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By Tom Fairless 

BRUSSELS--This city of bureaucrats has become a place of pilgrimage for West Coast technology firms.

From Amazon.com Inc. to Uber Technologies Inc., the giants of Silicon Valley are bulking up in the European Union's de facto capital, hiring lobbyists and jostling for the favor of the Web's most ambitious regulators.

Smaller U.S. firms are showing up, too, drawn by a muscular antitrust agency that has meted out billions of dollars in fines to tech giants such as Intel Corp. and Microsoft Corp.

Google Inc., which is under particular pressure in Brussels, more than doubled its outlays on lobbying of EU institutions last year from 2013, according to figures disclosed publicly in an EU database.

EU regulators this spring accused Google of skewing results to favor its comparison-shopping service, and demanded it change how its search engine functions. The company is also facing a second EU antitrust inquiry over its control of the Android mobile-operating system, which powers roughly three-quarters of the world's smartphones.

The battles being fought out in Brussels could determine the future shape of the Internet and help decide competitive struggles among companies based halfway across the world.

"Brussels is the most important place in the world from a tech policy standpoint," said Luther Lowe, head of public policy at business-review website Yelp Inc. in San Francisco, which has filed a separate complaint with EU authorities over Google's search practices. Mr. Lowe said he has spent seven months of the past two years in Belgium's capital, and recently appointed a full-time lobbyist here.

Casey Oppenheim, a San Francisco-based Internet entrepreneur, planned his family vacation this year around a trip to Brussels. Mr. Oppenheim filed a complaint here in June alleging that Google had unfairly pulled a privacy application created by his firm, Disconnect Inc., from its Play mobile app store last year. Google said the app, which aims to stop other apps from collecting data on users, violated a policy prohibiting software that interferes with other apps. Disconnect is available on Apple Inc.'s iOS App Store, Mr. Oppenheim said.

At a time when Europe often struggles to project power beyond its own borders--and even within them--its muscular Internet policy stands out.

In the past four months alone, the EU became the first regulator in the world to file antitrust charges against Google; it opened several major inquiries into possible abuses by U.S. search engines and price-comparison websites; and it pushed ahead with antitrust probes into companies including Amazon and Qualcomm Inc. The tax affairs of Apple and Amazon are under scrutiny in Brussels, and EU policy makers are putting the finishing touches to a tough new data-privacy regime that they hope to establish as a global standard.

Faced with that onslaught of scrutiny, U.S. firms are staffing up.

Google, Microsoft and IBM Corp. are among the top 10 companies in Brussels by the number of high-level meetings with the EU's executive branch since December, according to data compiled by Transparency International, an anticorruption organization. That puts them ahead of giant European firms like BP PLC and Deutsche Telekom AG.

Google last week sent its formal response to the EU's antitrust charges regarding its comparison-shopping service. The company argued that regulators had erred in their analysis of the fast-changing online-shopping business, misconstrued Google's impact on rival shopping-comparison services and failed to provide sufficient legal justification for its demands.

The EU will now consider Google's response before making a final decision, which could take another 18 months or more. It could fine Google up to 10% of its global annual revenue if it judges the company to have violated EU law, and impose immediate injunctions on its business practices. Google could then challenge the ruling in European courts, a process that could last many years.

In the U.S., regulators closed their own investigation into Google's search practices two years ago after the company agreed to voluntary changes.

The EU's decision to file charges against Google has encouraged entrepreneurs like Mr. Oppenheim to seek redress in Brussels. His lawyer, Gary Reback, who is based in Menlo Park, Calif., said he frequently advises clients to fly nine time zones rather than catch a taxi to the U.S. Federal Trade Commission's offices in San Francisco.

John Lapham, general counsel at Seattle-based Getty Images, said he has visited Brussels twice this year. Getty, the world's largest photo agency, complained to EU antitrust officials earlier this year that Google had unfairly favored its own image-search service over rivals.

"A lot of U.S. companies are pleading their case in Brussels because we have big customer bases in the EU...and Brussels is the only spot on the planet right now that has the willpower to stand up to Google," Mr. Lapham said.

For an institution that lacks the ability to raise and spend taxes, antitrust policy has long been the sharpest weapon in Brussels's armory. It has been used aggressively since the 1950s to smash down national barriers to a single European market for goods and services.

A history of battling national governments and entrenched interests has left the EU with few qualms about taking on the most powerful companies.

By contrast, U.S. antitrust cops stepped back from some tough enforcement measures over the past decade, lawyers say. A turning point, they say, was a decision by the U.S. Department of Justice in Sept. 2001 to drop an aggressive plan to break up Microsoft.

Meanwhile, the EU has slapped the Redmond, Wash. software giant with some EUR2.2 billion ($2.5 billion) in fines.

Unlike U.S. regulators, the EU doesn't need to prove antitrust cases before a court--because it is itself the judge--and the bloc's appeals courts in Luxembourg have rarely overturned its decisions. Brussels is also under a greater obligation to consider all complaints made against companies like Google, or explain why it has rejected them, EU and U.S. officials say.

China's competition authority is seen as a future powerhouse that could eventually rival Brussels and Washington--and something of a wild card given its broad focus on industrial policy goals. But antitrust enforcement is still in its infancy in China, and U.S. Internet firms are less present given the country's focus on building homegrown rivals to firms like Google and Amazon.

Crucially, concerns around the use of personal data by large Internet firms are much more prevalent in Europe, particularly in mighty Germany. Those concerns have intensified since Edward Snowden's revelations of widespread surveillance of European citizens by U.S. security services.

Yet the EU's assertiveness in an online world that is dominated by U.S. names is fraught with risks. Besides concerns about protectionism raised by President Barack Obama and others, Internet firms worry that Brussels might end up as final arbiter for the global Internet.

"It's unusual to have Europe serving as a proxy for U.S. companies," said Tim Wu, a former adviser to the FTC who is known for coining the phrase "net neutrality," the principle that Internet service providers should enable access to all content equally.

Back in San Francisco, Mr. Oppenheim says he feels a lot better for his trip to Europe. "People are very receptive," he said. "There's a general understanding that the Internet is a global entity. If the EU regulates...it doesn't just impact the EU."

Write to Tom Fairless at tom.fairless@wsj.com

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(END) Dow Jones Newswires

September 02, 2015 05:44 ET (09:44 GMT)

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