27 July 2017

Google - an overview of the summer’s EU case against the internet giant

In June 2017, the European Commission ruled in the first of three pending cases against Google and ordered Google to pay a record-high fine of EUR 2.42 billion for abuse of its dominant position. According to the European Commission, Google favoured Google Shopping in its search engine.

After seven years of investigations, negotiations and three settlement attempts, the European Commission ruled in June 2017 in the case concerning Google’s price comparison service Google Shopping. A price comparison service finds offers for consumers from all kinds of online distributors.

In 2010, Google came under the review of the European Commission after complaints from competitors such as Microsoft that Google was abusing its dominant position on the market for online search engines to favour a number of Google’s own services - such as Google Shopping. The case resulted in a statement of objections in 2015 and now a final decision from the European Commission.

THE EUROPEAN COMMISSION’S DECISION

The European Commission concluded in its decision of 27 June 2017:

  • That Google systematically gave a prominent placement to its own comparison shopping service. The result was that Google Shopping had more visible traffic by way of links to the detriment of the competitors.
  • That Google holds a dominant position with a market share of 95 % on the market for general Internet search engines in all EU and EEA countries.
  • That Google has abused its dominant position by having favoured Google Shopping, thereby restricting the competition on the market for price comparison services.

According to the European Commission, Google’s conduct led to a significant increase in the traffic on Google Shopping and a significant decrease in the competitors’ market shares. The European Commission found that this favouring was contrary to the prohibition against abuse of a dominant position under article 102 of The TEUF.

Consequently, Google was ordered to pay a record-high fine of EUR 2.41 billion. Further, Google had to change its search platform within 90 days so that Google Shopping is presented in neutral searches on equal terms with the competitors. If Google does not comply with the decision, it risks having to pay daily fines of up to 5 % of Google's parent’s (Alphabet) daily turnover worldwide.

THE FUTURE AND GOOGLE’S OTHER CONCERNS

Google has already stated that it does not agree with the European Commission’s decision, and that it is considering an appeal. Google cannot appeal against the decision until at the end of August. But, even though the case concerning Google Shopping has been concluded, the European Commission’s investigations of Google are far from over. In addition to the case concerning Google Shopping, two more cases are being investigated:

  • The Android case where the European Commission suspects Google of preventing the development of applications that may threaten Google’s position on the market for search engines.
  • The AdSense case where the European Commission suspects Google of having concluded exclusivity agreement with third party websites to show only ads administered by Google.

Google has received statements of objections in both cases and is awaiting the European Commission’s decisions.

As a direct consequence of the European Commission’s decision, Google may also expect several major claims for damages from competitors and other stakeholders, which have already been announced.

WHAT DOES THE GOOGLE CASE SHOW?

Abuse of a dominant position and the effect thereof often relate to the same market, but this is by no means always the case. The case concerning Google Shopping emphasises that it is important that companies holding a dominant position on one market consider on a current basis whether their conduct may affect and distort competition on other markets contrary to the prohibition against abuse of a dominant position. This is especially relevant when a dominant company has activities or interests in other markets which risk being favoured contrary to the rules.

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