David Flint and Rebecca Ferguson look at a second investigation into tech giant Google over exclusivity arrangements and other matters.
Last year, the European Commission announced a series of investigations into Google’s potentially anti-competitive behaviour. In June this year, it fined Google €2.4 billion for abusing its dominant position in the internet search market to promote its own online shopping platform. This was the highest penalty ever imposed on an undertaking by the European Commission, and concluded the first of the investigations.
Currently, the Commission are also investigating Google’s stringent requirements for Android operating systems and exclusivity arrangements for its AdSense product. It seems that the first stage of the Google investigations will be brought to a close in the New Year; bringing with it, potentially, the largest fines ever imposed on an organisation, and a very difficult year for Google!
As Google enjoys a pre-eminent position in the market, any attempts unfairly to exploit its position to the detriment of competitors (and consumers) is abusive under EU competition law and makes Google liable to fines from the Commission. Google first ran into problems with the Commission when it used its search engine (one of the market leaders) to promote its own online shopping service, to the detriment of competitors and consumers. That was why it received a €2.4bn fine.
The Commission then sent statements of objections against Google’s conduct in relation to (1) the requirements it attaches to the Android operating system; and (2) the exclusivity arrangements imposed on websites that use AdSense, which mean that users of AdSense cannot use other advertising services from other providers. These cases are very important for the Commission as they go to the core of Google’s trading activities – advertising (which generates most of Google’s revenue).
More recently, we have seen a tendency, from competition authorities, to focus on online trading and advertising and these investigations have struck one of the largest and most successful companies on the internet. Where a company enjoys a dominant position in a market, they have a special obligation not to abuse such a position, as any anti-competitive behaviour would have a marked effect on the other competitors in the market. The next two rounds of fines could land Google with a liability running into several billion euros!
However, after the recent Intel case, in which the Court of Justice challenged the Commission’s methodology, the Commission will want to be ultra careful in its analysis here.
- David Flint is a partner and Rebecca Ferguson a trainee at MacRoberts