Google execs hunker down for summer fight as EU fines loom

Bloomberg

As European Union officials count the days before their annual vacation, Google’s lawyers and lobbyists are hunkering down in Brussels, preparing for what may be a record EU antitrust fine. A penalty in the shopping-search probe could come within weeks and many expect it to exceed a $1.2 billion fine on Intel Corp. in 2009.
That would be another show of strength by EU Competition Commissioner Margrethe Vestager who slapped Apple Inc. with a 13 billion-euro ($14.5 billion) tax bill in August. Google is a top priority case for her as European politicians and publishers push for action against the Mountain View, California-based company that’s come to dominate online advertising.
“If there’s going to be a fine, it has to be the biggest ever,” said Stephen Kinsella, a lawyer at Sidley Austin who represents companies that have complained to the EU about Google. “The European Commission has strongly signaled that if there is going to be a fine it would need to be at a level that would have deterrent effect.” Timing on a decision could slip and Google representatives and the commission both remain tight-lipped, declining to talk about it. The company hasn’t yet met with regulators to discuss a potential EU order or how it might implement any changes, according to a person familiar with the probe, who spoke on condition of anonymity.

MAJOR RULINGS
But the EU has a long tradition of issuing major rulings just before officials quit Brussels for their summer break. Last July saw more than $3 billion in fines for truckmakers including Daimler AG and Volvo AB. With one eye on the impending decision, some Google officials have been getting ready, moving vacation dates or making sure they are close to the action, other people familiar with the probe said.
Vestager “has a keen eye to maximizing the impact of any announcement on a case and July sees a slowdown in the news cycle,” said Christopher Bright, a lawyer at Shearman & Sterling in Brussels, who’s not involved in the Google probe. “Together with the advanced state of preparation of the case, this points to a July announcement for Google.”
Vestager isn’t afraid of big numbers, setting records with the tax bill for Apple — which it’s appealing — and the cartel fine for truck companies.
Facebook Inc. may have got off lightly with a mere 110 million-
euro penalty for not providing corr-ect information in the WhatsApp merger probe.

TOP SPOT
Intel holds the top spot for a monopoly abuse with a fine of 1.06 billion euros. That represented more than 3 percent of Intel’s $37.6 billion in sales in 2008, below the maximum penalty of 10 percent of yearly sales regulators can impose.
As Alphabet Inc. pulled in $90 billion in revenue last year, any fine would be capped at $9 billion. But within that limit, the actual size of the fine would be calculated from sales in the market under investigation.
Alphabet’s Google division generated $79 billion in ad revenue in 2016. While it doesn’t break out sales for shopping search advertising, ads from search provide most of its revenue.
The EU also factors in how many years the illegal conduct lasted. Regulators say the systematic promotion of Google’s own shopping search started in 2008, allowing Google Product Search and Google Shopping grow more quickly than rival comparison-shopping services.
A large penalty and an order for Google to change its ways might just be the start.
The EU is also examining its AdSense advertising service and its Android mobile phone software. The Android investigation goes to the heart of what Google does in the mobile-phone space, questioning the strict terms Google places on phone makers and app developers to use the software it provides for free.