Microsoft's complaint about Google's business practices in the European Union will eventually push Google to strike a deal with regulators, an antitrust expert said today.
On Thursday, Microsoft announced it had joined several other much smaller firms in registering a complaint with European Commission regulators in Brussels. In what Brad Smith, Microsoft's chief lawyer, said was the company's first-ever antitrust complaint, Microsoft charged its long-time rival with a "broadening pattern of conduct aimed at stopping anyone else from creating a competitive alternative."
Complaints were first lodged against Google in the EU by four small companies in February 2010, prompting the Commission to launch a wider investigation last November.
Although it may be difficult for the Commission to rule Google's practices anti-competitive, the risk of losing the case as well as Microsoft's experience in EU antitrust will probably convince Google to negotiate with regulators, said Hillard Sterling, an antitrust attorney and partner at Lewis Brisbois Bisgaard & Smith.
"Google is sufficiently large in Europe that regulators will take a close and careful look at this, but the probable end result will be some concession by Google," said Sterling. "It will likely agree to loosen the technical restrictions and broaden Microsoft's access to the purportedly inaccessible technologies and sites."
Microsoft has alleged that a litany of Google practices are anti-competitive.
Google blocks Microsoft's Bing search engine from indexing much of YouTube, Google's video site, said Smith on Thursday, and refuses to allow Windows Phone 7 access to YouTube metadata, putting Microsoft's mobile OS at a disadvantage to Google's own Android and Apple 's iOS. Other charges stem from Google book content search practices and restrictions on advertisers' access to their data, Microsoft said.
Google should expect an intense investigation, said Sterling. "The EU has shown to be a bit more aggressive than the U.S., and its regulators are more insistent," he said.
Another factor regulators will consider, and Microsoft's Smith brought up Thursday, is Google's search share in Europe. According to comScore's 2010 statistics, Google owns 90% of the European search market; Smith cited 95% yesterday. That means Google has a lot to lose if regulators rule against it.
"That alone should push Google to the negotiating table," said Sterling. "It's probable that Google would accept restrictions, perhaps eagerly, so long as Google's dominant position in the market remains intact."
Microsoft also has a unique history with Commission regulators, who in 2007 fined the company billions after a seven-year investigation, subsequent ruling and appeal of that ruling. It's intimately familiar with the process -- painfully so, said Smith, who acknowledged the irony of Microsoft sitting on the other side of the table in this case.
Yesterday, Smith hinted at Microsoft's expertise in the area.
"More so than most, we recognize the importance of ensuring that competition laws remain balanced and that technology innovation moves forward," he said in a lengthy blog post Thursday.
Sterling seconded that. "Microsoft could testify directly to how much monetary pain the EU can inflict," he said. "And Microsoft brings strength to the table because the EU will take seriously the concerns of such a major worldwide technology player."
But Microsoft's involvement could be a double-edged sword. Although the Commission may feel compelled to act, at least in part, out of a sense of fairness to a company it hammered last decade, Microsoft's decision to join the complainants could backfire.
"Microsoft has inherent credibility problems since it's a competitor," said Sterling. "After all, competitors usually complain when conduct increases competition and reduces prices, which is the antithesis of a legitimate antitrust complaint."
And Google could use Microsoft's own arguments in its battles with U.S. antitrust regulators to its advantage.
"Microsoft argued for years about the competitive nature of competition over the Internet," Sterling said, referring to the U.S. antitrust case that focused on Internet Explorer. "The focus has shifted from the browser to the search engine, but Google will use Microsoft's prior arguments and positions as weapons to help prove the absence of truly anti-competitive effects."
Nor is the Commission's case a slam dunk: Regulators will have to show anti-competitive behavior that has resulted in fewer choices or higher prices for consumers, not that competitors like Microsoft have been somehow harmed.
"Antitrust laws both here and in the EU are intended to protect competition, not competitors," Sterling said. "That's an extremely high burden."
But Sterling stuck to his predictive guns, and repeated his assertion that it is very unlikely Google will let this drag out to an actual ruling by the Commission.
"[EU] regulators will demand some restrictions to preserve competition [and] Google will settle this for some modest, but still substantive pro-competitive actions," Sterling said.