The European Commission
has fined Google EUR 2.4 billion for abuse of dominance by promoting its own
comparison shopping service ahead of those of its rivals.
The penalty is the
largest that has been imposed on a single company for breach of EU competition
law, doubling that handed down to Intel for abusive discounting practices in
2009.
The focus of the
Commission’s antitrust concern is the prominent display, within Google's web
search results, of links to Google's own specialised web search services (e.g.
Google Shopping) relative to links to competing specialised web search
services.
The theory of competitive
harm is controversial. First, it is
clear that 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 can 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.
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 is
otherwise indispensable to compete.
Moreover, even where access to an essential facility has been mandated
in previous cases this indicates that 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 key issue for
competition, then, is what Google should or should not be permitted to do in
terms of differentiating itself. Putting
it another way: should third parties be entitled to an equal position in
Google’s search results? Even if that is
accepted, how is that to be achieved in a way that allows consumers to make an
informed choice and without destroying Google’s and other parties’ incentives
to innovate? These are the issues at the
heart of the Google case.
The search engine case is
not the only abuse of dominance investigation that the Commission is pursuing
against Google. The Commission is also
investigating Google’s practices in relation to its Android operating system,
alleging that it is limiting the development of alternatives by requiring
smartphone and tablet manufacturers to pre-install its own applications. Another case relates to the effect of
exclusivity arrangements allegedly preventing advertisers from moving their
online advertising campaigns to rivals.
The Commission’s focus on
Google (and Microsoft before it) has prompted the often recurring question as
to whether US companies are receiving rather more EU competition law scrutiny
than their European rivals. However,
Vestager has made clear her views that Google is a ‘good company’ and that it
makes no difference from the EU competition law perspective whether a company
is American or European.
It is expected that
Google will appeal the decision.
