Google-Europe Feud Continues – Now Over Job Search Listings

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Google (NASDAQ:GOOGL), the global internet search and advertising giant just cannot catch a break in the European Union. The wholly-owned subsidiary of Alphabet has been in something of a blood feud with the EU's competition commissioner Margrethe Vestager. The commissioner in recent years has seen fit to slap Google with historic fines which have made it seem more or less like a regular operating expense.  In fact, in 2018 the company did specifically mention "European Commission fines"  in its consolidated statement of income.

The sins of Google

To say that Europe is less than pleased with Google's conduct would be an understatement. Last year the fines slapped on Google managed to exceed its tax liability - $5.1 billion up from $2.7 billion in 2017 - compared to a total corporate tax of $4.2 billion. The fine was levied for anti-competitive agreements relating to its Android platform. As mentioned, Google had already had to pony up nearly half that amount the previous year - relating to Google shopping monopolistic practices. In March of this year, Google was slapped with another $1.7 billion in fines over its AdSense platform and anti-competitive agreements. This brings the total tally since 2017 to nearly $10 billion.

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Now the concern is regarding the Job listings Search tool built into its search results. Vestager told a conference on Tuesday  "We're looking right now at whether the same thing may have happened with other parts of Google's business - like the job search business known as Google for Jobs". The latest probe was kicked off after 23 job search sites in Europe together complained to the commission about perceived discriminatory and anti-competitive practices. In particular, the companies are aggrieved by the preferential placement of Google's own job search widget over its rivals on its platforms in the search results.

The companies alleged "Google also directly offers its services to recruiters and thus fulfills the typical functions of a job board. In doing so, Google is attempting to circumvent and ultimately serve as a substitute for other job boards". They prayed for an interim injunction to restrain Google from such practices while the European Commission looks into the matter and completes the probe. However, Google is not taking it lying down. A spokesperson denied the charge and stated "Any provider - from individual employers to job listing platforms - can use this feature in Search, and many of them have seen a significant increase in the number of job applications they receive. Since launch, we've made a number of changes to address feedback in Europe".

How the Cookie Crumbles

In recent years, Vestager has expressed concerns with other Google products such as its search for travel and images as well as maps although no such formal investigations were immediately forthcoming. That may have just changed, the increased activity from the commission on top of the already hefty fines levied on Google may indicate the potential for an even greater and wider probe into other various products and arms of the firm. Google appears to have significant continued regulatory exposure for Anti-Trust violations in Europe - in contrast to the US where the only formal investigation into Google by the Federal Trade Commission came up empty-handed in 2013.

Furthermore, even the most well recognized big tech Anti-Trust probe into Microsoft (NASDAQ:MSFT) under the Clinton administration from 1991 to 2002 did not break up the said company and basically lost steam as the years dragged on.  However, even the relative security of the US legal and political environment may be giving way to a more hostile and activist regulatory climate. Today there is broad bipartisan support for greater oversight of silicon valley tech giants - including and up to breaking up potential monopolies. The FTC, DOJ and a House Judiciary subcommittee all having launched independent investigations into California's darlings. It's hard to say if enforcement action or penalties will follow but this level of scrutiny has not been seen for years.

Fundamentally despite Google's investment in various "moonshots" it remains a search and advertising company. The parent Alphabet derived all but $500 million of its $138 billion revenue from sources other than Google in 2018. Furthermore, Europe is Google's second-biggest market after the US. This means European fines and regulatory hang-ups are a fairly significant continuing legal and financial risk. Shares of Google had tumbled 5% when news of the Department of Justice's antitrust investigation had broken in late May of this year. Stay tuned to find out how the market reacts to Google's continued regulatory woes.