissioner Margrethe Vestager attends a meeting of the EU's executive body today

Google accused of competition rules breach by EU

The EU has accused Google of abusing its search dominance to distort results in favour of its Google Shopping service.

The move marks the culmination of an investigation that started in 2010 and sets up a legal battle that could end in Google being fined as much as 10 per cent of its annual revenue – about $6bn (£4bn) – and force the US company to overhaul its European operations.

Competition Commissioner Margrethe Vestager also announced the launch of a separate competiion probe into Google’s Android mobile operating system to see whether the company is abusing its dominant market share to promote its own services.

The statement said the US tech giant, which dominates Internet search engines globally, had been sent a Statement of Objections – effectively a charge sheet – to which it can respond.

"I am concerned that the company has given an unfair advantage to its own comparison shopping service, in breach of EU antitrust rules," said Vestager. "If the investigation confirmed our concerns, Google would have to face the legal consequences and change the way it does business in Europe."

On top of potential fines, if the European Commission finds that a company is abusing a dominant market position it can demand sweeping changes to its business practices, as it did with US software giant Microsoft in 2004 and chip-maker Intel in 2009.

Of the formal investigation into Android, Vestager said: "I want to make sure the markets in this area can flourish without anticompetitive constraints imposed by any company."

The announcement follows five years of investigation and abortive efforts to strike a deal with Google by her Spanish predecessor, Joaquin Almunia, who handed over his dossier to the Danish liberal in November.

But it has not addressed all the complaints lodged with the Commission by competitors who say Google has been promoting its own products and services such as Google Maps, YouTube and Google+ in search results and blocking advertisers from moving their campaigns to rival platforms.

Industry experts believe the action is unlikely to markedly shift existing business towards the firm’s competitors, but by firing a warning shot across Google's bows it may favour competitors in new areas as technology develops.

There was no immediate public response from Google, but an internal memo to staff published by the blog re/code described the moves as "very disappointing news" and said: "We have a very strong case, with especially good arguments when it comes to better services for users and increased competition."

Google initially has 10 weeks to respond to the charges and can demand a hearing. A final resolution – quite possibly involving court action if Google does not choose to settle – could take years.

The company had already put forward three proposals to resolve the case, most recently offering to give competing products and services better visibility on its website, let content providers decide what material it can use for its own services and make it easier for advertisers to move their campaigns to rivals.

Almunia initially accepted that deal only to reverse his decision six months later and demand more concessions following pressure from Germany, leaving the ultimate decision to his successor.

Germany has been particularly vocal in pressing the Commission to act against Google, with several domestic companies among the group of publishers and technology companies that have issued comlaints against the search engine, alongside major US rivals including Microsoft and Expedia.

Axel Springer chief Mathias Doepfner told the German media group's shareholders in Berlin on Tuesday that Almunia's efforts to negotiate a deal with Google would have been a "shoddy compromise" and praised Vestager for being "more determined, quicker and more true to the facts".

President Barack Obama accused the EU in February of taking a protectionist stance against the US tech industry, but the announcement could intensify scrutiny of a Federal Trade Commission (FTC) competition investigation that was settled in 2013 without finding any significant misbehaviour.

A confidential report mistakenly released to The Wall Street Journal last month revealed the FTC's legal staff had recommended suing Google for breaking competition laws only to be overruled by the agency's governing commissioners.

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