Consumer Watchdog Urges EU to Block Google’s Motorola Deal

Mon, Jan 23, 2012 at 12:40 pm

    A United States consumer group has written to the European Commission asking it to block Google’s Motorola deal and to launch an investigation into the Internet…

    A U.S. consumer advocacy group has written to the European Commission asking it to block Google’s deal to acquire Motorola and to launch an investigation into the Internet giant’s alleged anti-competitive behavior.

    The Commission is expected to approve Google’s takeover of Motorola Mobility for US$12.5 billion by mid-February, after requesting and receiving additional information from Google. But Consumer Watchdog, an independent consumer rights organization that has in the past worked with Microsoft, believes this would be bad for consumers on both sides of the Atlantic.

    “Google’s Android smartphone operating system dominates the mobile market with a 38 percent share and is growing,” said John M. Simpson, Consumer Watchdog’s privacy project director, in a letter to European Competition Commissioner Joaquin Almunia.

    “Google controls 95 percent of the mobile search market. There is evidence it is pressuring handset manufacturers to favor Google applications when using the Android operating system,” Simpson added. “Allowing the Motorola Mobility deal would provide Google with unprecedented dominance in virtually all aspects of the mobile world — manufacturing, operating systems, search and advertising. It would be a virtually unstoppable juggernaut.”

    According to reports, the takeover would give Google access to more than 17,000 Motorola patents. “If Google is allowed to dominate the mobile market it will result in higher prices for consumers and stifle innovation,” said Simpson.

    But he went further, urging the Commission to launch a formal antitrust investigation into Google’s search activities. The Commission is already considering complaints from competitors and is likely to make a decision on that by the end of March.

    “The Commission is dealing with this case as a matter of priority. By the end of the first quarter, we will probably be in a position to conclude on the nature of the concerns given the evidence gathered,” Almunia’s spokeswoman said last week.

    However, the Commission would not say whether an investigation was likely. At least nine companies have complained to Europe’s antitrust regulators about Google, including British site Foundem, French company 1plusV and the Spanish Association of Daily Newspaper Publishers.

    “The recent announcement of Google’s ‘Search, plus Your World’ is but the latest example of how Google uses its monopolistic position in an uncompetitive way to promote its own services,” Consumer Watchdog’s Simpson said.

    The Consumer Watchdog director also said that he had more faith in European authorities to stand up to the Internet giant than those in the U.S.

    “The Commission’s role in keeping Google’s abuses in check is essential. Its executives have close relationships with many U.S. officials and the company just spent a record $9.7 million in 2011 lobbying policymakers in Washington. We have faith the Commission will not succumb to such influence,” he said.

    Google has more than 90 percent of search in some markets compared to about 65 percent in the U.S.

    Among the actions that Consumer Watchdog wants the Commission to consider are significant financial penalties, transparency on how Google’s “quality score” is derived and forcing Google to break up into different companies “so there is no incentive to unfairly use search to promote other services.”

    It seems unlikely that the Commission would go that far, but it can fine companies up to 10 percent

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    of their global turnover for breaching European Union rules.

    Follow Jennifer on Twitter at @BrusselsGeek or email tips and comments to jennifer_baker@idg.com.

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