The Google case: lessons for doing digital business in Europe

On 27 June 2017, the European Commission announced that it had fined Google €2.42 billion for unlawful abuse of dominance, contrary to EU antitrust law.

The Google case

The Commission found that Google had abused its dominance in markets for general internet search by leveraging its position to give an illegal advantage to its comparison shopping service over and above competing services.

The decision follows seven years of investigation. The Commission examined significant amounts of data, including 1.7 billion search queries, and conducted detailed market investigations via questionnaires to several hundred companies.

In addition to paying the fine, Google now has 90 days from the date of the decision to cease its infringing conduct and comply with an order requiring it to give equal treatment to competing comparison shopping services.

Of particular interest is the Commission’s note in its press release that Google is liable to face civil damages actions by persons or business harmed by its conduct. Coupled with comments from the Commissioner for Competition, Margrethe Vestager, urging companies to bring damages, the Commission is clearly demonstrating its desire for increased private enforcement actions in Europe.

The Commission also noted that it continues to investigate Google in two separate cases, relating to its Android operating system and AdSense.

What does this mean for doing digital business in Europe?

The Google case illustrates the Commission’s increasing focus on digital business and technology markets, including online platforms.  The last year has seen the Commission launch its e-commerce sector inquiry (with several antitrust investigations already coming out of it), as part of the Digital Single Market initiative.  The Commission’s focus on e-commerce arises out of the single market goal of the EU, with e-commerce seen as a key tool for boosting genuine cross-border trade between member states.  This means that conduct that might not raise antitrust issues in other jurisdictions, such as the US, will be investigated in Europe if it restricts e-commerce and the development of the Digital Single Market.

Where digital businesses achieve strong market positions, the Commission has also demonstrated its willingness to step in and prevent any abuse of this dominant position. Historically, the Commission has imposed its biggest fines in the technology sector, for example on Intel (€1.06 billion in 2009), Microsoft (€561 million in 2013) and now Google. The Commission is clearly not afraid to tackle complex cases in novel technology markets.

However, this case is likely to reignite the debate around whether regulation of fast moving markets is necessary and effective, given the speed of developments and change in these markets. Critics may question whether competition law is the most appropriate tool to use in these circumstances to target the perceived issues, given the length of time taken to investigate the concerns.

Nevertheless, it serves as a reminder that the Commission is willing to intervene in rapidly changing technology markets and to regulate them to ensure compliance with EU competition law.

As companies grow and build their presence in emerging technology markets, they must be mindful of the competition rules in place and ensure they comply. Cases such as this clearly demonstrate that authorities are happy to investigate where they have concerns and companies should remain alive to this risk.