B is for Brussels: Google's corporate rejig WON'T insulate firm against antitrust probes

Alphabet Show is diddly-squat to Commish. For now

Time to split?

Whether or not Vestager is even considering this route is unclear, as the Commission does not comment on ongoing cases. However, she is widely seen as tougher than her predecessor Joaquin Almunia, who bent over backwards to try to accommodate Google with a gentleman’s so-called Article 9 agreement. Under Article 9, the Commission can accept a set of promises from a company to resolve a complaint.

If Vestager does decide to pursue an option to split off search from other services, the new Alphabet organisation might make implementing that easier for Google. And after all, Page did say that he was “taking the long-term view and improving transparency and oversight”.

Kostas Rossoglou, Yelp’s head of EU public policy, said that Google's legal department was the driving force behind the Alphabet construct because of increasing anti-trust pressure. “Google is afraid of EU's case against them if they're preemptively 'breaking up' the company into a pseudo-conglomerate structure,” he said. “The voluntary functional separation of its services is the ultimate trick to manage the anti-trust case.”

So although the new structure will not solve the A-Z of competition concerns in the EU, it might go some way to dealing with the fall-out, as well as fending off future anti-competitive accusations. However, it has not come soon enough to head off an Android probe.

In April, the Commish launched an investigation into “whether Google has illegally hindered the development and market access of rival mobile applications or services by requiring or incentivising smartphone and tablet manufacturers to exclusively pre-install Google’s own applications or services”. Google services and apps, such as Maps, Chrome, and YouTube, are routinely bundled with the Android OS, and competitors say it’s giving Google an unfair advantage.

Given its dominant market position – Android was run on around 80 per cent smartphones shipped worldwide last year – unbundling it from other Google services may not be enough to avoid punitive measures. The Commission has spent three years gearing up for this formal investigation and will not abandon it lightly: indeed the new Alphabet set-up may even prolong the painful probe.

“The investigation will focus on whether Google has entered into anti-competitive agreements or abused a possible dominant position in the field of operating systems, applications and services for smart mobile devices," the Commish said.

In other words, Google's corporate rejig means diddly-squat to Brussels and its current competition investigations. It's worth noting that it could be a different story for any potential future probes, however. ®