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E.U. Parliament, in Nonbinding Measure, Calls for Breaking Up Google E.U. Parliament, in Nonbinding Measure, Calls for Breaking Up Google
(about 2 hours later)
BRUSSELS — The European Parliament on Thursday approved a nonbinding resolution for Google to be broken up into separate companies. BRUSSELS — Europe’s resentment of the American technology giant Google reached a new noise level on Thursday as the European Parliament passed a nonbinding vote to break up the company.
There is no immediate threat to Google from the vote, which amounts to little more than political posturing because the Parliament has no formal power over antitrust policy in the 28-member trade bloc. Although merely symbolic — the resolution carries no legal weight — the move came the day after a separate European body sought to further expand citizens’ “right to be forgotten” privacy protections against Google.
But the vote signifies the increasing trans-Atlantic tensions over the dominant role that Google, an American technology titan, plays in Europe. The vote followed a separate move on Wednesday to rein in the company by a European regulatory body that aims to protect the electronic privacy of European citizens. Both moves are also playing out against the backdrop of a long-running investigation by the European authorities of Google, on which the European Union’s new antitrust chief, Margrethe Vestager, is still getting up to speed.
Thursday’s vote could also raise pressure on Margrethe Vestager, the bloc’s recently installed competition commissioner, to speed up a decision on whether to bring formal antitrust charges against Google in a long-running investigation. That inquiry, begun in 2010, involves Google’s dominant position in Europe’s Internet search business, and asks whether the company’s search results favor other Google-related services and whether Google impedes its competitors’ search-advertising platforms. A breakup of Google in Europe will almost certainly not happen, legal experts say. And whether any of the various policy moves afoot will ever significantly curtail the company’s business operations across the region is still too soon to gauge.
Al Verney, a Google spokesman in Brussels, declined to comment after the vote on Thursday. But taken together, the level of policy-making activity being devoted to the company signifies the growing antipathy to American technological dominance in the European Union even as its citizens grow ever more reliant on its gadgetry and conveniences. Not since European officials spent years seeking to rein in the powers of an earlier tech titan, Microsoft, has an American company drawn such scrutiny on this side of the Atlantic.
The vote was on a broader resolution on the digital economy that passed with 384 votes in favor, 174 against and 56 abstentions. The resolution, which broadly called on the European authorities to break down competitive barriers in digital commerce, was backed by large numbers of lawmakers from the European People’s Party and the Socialists & Democrats, the two main political blocs in the Parliament. European fears of American technology giants have been stoked in the last 18 months by the revelations of Edward J. Snowden, the former National Security Agency contractor, about American intelligence agencies’ spying activities and perceived easy access to the world’s tech infrastructure. Chancellor Angela Merkel of Germany publicly complained when it was discovered last year that her cellphone had most likely been tapped by American intelligence.
Ms. Vestager, a Danish free-market liberal who took office on Nov. 1, replaced Joaquín Almunia, who initiated the antitrust investigation of Google and tried three times to settle with the company but abandoned those efforts after the company’s competitors and other groups said the proposed settlement terms would be ineffective. Ms. Vestager has insisted on taking the necessary time before deciding on next steps in that antitrust case. In one sense, Thursday’s vote amounts to little more than political posturing because the Parliament has no formal power over antitrust policy in the 28 countries of the European Union. That power rests with the European Commission, the bloc’s executive arm. Yet the vote could raise pressure on Ms. Vestager to speed a decision on whether to bring formal antitrust charges against Google in an investigation that began in 2010. That inquiry involves Google’s dominant position in Europe’s Internet search business and asks whether the company’s search results favor other Google-related services and hobble competing search advertising platforms.
She must also decide whether to open a formal investigation into Google’s Android mobile operating system. A preliminary inquiry, also begun under Mr. Almunia, has been considering whether Google uses Android to discriminate against non-Google applications. But even if Ms. Vestager finds fault on Google’s part, analysts said, the most likely outcome might be changes in its business practices and even possibly a big fine — as happened in past European investigations with Microsoft as well as another American tech giant, the chip maker Intel.
Ricardo Cardoso, Ms. Vestager’s spokesman, said after Thursday’s parliamentary vote that she would not be swayed by the result. Antitrust should be “independent from politics” so that Europe’s “procedures are not put into question,” Mr. Cardoso said. “Breaking up Google would be unprecedented in all kinds of ways and seems hugely unlikely in absence of massive, proven consumer harm — and it’s very unclear to me whether the commission is going to find that harm,” said Mario Mariniello of Bruegel, a research organization in Brussels.
The outcry against Google is nonetheless hard to ignore. He noted that United States antitrust officials had never found reason to censure Google, despite its market power on both sides of the Atlantic. He said it was “hard to see how Europe could do this alone, and what would be the basis for doing something so fundamentally different from the U.S. authorities.”
None of the deals offered by Mr. Almunia satisfied rivals and critics of Google, whose search engine, with about 90 percent of the market in some European Union countries, is even more dominant in Europe than it is in the United States. The lack of a settlement means that Google could still face a fine of nearly $6 billion and restrictions on its freedom to do business in Europe if it is eventually found to have broken European Union competition laws. Ricardo Cardoso, spokesman for Ms. Vestager, said after the parliamentary vote that she would not be swayed by the result. Antitrust should be “independent from politics” so that Europe’s “procedures are not put into question,” he said.
The resolution approved on Thursday addressed a number of issues concerning Europe’s digital economy. The breakup proposal, which opponents to the measure had sought to dilute or delete, did not attack Google directly, even though the company was widely assumed to be the target. Instead it called on Ms. Vestager’s department “to consider proposals aimed at unbundling search engines from other commercial services as one potential long-term means” of introducing more competition into online search in Europe. A Google spokesman, Al Verney, declined to comment.
Among the proponents of tough antitrust action against Google in Europe who will be cheered by the result on Thursday are major American technology companies like Microsoft and Yelp, as well as powerful German and French publishing groups that have formed a lobbying group called the Open Internet Project. The vote was taken on a broader resolution on the digital economy that passed with 384 votes in favor, 174 against and 56 abstentions.
Lobbying over the Google case has grown greatly as the stakes have risen for control of the digital economy. The lengthy resolution broadly called on the European authorities to break down barriers in digital commerce and was backed by significant numbers of lawmakers in the main conservative and socialist political blocs in the Parliament, the only directly elected body in the European Union.
The breakup language was introduced by Andreas Schwab, a German member of the European Parliament. Mr. Schwab is “of counsel” at the German law and lobbying firm CMS Hasche Sigle, which has represented some of the German publishing interests that have been most eager to curb Google, including the German Magazine Publishers association. He earns roughly $15,000 to $75,000 annually from the firm, according to a disclosure filing. The firm’s website lists his expertise as competition policy. Ms. Vestager, a free-market Dane who took office on Nov. 1, succeeded Joaquín Almunia, who initiated the antitrust investigation of Google. Mr. Almunia tried three times to settle with the company but abandoned those efforts after its competitors and other groups said the proposed settlement terms would not be enough to allow for fair competition. Google’s search engine, with about 90 percent of the market in some European Union countries, is even more dominant in Europe than it is in the United States.
Mr. Schwab said he had not discussed the resolution with the law firm. Addressing the Parliament late Wednesday to urge passage of his resolution Mr. Schwab said he wanted to enable all businesses to “participate on an equal footing” in Europe’s digital sector. Ms. Vestager has said she would take the necessary time before deciding on next steps in that antitrust case. She must also decide whether to open a formal investigation into Android, Google’s mobile operating system. A preliminary inquiry, also begun under Mr. Almunia, has been considering whether Google uses Android to discriminate against non-Google applications.
Evelyne Gebhardt, a Socialist lawmaker from Germany, told the Parliament ahead of the vote that she supported the resolution “to make sure that our young entrepreneurs — young people coming out of university who are building things, who have new ideas — have an opportunity to give their services quite freely” on the Internet. The power of the commission to break up companies was made explicit in 2003. In a landmark case in 2008, the German energy utility E.ON agreed to sell its extra-high voltage network as part of a settlement, not something unilaterally imposed on the company.
It is “high time” that the bloc’s antitrust authority “came up with a result,” Ms. Gebhardt said. In the case of technology companies that have already run the antitrust gantlet in Europe, the main penalty has been the use of fines. The largest single fine yet levied in such a case was 1.1 billion euros, or $1.37 billion, in 2009 against Intel for abusing its dominance in the computer chip market. But Microsoft underwent a series of investigations and settlements, racking up a total of more $3 billion in European fines over the course of a decade, including a penalty in 2013 for failing to adhere to an earlier settlement.
The run-up to the vote mobilized an international lobbying effort, with American consumer advocates and Google’s rivals supporting the resolution, while dozens of powerful members of Congress in Washington and Gov. Jerry Brown of California, where Google is based, strongly condemning the initiative. For Google, its inability to reach a settlement with the European Commission despite years of trying means the company could still potentially face a fine of nearly $6 billion, or 10 percent of global annual sales, and restrictions on its freedom to do business in Europe if it is eventually found to have broken the bloc’s competition laws.
Leaders of congressional trade committees warned that the vote could even imperil negotiations over a trans-Atlantic trade pact, which the European Union has made a priority as part of its efforts to jump-start growth and create new jobs. Among the proponents of tough antitrust action against Google in Europe are major American technology companies like Microsoft and Yelp, as well as powerful German and French publishing groups that have formed a lobbying group called the Open Internet Project. That Microsoft now finds itself lobbying against the current market giant indicates how quickly the dynamics can change in the digital economy.
Some European lawmakers, including Kaja Kallas of Estonia, warned late Wednesday that the resolution was a wrongheaded effort aimed to protect vested interests in Europe. “I am disappointed that discussion over this resolution has turned into an anti-Google debate,” she said. “Many decision makers still see digital solutions as a threat, rather than an opportunity.” The breakup language was introduced by Andreas Schwab, a German member of the European Parliament. Mr. Schwab is “of counsel” at the German law and lobbying firm CMS Hasche Sigle, which has represented some of the German publishing interests that have been most eager to curb Google, including the German Magazine Publishers association. Mr. Schwab said he had not discussed the resolution with the law firm.
But that effort failed to head off the resolution amid growing distrust of big American technology companies like Google that many Europeans consider cavalier about citizens’ privacy and too powerful to enable competitors, particularly in Germany, to gain a toehold. In the United States, powerful members of Congress and Gov. Jerry Brown of California, where Google is based, strongly condemned the initiative. Leaders of congressional trade committees warned that the vote could even imperil negotiations over a trans-Atlantic trade pact, which the European Union has made a priority as part of its efforts to reinvigorate growth and create new jobs.