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Rich, Powerful, And Under Investigation: Google Is The New Microsoft

The European Union has filed charges alleging Google uses its dominance of the search market to stifle competition. The complaint brings back memories of Microsoft, back in the days when it made competitors tremble.

Posted on April 15, 2015, at 1:17 p.m. ET

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Google has replaced Microsoft as the tech world's new bully, at least in the eyes of European authorities.

European Union antitrust regulators went to battle with Google on Wednesday by accusing the tech giant of improperly using its dominance in the search market to promote its shopping service, at the expense of rival tech companies and consumers. The European authorities also announced an investigation into possible abuse related to Google's Android mobile operating system.

In a statement detailing the antitrust charges, the European Commission claimed Google search results have given prominent placement to the company's own shopping service regardless of its merits, preventing shoppers from seeing the most relevant results. The charges, which Google has challenged, could eventually result in a big fine or an action to curb Google's influence in Europe.

Google fought back in a blog post on Wednesday. "While Google may be the most used search engine, people can now find and access information in numerous different ways," the post said. "Allegations of harm, for consumers and competitors, have proved to be wide of the mark."

Whatever the outcome, the accusations show how poorly Google is perceived by European authorities. Far from being a champion of an open, creative internet, Google may be "stifling innovation," the European Commission said. While Google says it is helping people find what they want, the commission claims the company's conduct has had a "negative impact" on consumers.

This sort of harsh treatment is familiar to another American tech giant that once towered over the industry: Microsoft.

For over a decade starting in 1998, Microsoft fought the European Commission over its Windows operating system, which the commission claimed was being unfairly used to push Microsoft's Internet Explorer web browser. Microsoft ultimately agreed to offer customers a choice of rival browsers and racked up more than $2 billion in fines.

That case and its fallout coincided with the end of an era in which Microsoft and Bill Gates, its chief executive, seemed to enjoy almost uncontested power.

While it may seem hard to believe now, there was a time in the 1990s when Microsoft had a fearsome reputation for crushing smaller rivals, most famously the Netscape web browser. The company's tactics provoked the United States government to bring antitrust charges, though that case resulted in a settlement that allowed Microsoft to escape a harsh punishment.

"A lot of developers felt if they were going to do anything, they had to do it under the radar of Microsoft," Dan Gillmor, a longtime technology journalist, told BuzzFeed News. "Everyone was really afraid."

Even The Simpsons was attuned to this fear, in a 1998 episode in which Homer agrees to sell his upstart technology company to Microsoft. "Buy 'em out, boys!" says the Bill Gates character, as his goons destroy Homer's office.

"I didn't get rich by writing a lot of checks," he adds, laughing maniacally.

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It's not clear how much of an effect the European case had on Microsoft's businessβ€”it was certainly not as big as the one brought by the US Department of Justice. Alongside those regulatory challenges, the company was hit hard by broader industry changes. The rise of the web as the world's common computing platform eroded the power of Windows, and the proliferation of smartphones made desktop operating systems even less relevant, even though Microsoft still enjoys a river of profits from its Windows and Office businesses.

But the EU and DOJ cases did mark a turning point, when governments began turning the screws on a company that, in their view, had become a bully.

Now it's Google's turn in the hot seat. According to a recent Wall Street Journal report, the company narrowly avoided a possible United States government lawsuit over its monopoly power. And the European matters could drag on for years.

These antitrust allegations, and growing hostility from others in the tech industry, are in part a self-inflicted wound. The company has used its windfall profits from search advertising to subsidize expensive attempts to replicate the products of numerous companies that once considered it an ally, going after everything from online photo storage to social networking and driverless cars.

1. @google's Antitrust issues could have been avoided. Classic mistake of not nurturing partners & often disrespecting them.

2. When @google was young they would have partners, including myself, over the office, break bread & talk about winning together.

3. At some point they became revenue obsessed & shifted strategy from partnerships to "the data says we should do X.... " - F the partners!

Most famously, the company abandoned its close relationship with Apple β€” Google CEO Eric Schmidt sat on Apple's board, and its search, YouTube, and Maps products were all embedded in the original 2007 iPhone β€” by mimicking many of the iPhone's features into Android and distributing the competing system for free to handset makers.

The move infuriated Steve Jobs, and Schmidt resigned from the Apple board in 2009. A long and costly series of lawsuits followed. "I will spend my last dying breath if I need to, and I will spend every penny of Apple's $40 billion in the bank, to right this wrong," Jobs told his biographer Walter Isaacson. "I'm going to destroy Android, because it's a stolen product. I'm willing to go thermonuclear war on this." Apple has since removed Google Maps and YouTube from the iPhone.

But despite hostility from both regulators and competitors, Google's situation is different in important ways from Microsoft's. For one, Google has not been as successful in crushing competition. Its Google Plus social network failed to challenge Facebook. Data storage upstarts like Dropbox have thrived in a business that many thought belonged to Google.

And Google, while it has been beaten up over privacy, isn't quite as fearsome in the public eye as Microsoft once was. When The Simpsons nodded to Google last year, it was to mock the company over a prominent flame-out: Google Glass.

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