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What's Next for Google in Its Terrible, Horrible, No Good, Very Bad European Antitrust Case?

Three different outcomes face Google in the EU.

Steve Jennings | Getty Images

Exactly seven years ago, Sundar Pichai, the Google VP in charge of its Chrome browser, authored the company’s public explanation for why it was throwing its support behind anti-competition charges brought against Microsoft by the European Commission.

On Thursday, Pichai is meeting with that same Commission. Only now he is CEO. And now it is Google that is locked in the antitrust crosshairs of European regulators.

Pichai will meet with senior EU officials, including Margrethe Vestager, the Competition Commissioner who, in April, opened a formal case against Google and a probe for a potential second case. Google responded, resolutely. When the pair meet, Pichai will likely reiterate that response, arguing that Google’s comparative shopping tool — the subject of the current case — and its Android operating system — the subject of the probe — do not hamper competition or hurt consumers.

How Vestager will respond is anyone’s guess.

From conversations with multiple people involved in the case in Brussels, one thing is clear: She is keeping her decision incredibly close to the vest.

That said, people on both sides of the case describe the Commissioner, an ambitious Danish politician, as incredibly thorough and well versed on the issues. In her first three months, she met with more companies involved than her predecessor had in three years, one complainant told me. (The predecessor, Joaquín Almunia, came to near-resolutions on the case three different times, all of which were scrapped.)

Two different people, when describing Vestager’s assertive political style, deployed the indelicate term “balls.”

Google is also well fortified for a fight. The joke in Brussels is that the search giant has hired every lawyer there not working for the opposition, just to keep them on retainer for when the case, as is very likely, devolves into a lengthy court battle. That’s where Google thinks it can win.

“The Google lawyers are just waiting for one little mistake,” said one person familiar with the case.

Here are three different scenarios facing Pichai and his company.

It’s Settled

This is Google’s best-case scenario. Vestager could step out to say the Commission was dropping the case, convinced by Google’s response. That’s effectively what happened in the U.S. two years ago around Google search. And it’s what happened earlier this month in the U.K., where a court dropped an anticompetitive case against Google’s placement of its maps service inside search.

Far more likely, the Commission and Google arrive at some settlement, wherein Google agrees to modify its behavior online. Vestager has said she is not ruling this possibility out. But several sources said it’s very unlikely the settlement would look like the three remedies on the table with Almunia — where Google promised to put rival company links in its product search results. If there were a settlement, the Commission might assign an independent watchdog for Google, appointed to ensure the company doesn’t cross its agreed-upon line, bringing a fine. (Like Microsoft did.)

Heavy Wrist Slap

Vestager could come down harder, sticking Google with a fine (of up to 10 percent of its annual sales) and some prohibition on its product search service in Europe. How hard this hits Google depends on the fine and, more critically for the company, what Vestager demands of its search engine. Another factor is how the shopping case is paired with the Android case.

Vestager could bring an official charge sheet on Android, as she did with shopping. Or she might hold off to see how the shopping case pans out. Should the Commission make progress on the case in the European courts, Vestager could use the threat of an Android suit as leverage. If you don’t play nice on shopping, Google, then I will come after you on Android.

Endless Charge Sheets

A third scenario, perhaps the most worrisome for Google, is that shopping and Android are just the beginning.

Vestager has said multiple times that she is also looking at other portions of Google’s business that could be abusing a dominant position, like maps and images. Last month, in an interview on Dutch television, she mentioned the possibility of going after local search, an issue on which Google foes like Yelp and Expedia are lobbying heavily. The Commission is reportedly looking at Google’s ad tech position, too.

Some in Brussels suspect that Vestager might bundle these into a single charge sheet, coupled with Android or even the existing shopping issue — a way to set a definitive “precedent,” a legal line in the sand for Google and every tech company thereafter. Or Vestager may wield each case on its own. A nightmare scenario for Google: Vestager comes to the podium with a harsh sentence on shopping, a formal charge sheet on Android and a new probe into another issue, with plenty of others lined up behind her.

In the interim, she’ll be hearing from Pichai and Google’s ambassadors. And she’ll certainly be hearing from Google’s critics.

“The case is standing at a favorable point for us,” Christoph Keese, executive VP for Axel Springer, said in an interview last month. The publishing exec also pushed back on claims that his company’s stance is driven by an old-fashioned fear of tech. “Let me say one thing,” Keese said. “The only Silicon Valley company we have a problem with is Google.”

Has that changed since Pichai took the helm? “Um, no,” he replied.

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