Google’s abuse of dominant position

In 2010 and 2015 three separate antitrust investigations were launched by the European Commission against Google, due to its alleged violation of EU’s competition laws, made possible due to its dominant position in the market. These three cases regarded three different services provided by Google: GoogleAdSense, Google Shopping and the Android operating system.

GoogleAdSense is a technology through which Google serves to its end users targeted advertisement in the interest of AdSense-enrolled webmasters, who pay this Google advertisement system depending on several different factors.

Google Shopping is a service which allows end users to search for products online and to compare the prices between different vendors.

Android is, instead, an open-source mobile operating system, whose original developer was bought by Google in 2005.

Regarding the first two services, the Commission launched an investigation on November 30th, 2010 (European Commission, 2010), alleging a possible violation of Article 102 TFEU (on the abuse of dominant position). In particular:

  1. Regarding GoogleAdSense, the EC investigated whether Google’s search engine imposed exclusivity obligations on its advertising partners, preventing them from placing some or all kinds of ads on their web sites at the scope of cutting out competing search tools.
  2. Regarding Google Shopping, the EC focused on the advantages given by the Google search engine to the Google Shopping service.

First of all, the Commission concluded that restrictions on advertising from Google competitors imposed by Google on third party websites concealed the protection and entrenchment of Google’s dominant position in online search advertising and resulted in preventing potential competitors from entering and growing in this sector.

In particular, the Commission was worried about Google’s abuse of leverage: the tech giant imposed third parties not to source search ads from Google’s competitors (EXCLUSIVITY CLAUSE), to ask Google’s approval to authorise competing ads (AUTHORISING EQUIVALENT ADS CLAUSE), to take a minimum number of search ads from Google putting them in a prestigious position in their websites (PREMIUM PLACEMENT AND MINIMUM GOOGLE ADS CLAUSE). This behaviour hindered competition and, therefore, was fined with €1.6 billion

In second place, the Commission recognized that Google gave systematic favourable treatment and prominent placement to its comparison shopping product, which is Google Shopping, diverting online traffic from rival comparison shopping services. At the same time, the EC launched a new investigation regarding the Android operating system.

In 2017, Google was fined €2.42 billion due to its abuse of dominance for giving illegal advantage to its Google Shopping service and for demoting rival comparison shopping services through its search engine. As a result, end users were unlikely to click on rival comparison shopping services but very likely to click on Google Shopping results, generating big sources of income for Google Shopping and, ultimately, for Google itself. This was considered to be hindering competition and damaging end users, so that Google was fined

Last but not least, the third investigation, regarding Google Android, was launched by the Commission in 2015 due to alleged anticompetitive behaviour in the field of operating systems and applications for smart mobile devices.

Android is an open-source system: it can be used and developed by anyone. Most of the smart devices’ manufacturers use the Android system together with a range of Google services and applications. In order to install Google’s apps on the devices, the manufactures get in touch with Google to obtain the right to do so.

In 2016, the Commission found that Google had implemented a strategy on mobile devices to preserve and strengthen its dominance in general internet search. Indeed, it was noted that:

  1. Google imposed manufactures to pre-install its Google Search, setting it as default search engine, as a condition to license certain Google’s apps. It did the same with the Google Chrome browser.
  2. Prevented manufacturers from selling mobile devices with an operating system different from but based on Android (so called Anti-fragmentation agreement)
  3. Gave financial incentives to manufacturers and mobile network operators after they agreed on pre-installing Google Search (Exclusivity)

Thanks to these practices, Google cemented its dominance in the field of search engines. The Commission, therefore, fined Google for a total amount of euros 4.3 bln.

UE vs Amazon  

The 10th November of 2020, the European commission sends statement of objection to Amazon for  the use of non-public independent seller data and opens second investigation into its e-commerce business practice. The multinational companyhas allegedly violated European antitrust law in France and Germany, distorting competition on the online market. According to Margrethe Vestager (vice-president of the European commission), Jeff Bezos’ giant would give preferential treatment to companies that rely on its logistics services for shipping and delivery, for example by offering them greater visibility.

Amazon would have exploited its infrastructure, misusing the data of those selling on the platform to favour its own products to the detriment of those of its competitors. The epicenter of the question are the data which are the “oil” of the 21st century. According to the Commission, once aggregated, this big data is processed to calibrate investments and promotions in an automated way. The losers are the third parties that have contributed to generating that critical mass and continue to sell in the same virtual megastore where they are ‘spied on’. If confirmed, the abuse would be an infringement of Article 102 of the Treaty on the Functioning of the European Union (TFEU) that prohibits the abuse of a dominant market position.

This is not the first time that the president of the commission of antirtrust try to fine Amazon. Also in July, 2019. Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “We must ensure that dual role platforms with market power, such as Amazon, do not distort competition.  Data on the activity of third party sellers should not be used to the benefit of Amazon when it acts as a competitor to these sellers. The conditions of competition on the Amazon platform must also be fair.  Its rules should not artificially favour Amazon’s own retail offers or advantage the offers of retailers using Amazon’s logistics and delivery services. With e-commerce booming, and Amazon being the leading e-commerce platform, a fair and undistorted access to consumers online is important for all sellers.”

In addition, the Commission opened a second antitrust investigation into Amazon’s business practices that might artificially favour its own retail offers and offers of marketplace sellers that use Amazon’s logistics and delivery services (the so-called “fulfilment by Amazon or FBA sellers”).

In particular, the Commission will investigate whether the criteria that Amazon sets to select the winner of the “Buy Box” and to enable sellers to offer products to Prime users, under Amazon’s Prime loyalty programme, lead to preferential treatment of Amazon’s retail business or of the sellers that use Amazon’s logistics and delivery services.

It is not certain that the European procedure will lead to a prohibitive fine (rumoured to be up to 10% of a turnover of 720 billion euros in the old continent). In the past, Vestager has spoken out against excessively onerous sanctions, which she considers ineffective. Also because the collection rate of fines is not very encouraging.

On the horizon is the introduction of a Digital Market Act which will modernise the Eurozone’s antitrust system. Brussels is driven by a desire to defend European consumers. A feat that one nation alone could not attempt with the same firepower as a bloc of 27 states. And the counteroffensive has only just begun.

Legal Desk Department

Gastaldo Leonardo
Sellitto Mariarosaria
Finocchiaro Albert

Prof. Pollicino Oreste

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