Tuesday, June 27, 2017
My friend Pinar Akman (we wrote a recent paper on online RPM and MFNs togther) asked me to post her initial thoughts on the Google search decision.
Initial Reactions to the Infringement Decision in Google Search*
Professor Pinar Akman
University of Leeds
Pending a full review of the Commission’s decision which is yet to be published, some preliminary observations can be offered on the Google Search decision which saw the largest antitrust fine ever to be imposed on Google. The infringement, according to the European Commission, is that Google abused its dominant position on the internet search market to favour its own comparison shopping service over those of its rivals (ie comparison shopping sites).
The first striking aspect of the decision is the ‘remedy’ that the Commission proposes (or fails to propose): the Commission states that Google must stop its illegal conduct within 90 days and it can do so by ‘respecting a simple principle: [i]t has to give equal treatment to rival comparison shopping services and to its own’. This is nothing but simple. Ordering a company which vehemently argues that it does treat all equivalent services equally, falls well short of what would have been expected of the Commission in terms of identifying with sufficient legal certainty what the company should do to stop infringing the law. Further, once one appreciates the fact that Google’s shopping results are simply ads for products and Google treats all ads with the same ad-relevant algorithm and all organic results with the same organic-relevant algorithm, the Commission’s order becomes impossible to comprehend. Is the Commission imposing on Google a duty to treat non-sponsored results in the same way that it treats sponsored results? If so, does this not provide an unfair advantage to comparison shopping sites over, for example, Google’s advertising partners as well as over Amazon, eBay, various retailers, etc which are the competitors of the comparison shopping sites but which do not receive such favourable treatment from Google but compete with them?
The second striking aspect of the decision is that, we still do not know what the relevant abuse is. On what existing law the case has been built is unclear. The theory of harm is also unclear. The Commissioner in the Press Conference has alluded to the practice not being a novel type of abuse, but as this author has argued elsewhere, it is impossible to fit the existing facts of this case within existing case law. This leads to the third striking aspect of the decision, which is the record fine. Fining a company more than twice as much any other company has been fined for an abuse of a dominant position in the history of EU competition law in a case where the practice is at least arguably a novel type of abuse does not follow previous practice of the EU Commission where no fine was imposed due to the practice being a novel abuse. The previous practice is preferable for legal certainty purposes.
Finally, it is sad to see that the decision appears to revolve around harm to a group of competitors and in particular, how Google’s practice led to a loss of traffic to some websites. There is practically no discussion of how the practice has affected Google’s only trading partners – advertisers – and there is little convincing discussion of how the users – consumers – (might) have been harmed as a result of Google’s practice. The suggestion that the practice leads to lack of innovation on both Google’s and the comparison shopping sites’ part and thereby harms consumers by reducing choice does not hold water. First, according to the EU’s own statistics, Google is the world’s fourth R & D investor, which has increased its investment in R & D by over 20% in 2016. Second, the comparison shopping sites – sites which merely comprise ads – have likely lost business as a result of the normal dynamics of competition as they could not innovate to catch up with Amazon’s numerous offerings to consumers. Third, comparison shopping sites remain fully accessible to consumers who value their offerings, irrespective of where Google ranks them in its results. All in all, a robust theory of harm that demonstrates harm to consumers from Google’s practices in this case appears to be still missing.
* This piece has not been commissioned or funded by any entity. The author has previously conducted research commissioned by Google on the Google Search case. That research is available here https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2811789.
 ‘Antitrust: Commission fines Google €2.42 billion for abusing dominance as search engine by giving illegal advantage to own comparison shopping service’ 27/6/2017 https://europa.eu/rapid/press-release_IP-17-1784_en.htm.
 See P Akman ‘The Theory of Abuse in Google Search: A Positive and Normative Assessment Under EU Competition Law’ (forthcoming) (2017) Journal of Law, Technology and Policy, available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2811789.
 See Case AT.39985—Motorola—Enforcement of
GPRS Standard Essential Patents, Comm’n Decision (Motorola) (summary at 2014 O.J. (C 344)
 https://iri.jrc.ec.europa.eu/documents/10180/1030082/The%202016%20EU%20Industrial%20R%26D%20Investment%20Scoreboard as noted in N Petit ‘My 2 cents on the EC decision against Google’ https://medium.com/@nicolaspetit_89712/my-2-cents-on-the-ec-decision-against-google-683651adeee.
Sokol disclosure: I do Google client work in my capacity as Senior Of Counsel at Wilson Sonsini Goodrich and Rosati. I did not work on the European case. I also in no way solicited or edited Pinar's thoughts. I saw Pinar briefly at the Oxford JAE symposium this weekend (good conference). We spoke about our respective families and that is it.