EU Presses Inquiries Into Google Parent Alphabet - Wall Street Journal

By Natalia Drozdiak Updated April 4, 2016 5:58 p.m. ET

BRUSSELSThe European Union is advancing its investigations into whether Google parent Alphabet Inc. GOOGL -0.59 % is abusing its dominance with its Adsense advertising service and its Android mobile-operating system, the blocs competition chief said in an interview Monday.

Commissioner Margrethe Vestagers comments, which come ahead of a trip Wednesday to the U.S., suggested the regulator could bring more formal charges against the U.S. search giant.

Ms. Vestager filed separate formal charges against Google last April for allegedly skewing its search results to favor its own shopping service.

At the time, she also opened a formal probe into Googles conduct with Android and said she would closely watch its behavior in other areas, including whether the company prevents or obstructs website operators from placing ads on their websites that compete with Googles advertising business.

The European Union has recently sent outquestionnaires to companies requesting more detailed information into Googles practices in its advertising business, according to several people familiar with the matter. Two of those people said the questionnaires sought information that went beyond the issue of whether Google was forcing website operators to use its advertising service exclusively.

Advertising is keyGoogle bases its business on getting people into the Google ecosystem, and discouraging them from leaving, so that they can be exposed to advertisingand thats where the money is made, said Alec Burnside, a Brussels-based antitrust lawyer with Cadwalader, Wickersham & Taft LLP, who advises a number of Google complainants.

On Monday, Ms. Vestager said theEUs separate probe into Googles conduct with its Android mobile operating system remains a high priority, but added that said she didnt know when the investigation would be completed.

She said the commission is looking at questions about tyingwhere if you want the Android system, then it comes with a Google suite of apps.

One of the issues theEUraised when it opened the investigation a year ago was allegationsthat Google required smartphone and tablet-computer makers to preinstall a range of its own apps for messages, search, email and other functions if a manufacturer wanted to include any one of them.

Google declined to comment. News Corp, NWSA -2.07 % publisher of The Wall Street Journal, has filed a formal complaint with the commission regarding Googles business practices.

Ms. Vestager said she wants to make sure in coming months she can start closing some of the many competition cases theEUhas opened in recent years.

One case still open is against Russian energy giant Gazprom PAO. Ms. Vestager said the commission was still pursuing two possible tracks in the case: the option of formally ruling against the company or a potential settlement. It remains to be seen if a commitment process can be successful, she said.

Gazprom recently said the two sides were making progress toward a mutually acceptable solution.

Last April, the European Commission, the EUs executive arm, accused Gazprom of violatingEUantitrust law in eight central and Eastern European countries where the Russian company was the dominant gas supplier. The commission said restrictive terms in Gazprom contracts forced territorial constraints on customers, for instance, by prohibiting them from re-exporting gas to another country.

Ms. Vestager rejected accusations by U.S. officials that she was discriminating against American companies. TheEUhas opened high-profile inquiries into whether tax breaks in member countries, such as Ireland and Luxembourg, violate rules against excessive state aid to companies. If deemed illegal, European officials could require those countries to recover corporate funds related to the tax breaks.

What were doing for every companybe that a U.S. company or a European companyis to make sure that their competitors dont get away with paying very, very little in taxes compared with themselves, the commissioner said.

U.S. companies whose tax practices are under investigation include Apple Inc. AAPL 1.03 % and Amazon.com Inc. AMZN -0.89 % Companies outside the U.S. also have been affected. U.S. Treasury Secretary Jack Lew wrote to the commission in February accusing theEUof disproportionately targeting U.S. companies over the tax breaks.

During her trip to the U.S., Ms. Vestager is scheduled to attend the annual meeting of the American Bar Association in Washington. While there, she will also meet with Mr. Lew as well as members of Congress and the U.S. administration, including U.S. trade representative Michael Froman.

Write to Natalia Drozdiak at natalia.drozdiak@wsj.com

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