This ruling will clearly come as quite a shock for Google given the size of the €2.42bn fine, but it is worth looking at this as being part of a wider trend.
This is the second sizable fine imposed by the European Commission in a little over a month on a US-based tech giant, after Facebook’s €110mil fine in May. While the Google penalty is considerably more than the Facebook fine, it signals willingness on the part of the Commission to take the fight to these huge corporations. Both fines were based on breach of the provisions of European law dealing with anti-competitive practices.
Whereas the antitrust laws in the US and the EU used to be broadly in line with each other, a gradual deregulation in the US has led to the clash of cultures we are seeing here. The vast success of Silicon Valley has been fostered by a deregulated marketplace, but this causes problems when these businesses do business against the very different legal backdrop operating in Europe.
What we are currently seeing is the EU beginning to get bolder and tougher in its approach. There’s a level of self-confidence about the approach that’s been taken; it’s clear they want to send a message to the market as a whole, not just to Silicon Valley.
When a company such as Google is both the provider of an important infrastructure service, such as search engine provision, and also a user of that service in competition with other businesses, it is always going to be open to allegations that it is operating an uneven playing field, favouring its own products and services over those of other businesses. Given that the algorithms used to search and return search results are highly confidential to Google, and entirely within their control, there are always going to be suspicions about how they operate to favour Google.
This, though, goes a lot further than that; it’s essential an allegation of much more blatant promotion of the Google Shopping Service comparison service over other comparison sites. We have seen similar cases in the past, where an airline company which was also a major shareholder in a flight finding and booking service was accused of manipulating the code so its own flights came out on top when users searched.
This is not just a Google specific issue; it has resonances for all companies large or small who have market power within their specific market. It applies particularly to businesses who operate on more than one level of a supply chain; for example, transport and logistics companies who both carry out fulfilment roles for other group companies and who offer these services to third parties.
The warning is clear; where companies are both offering a service to others and using that service to fulfil their own customer demands, any priority to their own products or services over those of other customers could give rise to a competition probe.
For further information about this issue and how it may impact you or your business, please contact Susan Hall.