Proving Google's abuse could be difficult for the EU

The European Commission might have a hard time proving that Google abused its supposed dominant market power in the European search market.

The Commission, the European Union’s executive and regulatory arm, filed official antitrust charges against Google on Wednesday after a five-year investigation. Google is alleged to have systematically favored its own comparison shopping product, Google Shopping—conduct which could be construed as infringing EU antitrust rules.

“It is safe to say that this is a bold move for the Commission. From the outside it is not at all clear that this will be a home run for the institution,” said Alfonso Lamadrid, a senior associate at the EU and Competition Law Department of Brussels law firm Garrigues, which is not involved in the case. He made his comments during a conference call organized by industry lobbyist group the Computer & Communications Industry Association (CCIA), of which Google is a member.

While the complaints by Google’s competitors cover many services, the Commission chose to file charges only over Google’s shopping product, noted Alfonso, adding that the narrowly defined case probably came as a surprise to many.

Picking its battles

“The Commission may probably be doing this because it believes it has a stronger hand in comparison to other categories,” Alonso said. For other categories, it could be easier for Google to argue that the search results it displays are simply a direct response to user queries. The Commission has said that it will continue its investigation into the other complaints.

The Commission will also have to formally show that Google is a dominant company in a specific relevant market, said Andrea Renda, senior research fellow at the Centre for European Policy Studies (CEPS), during the CCIA conference call. This is much less obvious than it might seem, even though Google has a market share of above 90 percent in many European countries, said Renda.

“Being big is not necessarily being dominant in antitrust terms and I’m sure that Google will challenge this finding,” Renda said, adding that determining the exact market under scrutiny will not be easy as it can be online search or comparison shopping or something else.

The more important question, though, is whether Google was entitled to favor its own content, and if not, whether this can be remedied by simply prohibiting Google from placing its own results first.

To counter these issues Google could, for instance, argue that its services are picked by its algorithm, and the Commission seems to be quite cautious not to cross the line in this regard, as it explicitly did not challenge the workings of Google’s algorithm.

Who is being hurt by this?

Another controversial matter is finding consumer harm, which is almost absent from statements issued by the Commission, which seem to focus on competitors, Renda said. “This is a bit of a problem for antitrust as it is not meant to protect competitors if it at the same time doesn’t mean protecting consumers,” he said, adding that simply saying that competitors might be put at a disadvantage does not mean anything at all in antitrust terms as far as the Commission has interpreted antitrust in past years.

Nevertheless, the Commission’s decision to formally charge Google is welcome, as the allegations against Google now have to be formulated in a more precise way, he said, adding that this is going to be a test bed for future antitrust cases.

Meanwhile, ICOMP, an industry association representing Google opponents including Microsoft, said the Commission has finally recognized that European consumers and businesses have been harmed by Google’s illegal conduct. Google has a long track record of ignoring EU laws and questioning the legitimacy of regulators investigating its conduct, ICOMP said. It added that throughout the Commission investigation, Google has tried to divert attention away from its illegal behavior. Any further attempts to do this must be firmly rejected, it added.

If the Commission finds that Google has violated the law the search giant will probably have to adjust its business practices. It could also be fined up to 10 percent of its annual global turnover, which in Google’s case could amount to US$6.6 billion.

However, it is very unlikely that a fine would be that high, said Lamadrid. To date, the highest Commission fine has been $1.06 billion, imposed on Intel. It would also be conceivable that there will be no fine for Google even if an infringement were to be found.

The Commission in the past has already negotiated commitments with Google and this indicates that it wasn’t planning to impose a fine. Commitment decisions are appropriate when the Commission does not intend to impose a fine, said Lamadrid, the expert from the Garrigues law firm. And in the past, the Commission did not issue fines when the case was considered to be novel, which can be said of the Google case, he added.

Google has 10 weeks to respond to the Commission’s charges.