Courtroom battle: Google faces off against EU

Google and European Union lawyers are waging a courtroom battle over whether the company is a key internet innovator or a “colossus of the digital age” that shields its position by crushing rivals.

As many as seven billion daily searches make the U.S. giant “the front page of the internet,” Nicholas Khan, a lawyer for the European Commission told a panel of judges in the opening session of a three-day hearing at the EU General Court in Luxembourg.

“The case is, in a nutshell, about what users are presented with, having made a search,” Khan said. Google search provides “an immensely powerful lever to direct users’ attention to any specific search market where Google might wish to develop a presence. No other internet player is in any remotely comparable position.”

The Alphabet Inc. unit earlier on Wednesday argued that a 2017 EU fine, then a record 2.4 billion euros ($2.6 billion), and an order to change how it shows shopping search results from rivals, went too far.

Such a ruling a decade earlier would have forced Google “to abandon its innovative technologies and its improved designs,” said Thomas Graf, a lawyer for the Mountain View, California-based company.

The court face-off over the EU’s first Google case sets the stage for pending appeals over separate fines by the Brussels regulator for unfairly linking apps to Android software and for thwarting advertising rivals. Google also risks early stage antitrust scrutiny into local search, jobs and vacation rentals services.

The judges’ initial ruling — expected in the coming months — would mark the end of another chapter in the decade-long antitrust battle between Google and the European Commission, which accused the company of using its vast market power to crush competition when users search for products online.

The company claims its ultimate aim was always to provide pertinent results for users that were also relevant for advertisers. Changes to the way it ranked results, such as the Panda algorithm change in 2011 that pushed down several rival shopping search services, were intended to filter out poor-quality sites and “dramatically improved Google’s results,” Google’s lawyer Meredith Pickford told the court.

Khan, the EU lawyer, said there was “nothing natural about the way the shopping unit was prominently placed” in boxes with photos above the usual search results. Google doesn’t contest many of the EU’s findings, he said, such as how it used “demotion algorithms” to give less prominence to search rivals.

Stakes are high for this case and a loss for EU Competition Commissioner Margrethe Vestager could set back a wave of enforcement that’s seen her also pursue Amazon.com Inc. and start looking at Facebook Inc.

The path to punishing Google was circuitous. Regulators appeared to waver by seeking a settlement where Google would make changes to search display to end the probe without fines. That sparked fury from European publishers and politicians and led to the EU reversing direction and moving toward a penalty after Vestager took charge in 2014.

The case is: T-612/17, Google and Alphabet v. Commission.

(Updates with EU comments, more from hearing starting in first paragraph)