Antitrust Law Daily Wrap Up, TOP STORY: Google facing additional EC abuse of dominance allegations, (Jul 14, 2016)
Organizations Mentioned:Alphabet Inc. | Google Inc.
By Jeffrey May, J.D.
The European Commission’s antitrust concerns over Google's business practices continue to pile up. The EC Competition Commissioner’s long-running investigation into Google’s alleged abuse of dominance in Internet search services and search advertising has resulted in new charges. Today, the EC announced that it has sent a supplementary Statement of Objections (SO), reinforcing its preliminary conclusion from 2015 that Google is favoring its own comparison shopping service to the detriment of rivals. In addition, it has issued a new SO, alleging that the company is artificially restricting the ability of its competitors to place search advertisements on third-party websites. This effort to restrict competitors is intended to maximize traffic to Google’s own websites, according to the EC.
Comparison shopping. In April 2015, the EC informed Google of its preliminary conclusions that the company treats its comparison shopping service more favorably in search results than rival services. Following the filing of the company’s formal response in August 2015, Google Senior Vice President & General Counsel Kent Walker stated that the SO was "wrong as a matter of fact, law, and economics."
According to today’s announcement, the EC has continued its investigation into the conduct with respect to the comparison shopping sites and that additional evidence and data support and reinforce its preliminary views. Google's favoritism allegedly prevents users from seeing the most relevant results in response to queries. Google and its parent Alphabet have eight weeks to respond to the supplementary SO.
Online search advertising. In an effort to protect its dominant position in online search advertising, Google has prevented existing and potential competitors, including other search providers and online advertising platforms, from entering and growing in this commercially important area, the EC asserts in its latest SO. Through its "AdSense for Search" platform, Google is dominant in the market for search advertising intermediation in Europe, according to the EC. Google allegedly entered into agreements with large third parties, so-called "Direct Partners," that contain anticompetitive conditions, such as exclusivity restrictions. In addition, these agreements purportedly required third parties to take a minimum number of search ads from Google and reserve the most prominent space on their search results pages to Google search ads and to obtain Google's approval before making any change to the display of competing search ads. Google and Alphabet have ten weeks to respond to this SO.
The EC also has confirmed that it is continuing to investigate Google’s alleged favorable treatment in its own general search results of its specialized search services, copying of rivals’ web content (known as "scraping"), and undue restrictions on advertisers. The inquiry was opened in November 2010 and appeared to be headed for a resolution in 2014. However, the EC and Google were ultimately unable to reach a resolution.
Companies: Alphabet Inc.; Google Inc.
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