European Commission fines Google for abuse of search engine dominance

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.