The European Commission says that the £130M ($185M) tax deal struck between Google and the UK government may amount to “illegal state aid” by offering the company better terms than those available to smaller businesses.
Google first came under fire for its tax arrangements in the UK in early 2013, when it was accused of funneling profits from UK Adword sales through Ireland, resulting in the company paying just £6M ($8.5M) tax on a turnover of £395M ($565M). In the new deal, it agreed to change its accounting practices to pay more tax in the UK, and to pay a lump sum in back tax …
As expected, the EU has formally accused Google of abusing its dominant position in search to favor links to its own products over those offered by competitors. The complaint takes the form of a Statement of Objections: a formal method of announcing that it believes Google has acted illegally and that a full investigation is underway.
The Commission’s preliminary view is that such conduct infringes EU antitrust rules because it stifles competition and harms consumers. EU Commissioner Margrethe Vestager said that “Google now has the opportunity to convince the Commission to the contrary. However, if the investigation confirmed our concerns, Google would have to face the legal consequences and change the way it does business in Europe.”
Google has not wasted any time in attempting to convince the Commission otherwise, arguing in a blog post that the evidence shows that Google has not harmed traffic to competitor websites … Expand Expanding Close
It doesn’t sound good for Google in Europe where the company has faced continued criticism, some comical and some less so, for using its dominant 90+% search share to give advantages to its other properties and squash competitors. FT:
Google will on Wednesday be accused by Brussels of illegally abusing its dominance of the internet search market in Europe, a step that ultimately could force it to change its business model fundamentally and pay hefty fines. Margrethe Vestager, the EU’s competition commissioner, is to say that the US group will soon be served with a formal charge sheet alleging that it breached antitrust rules by diverting traffic from rivals to favour its own services, according to two people familiar with the case.
Europe’s competition chief, Margrethe Vestager, is expected to make an announcement that Google has abused its dominant position on Wednesday in Brussels, according to two people who spoke on Tuesday on the condition of anonymity…
“The E.U. competition commissioner, Margrethe Vestager, will decide what steps they want to go,” Günther Oettinger, a German politician who is charge of Europe’s digital economy, told Die Welt am Sonntag, a German newspaper, on Sunday. “I think that they will be far-reaching.”
Google has yet to comment on the matter but if Google fails to rebut any formal charges, Ms. Vestager could “levy a huge fine that could go above 6 billion euros, or $6.4 billion, amounting to about 10 percent of Google’s most recent annual revenue”.
