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Google’s legal team certainly has its hands full, and billions of dollars are at stake.
In San Francisco, its lawyers are fighting allegations that it skirted Oracle’s (ORCL) copyrights for Java, the open source software programming language, when it designed the Android mobile operating software. And now Europe’s tough antitrust policewoman, Margrethe Vestager, appears ready to make good on her threat to make Google pay up for its overwhelming success in search algorithms and mobile computing software.
Over the weekend, the British newspaper The Telegraph reported that the European Commission is preparing a fine of 3 billion euros (around $3.4 billion). That’s triple the amount that Intel (INTC) was levied several years ago over sales practices that Europe said were unfair to its primary rival from the past decade, Advanced Micro Devices (AMD). On the bright side, it’s only half the amount Europe could fine Google, which is an estimated $6 billion based on its annual revenue. Plus, it’s not official yet.
Some of the charges Google is fighting in Europe are reminiscent of the ones that gave Microsoft trouble about 13 years ago. Both have drawn the ire of competitors for their practice of “bundling” their own applications with their operating system software—Microsoft (MSFT) was targeted for preferring its Internet Explorer browser on computers running Windows (a practice it was forced to change), while Google is under attack for favoring its search app on smartphones and tablets that use Android.
Google (GOOGL) is also in trouble over how its algorithms organize Internet search results—to the perceived detriment of certain web price comparison and shopping sites that originate in Europe. The company actually managed to fend off these charges for seven years before Vestager turned up the heat again. As Europe circles, Google also faces renewed scrutiny in the United States—the Federal Trade Commission is reopening its investigation, even though the agency voted unanimously to close it just two years ago.
What should make Google’s situation in Europe especially concerning to other software companies is that the suggested remedy is likely to require that the company rewrite its software algorithms for how data is collected, analyzed, and displayed. The “fix” isn’t simply a matter of changing sales practices or processes, as was the case with Intel. It could force changes at the engineering level, which is something that Google has resisted adamantly along the way—appealing to the needs of consumers. How Europe plans to enforce such changes technically is anyone’s guess—unless it hires programmers as smart as the ones employed by Google—especially since it fell down on the job when it came to policing the Microsoft agreement. And that was a far simpler change to monitor.
This unfolding case should give other big software companies facing antitrust scrutiny in Europe—especially Facebook (FB), which is being investigated in Germany—plenty to think about for many years.
