B is for Brussels: Google's corporate rejig WON'T insulate firm against antitrust probes
Alphabet Show is diddly-squat to Commish. For now
Brussels confirmed late on Tuesday that Google's radical corporate shape-shifting that spawned parent company Alphabet would not "insulate" the Chocolate Factory from the EU's competition probes.
The European Commission's competition spokesman Ricardo Cardoso told The Register:
We have seen press reports that Google is carrying out a corporate restructuring. Google itself explained that it’s changing its structure to better run its different businesses. As far as the Commission is aware, there is no link to our competition investigations.
In general, the Commission will always carry out its competition enforcement duties independently of the precise corporate structure of the companies under investigation. A company does not insulate itself from a competition investigation through a change in corporate structure.
One of the most persistent questions nagging commentators since Google announced its big changes has been how the new set-up will impact on the Chocolate Factory’s EU anti-trust case.
Google was accused by the European Commission of giving preference to its own services, scraping news sites and imposing anti-competitive terms on advertisers. The latter two activities were resolved early on in the negotiations, which have rumbled on for more than five years. However the issues of search and promotion of Google’s own services have proved trickier to solve.
In essence, the new Alphabet set-up won’t affect the competition case, since the investigation stemmed from historical complaints. However many have speculated that Google may have one eye on possible sanctions.
In July, the EU competition chief Margrethe Vestager sent a redacted version of the charges against the world's biggest broker to Google’s rivals. The so-called Statement of Objections sets out the Commission’s case against Google and is the first step on the road to possible punitive measures – including potential divestiture orders and a possible fine of up to 10 per cent of global turnover.
Google has until 17 August to complete its defence, leading many to speculate that the surprise Alphabet news may be part of this strategy. In his blog post announcement, Google supremo and newly minted Alphabet CEO, Larry Page, said “this newer Google is a bit slimmed down”. However, aside from a few “out there” projects such as Wing and Calico, Page didn’t elaborate on which bits of fat Google would be shedding.
That is relevant for the anti-trust case, because splitting off search from Google’s Shopping service, for example, would go a long way to allaying Vestager’s competition concerns. Guillermo Beltrà, legal head at European consumer organisation, BEUC, said on Twitter that although an interesting move, with core web services – including search – still operating under the same business division, there was no real separation.
But unbundling search is something the European Parliament would also like to see.
Last November, two MEPs – Andreas Schwab and Ramon Tremosa – were behind a bizarre vote to “break up Google”. Although it didn’t mention Google by name, the proposal to unbundle search engines from other services, was clearly targeted at the current Chocolate Factory case. "We're just pointing out that there are tools the Commission can use," said Schwab at the time. Despite having no authority to dictate punishment, the Parliament passed the resolution by 458 to 173.