Google says European Commission’s search engine dominance case is “wrong as a matter of fact, law and economics”

Google has responded to the Commission’s Statement of Objections in its search engine dominance investigation, maintaining that the case is without factual, legal or economic foundation.

The case dates back to 2009. The Commission’s chief concerns relate to the prominent display, within Google's web search results, of links to Google's specialised web search services (e.g. Google Shopping) relative to links to competing specialised web search services (including services allowing users to search for restaurants, hotels or products).  The issue of a Statement of Objections to Google on 15 April 2015 followed a series of failed attempts to resolve the case by commitments, suggested a renewed momentum.

On 27 August Google responded formally to the Commission’s case and its general counsel made a statement that Google believes the Commission’s allegations are unfounded. 

The world has come a long way since Archie was created as the world’s first search engine in 1990.  Lycos appeared in 1994, followed by AltaVista, Excite, Infoseek and Magellan a year later.  Google was incorporated four years later and by 2011 comScore reported that 9 out of 10 Europeans use Google for online search.  Google relies on economic data, apparently spanning over a decade, which it says confirms that search is competitive and the Commission has failed to take proper account of the effect that rival services such as eBay and Amazon have on the market.

Google has challenged the Commission’s remedies which would require it to display results from other providers and stop discriminating between its own operations and those of rivals. The theory that underpins this remedy is controversial for two main reasons.  First, it is clear that even a dominant company may compete on the merits and is entitled to differentiate itself from its competitors provided that this is not based on “methods different from those which condition normal competition”.  This implies that a dominant company may, in principle, compete on marketing elements such as displaying responsive search results and even those that favour its own services.  It may be asked why Google cannot show what it considers to be its own directly responsive results, since that is precisely what a search engine does and is a core value proposition.  Search engines will compete on the basis of their own offering by showing exactly what they consider to be responsive to a user query. 

Second, any obligation on a dominant company to deal with its competitors has traditionally been confined to the situation where the firm controls essential facilities or access to key content or infrastructure is indispensable to compete.  Particular competition concerns arise where the dominant firm competes with a customer in a downstream market – the dominant firm favours its own operations by charging different prices or imposing different terms on competitors than it offers its own operations.  This may place competitors at a commercial handicap which directly or indirectly harms consumers.  However, the situation is arguably quite different from that at issue in the Google case where the Commission comes very close to asserting that listing within Google’s search results on a par with its own services is essential for such rivals to compete.  Whether the theory of harm is characterised as one of denial of access to an essential facility or discriminatory grant of access to a distribution platform by a vertically integrated firm, a unifying theme appears to be that of anticompetitive foreclosure.  However, it is unclear to what extent access to Google’s platform is an essential facility.  Moreover, even where access to an essential facility has been mandated in previous cases such access need not be on identical terms to that granted to the dominant firm itself, provided that access allows for the provision of a commercially viable service.

The Commission now has to decide whether to drop its case, proceed to an infringement decision or start settlement discussions. If it moves to an infringement decision that is probably not likely to be handed down until well into 2016 at the earliest.