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Google Execs Hunker Down for Summer Fight With EU as Fines Loom

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A logo is pictured at Google's European Engineering Center in Zurich
  • Google Execs Hunker Down for Summer Fight With EU as Fines Loom

As European Union officials count the days before their annual vacation, Google’s lawyers and lobbyists are hunkering down in Brussels, preparing for what may be a record EU antitrust fine.

A penalty in the shopping-search probe could come within weeks and many expect it to exceed a $1.2 billion fine on Intel Corp. in 2009.

That would be another show of strength by EU Competition Commissioner Margrethe Vestager who slapped Apple Inc. with a 13 billion-euro ($14.5 billion) tax bill in August. Google is a top priority case for her as European politicians and publishers push for action against the Mountain View, California-based company that’s come to dominate online advertising.

“If there’s going to be a fine, it has to be the biggest ever,” said Stephen Kinsella, a lawyer at Sidley Austin who represents companies that have complained to the EU about Google. “The European Commission has strongly signaled that if there is going to be a fine it would need to be at a level that would have deterrent effect.”

Timing on a decision could slip and Google representatives and the commission both remain tight-lipped, declining to talk about it. The company hasn’t yet met with regulators to discuss a potential EU order or how it might implement any changes, according to a person familiar with the probe, who spoke on condition of anonymity.

Major Rulings

But the EU has a long tradition of issuing major rulings just before officials quit Brussels for their summer break. Last July saw more than $3 billion in fines for truckmakers including Daimler AG and Volvo AB. With one eye on the impending decision, some Google officials have been getting ready, moving vacation dates or making sure they are close to the action, other people familiar with the probe said.

Vestager “has a keen eye to maximizing the impact of any announcement on a case and July sees a slowdown in the news cycle,” said Christopher Bright, a lawyer at Shearman & Sterling in Brussels, who’s not involved in the Google probe. “Together with the advanced state of preparation of the case, this points to a July announcement for Google.”

Vestager isn’t afraid of big numbers, setting records with the tax bill for Apple — which it’s appealing — and the cartel fine for truck companies. Facebook Inc. may have got off lightly with a mere 110 million-euro penalty for not providing correct information in the WhatsApp merger probe.

Top Spot

Intel holds the top spot for a monopoly abuse with a fine of 1.06 billion euros. That represented more than 3 percent of Intel’s $37.6 billion in sales in 2008, below the maximum penalty of 10 percent of yearly sales regulators can impose.

As Alphabet Inc. pulled in $90 billion in revenue last year, any fine would be capped at $9 billion. But within that limit, the actual size of the fine would be calculated from sales in the market under investigation. Alphabet’s Google division generated $79 billion in ad revenue in 2016. While it doesn’t break out sales for shopping search advertising, ads from search provide most of its revenue.

The EU also factors in how many years the illegal conduct lasted. Regulators say the systematic promotion of Google’s own shopping search started in 2008, allowing Google Product Search and Google Shopping grow more quickly than rival comparison-shopping services.

A large penalty and an order for Google to change its ways might just be the start. The EU is also examining its AdSense advertising service and its Android mobile phone software. The Android investigation goes to the heart of what Google does in the mobile-phone space, questioning the strict terms Google places on phone makers and app developers to use the software it provides for free.

Cash Pile

While money matters, Alphabet has a cash pile of more than $92 billion as of March 31 and any changes to its business model ordered by the EU may “probably be of more significance,” said Spencer Waller, a competition law professor at Loyola University in Chicago.

“I doubt this is going to hamstring the company but the commission is going to order what it thinks is necessary to give competition a chance,” he said.

EU’s claims that Google Shopping results harm competition “are wrong as a matter of fact, law, and economics,” general counsel Kent Walker wrote in a blog post last year. The EU’s case “rests on a theory that just doesn’t fit the reality of how most people shop online” because price comparison sites aren’t the only way to shop around.

Google can appeal, which could take years. Microsoft only won a 4 percent cut to its fine. Intel has been waiting eight years for a final ruling.

Vestager’s move against Google is sure to attract further criticism that she’s unfairly singled out U.S. companies. Transatlantic tensions are already on the rise after President Donald Trump’s decision to pull the U.S. out of the Paris climate accord, adding to concerns over global trade.

“We’re entering a period in the States where foreign competition enforcement against U.S.-based companies is going to be a matter of more public comment and criticism,” said Waller. “I think you’ll hear similar things” to the outcry over the Apple tax bill when the Google probe wraps up, he said.

On the other hand, Vestager is under pressure in Europe from companies and politicians eager to see her punish Google.

Complaints about Google continue to pour in to the EU, most recently from publishers about Android software. And new fronts could open; Vestager tweeted recently that she’d be playing close attention to Google’s new ad-blocking feature.

For Google, there could be more summers like this.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Oil Inches Higher But Rangebound as COVID-19 Cases Soar

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Oil prices edged higher in rangebound trade on Monday on optimism about a rebound in the U.S. economy as vaccinations accelerate, but rising COVID-19 cases in other parts of the world kept a lid on prices.

Brent was up 22 cents, or 0.4%, at $63.17 a barrel by 0843 GMT. West Texas Intermediate (WTI) U.S. crude rose 12 cents, or 0.2%, to $59.44 a barrel.

The prices have remained rangebound in the last three weeks, with Brent between $60 and $65 per barrel and WTI at $57 to $62.

“Oil prices are entering a consolidation phase after swinging wildly last month,” Stephen Brennock of oil broker PVM.

“While there are still plenty of reasons to be bullish, market players have become more cautious as infections have surged in Europe, India and some emerging markets, while vaccine rollouts have proved slower than anticipated,” he added.

India now accounts for one in every six daily infections worldwide, and other parts of Asia are seeing infection rates rise.

Asian oil demand remained weak and some buyers asked for lower volumes in May partly because of refinery maintenance and higher prices.

The United States has fully vaccinated more than 70 million people but U.S. gasoline demand has not picked up as much as expected.

The U.S. economy is at an “inflection point” amid expectations that growth and hiring will accelerate in the months ahead, but faces the risk of reopening too quickly and sparking a resurgence in coronavirus cases, Federal Reserve Chair Jerome Powell said in an interview broadcast on Sunday.

“There really are risks out there. And the principal one just is that we will reopen too quickly, people will too quickly return to their old practices, and we’ll see another spike in cases,” Powell said in a CBS interview, recorded on Wednesday.

On the production side, no new oil drilling rigs were started in the United States in the most recent week, a report published by Baker Hughes showed.

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Equatorial Guinea to Launch Vision on Post-COVID Energy Transition Plans with Report and Film

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The Africa Energy Series (AES): Equatorial Guinea 2021 campaign – comprising a report and a documentary – will serve as a critical tool to navigate the energy investment landscape in one of Africa’s more mature petroleum producing markets; Equatorial Guinea has largely been able to sustain its pace of engagement with global investors in the face of COVID-19, forecasting $1.1 billion in FDI in oil and gas activities in 2021; The third edition of the AES: Equatorial Guinea 2021 report will be released at Africa Oil & Power’s U.S. Africa Energy Forum 2021 networking event in Washington, D.C. this July.

Africa Oil & Power is proud to announce the upcoming launch of its Africa Energy Series (AES): Equatorial Guinea 2021 investment report and documentary, as part of a multimedia campaign set to champion the domestic energy sector and shape the West and Central African energy narrative.

The dual-language publication will target key developments driving a post-COVID-19 recovery in Equatorial Guinea – namely, the growth of petroleum and power industries; regional gas monetization initiatives; a clean energy transition; the impact of environmental, social and governance criteria; and expansion of the national diversification agenda.

A 30-minute documentary will provide a visual complement to the publication, featuring first-hand interviews with government officials, private sector players, industry regulators and energy experts discussing Equatorial Guinea’s unparalleled ambition and future plans.

“From spearheading regional gas monetization initiatives to drilling new exploration wells as early as Q2 2021, Equatorial Guinea continues to cement its reputation as a progressive, dynamic force on the African energy stage,” said H.E. Gabriel Obiang Lima, Minister of Mines and Hydrocarbons. “The Africa Energy Series publication in conjunction with a detailed documentary format, gives us the voice to showcase the depth of our full-stream investment opportunities to a global audience.”

Since the onset of COVID-19, Equatorial Guinea has been proactive in safeguarding opportunities for foreign investors and continuing to drive capital into its hydrocarbon resources. In February, Chevron achieved first gas flow from the successful execution of its Alen Gas Monetization project, a $475-million investment representing the first phase of Equatorial Guinea’s Gas Mega Hub masterplan.

The Ministry of Mines and Hydrocarbons is currently promoting several capital-intensive projects – including the construction of modular oil refineries, a gold refinery, liquefied petroleum gas strategic tanks, a urea plant and the expansion of a compressed natural gas project – which are open for investment. Last December, the Ministry of Mines and Hydrocarbons announced a forecast of $1.1 billion in foreign direct investment in oil and gas activities in 2021.

Active in Equatorial Guinea since 2015, AOP released its first AES documentary on the country in 2016, followed by investment reports in 2018 and 2019.

The AES: Equatorial Guinea 2021 investment report will be launched at the U.S. Africa Energy Forum 2021 online seminar and in-person networking event in Washington, DC. (July 12). The documentary will be launched at the U.S. Africa Energy Forum conference in Houston (October 4-5) and broadcast globally on news networks.

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U.S. Africa Energy Forum 2021 Launches: Promotes U.S. Role as Primary Investor in African Energy

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The U.S. Africa Energy Forum 2021 – organized by Africa Oil & Power, in partnership with the African Energy Chamber’s U.S.-Africa Committee – will foster alignment between U.S. and African governments’ energy policies and highlight African oil, gas, power and renewable projects across the energy value chain for U.S. investors; the multi-day forum unites U.S. and African policymakers, energy executives and industry leaders to create new linkages and foster discussions that drive long-term policy formation and project execution; the in-person, two-day summit and gala dinner will be hosted in Houston, Texas (October 4-5, 2021) and an online seminar and in-person networking event will be held in Washington D.C. (July 12).

Africa Oil & Power (AOP) and the African Energy Chamber are excited to announce the launch of the first-ever U.S. Africa Energy Forum (USAEF). This event aims to create deeper cooperation between the U.S. and Africa on energy policy, to reach alignment on long term sustainability goals, to stimulate greater American investment in the African oil, gas and power sectors, and to engage and reposition the U.S. as the primary partner of choice for African energy developments.

Under the theme “New Horizons for U.S. Africa Energy Investment” the forum will explore diverse foreign investment and export opportunities across the continent, including natural gas as a vital fuel for the energy transition; energy storage and battery minerals; Africa’s place in global energy supply chains; the benefits of the African Continental Free Trade Area; evolving energy technologies and how they relate to the future role of petroleum resources; and on-and off-grid power developments.

An online seminar and in-person networking event will be held in Washington D.C. on July 12, 2021, building up to the in-person U.S. Africa Energy Forum summit and gala dinner, to be hosted in Houston, Texas, on October 4-5, 2021. Africa Oil & Power and the African Energy Chamber invite all U.S.-based companies with an interest in engaging with African industry leaders and project developers to participate in the USAEF Houston summit.

This initiative comes at an important juncture in U.S.-Africa relations. The Biden Administration’s announcements of its intentions to proactively build a stronger U.S.-Africa partnership coincides with the fact that African projects are seeing rising interest from U.S. companies and lending institutions alike. The USAEF event is thus dedicated to enabling dialogue between its participants that advances these developments.

“Our mission has always been to showcase the resource potential that Africa has to offer while at the same time showing its growing preference for sustainable energy policies and technologies. Toward that end, we hope it becomes evident that Africa does not just want investment capital: it wants smart capital and an accompanying partnership with the investors,” says James Chester, Senior Director of Africa Oil & Power. “The U.S. Africa Energy Forum represents the first-of-its-kind opportunity to catalyze U.S. participation in Africa’s energy transformation – via technology, policy support, capital injection and skills development – and turns a new page in the chapter on global energy investment.”

In partnership with the African Energy Chamber’s U.S.-Africa Committee, AOP will introduce American companies to African opportunities and advance an agenda of sustainable, long-term investment in African energy and other sectors by U.S. organizations.

“The rise in support from the U.S. to the continent is a credit to Africa itself, which is increasingly viewed as a favored destination for global investors, multilaterals and export credit agencies,” says Jude Kearney, President of Kearney Africa and former Deputy Assistant Secretary for Service Industries and Finance at the U.S. Department of Commerce during the Clinton Administration. “Africa continues to command a healthy share of global FDI in oil and gas industries. It has for decades shown that investment in those sectors is favorable compared to other jurisdictions and can be successful by many measures. Even as Africa and the rest of the world wrestles with a global pandemic, Africa’s energy sector shows vitality and resiliency – not only in hydrocarbons but in regard to new opportunities in mining, liquefied natural gas, and agriculture.”

Both African governments and private sector sponsors of African energy projects value highly the combination of investment and partnership that US investors famously convey. The USAEF seeks to enable successful partnerships between its participants such that the energy development goals of U.S. investors and strategic partners and their African counterparts can be achieved.

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