Google Appeals EU Antitrust Penalty -- WSJ

By Sam Schechner and Natalia Drozdiak Features Dow Jones Newswires

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (September 12, 2017).

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Alphabet Inc.'s Google on Monday filed an appeal of the European Union's record EUR2.42 billion ($2.91 billion) antitrust fine against the company for allegedly abusing the power of its dominant search engine, setting up a legal battle that could set the tone for a series of cases and probes against the company.

The appeal comes shortly before the deadline under EU law to file an appeal against the decision, which was issued by the European Commission, the bloc's executive body, in late June. The EU accused Google of discriminating against rival comparison-shopping sites in search rankings and, along with the fine, ordered the tech giant to revamp its search results in Europe.

A Google spokesman confirmed that the company had filed an appeal but declined to discuss the legal rationale it had offered to overturn the ruling.

Google had previously said it disagrees with the decision and had indicated it would consider appealing.

"The commission will defend its decision in court," a European Commission spokesman said in response.

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Google's decision to appeal comes after the commission suffered a blow last week at the European Union's highest court, an unusual development for the regulator. Judges at the European Court of Justice effectively dismissed some arguments on which the commission had rested its antitrust case when it fined Intel Corp. EUR1.06 billion in 2009 for abusing its dominance.

Google's appeal, however, won't stop the company from having to pay its fine or comply with other elements of the June ruling, which could -- if upheld -- have far-reaching impacts on Google's increasingly sprawling business.

In the ruling, the EU ordered the company to treat equally its competitors' offerings and its own shopping service equally -- a precedent that could be repeated against other parts of Google's business, such as maps and travel search.

In late August, Google made moves to comply with the EU's decision, sketching out to the antitrust authority how it plans to overhaul its shopping search results by a late September deadline. The changes would have to apply for users in all European countries where Google offers its shopping service. The company faces penalties of up to 5% of average daily global revenue for each day it doesn't comply.

At issue in the case are Google's shopping ads, which often appear atop search results when a user searches for a product, like "gas grill." The EU says those ads, which appear before other search results, illegally disadvantage other comparison-shopping services, whose results appear lower down.

While Google's appeal isn't public, the company has outlined its areas of disagreement with the EU's arguments since the bloc first filed charges in 2015. The company says consumers benefit from its ads, and argues that the EU erred in not considering Amazon.com Inc. and eBay Inc. among the competitors for shopping searches. Google says that active competition from those companies is largely to blame for the plight of some shopping-comparison sites, rather than Google's search results.

In addition to an appeal, Google could file for an injunction, or so-called interim measures, to pause the order to change its behavior, pending the outcome of the appeal. But a spokeswoman for the EU's Court of Justice on Monday said Google hadn't filed for such an injunction. Companies typically apply for interim measures at the same time as they lodge their appeal.

The EU has also filed formal charges against Google for other parts of its business, including alleged abuse of its Android operating system for mobile phones. Google has denied the charges.

Write to Sam Schechner at sam.schechner@wsj.com and Natalia Drozdiak at natalia.drozdiak@wsj.com

(END) Dow Jones Newswires

September 12, 2017 02:47 ET (06:47 GMT)