Ever since its foundation in 1998, Google search has been able to continue a dominant position in the search engine market. Apart from being a market leader in the search engine, Google has also diversified its service offered over the years, including Gmail, YouTube, Calendar, Google Maps, Drive etc. With such a huge dominance and influence over the search engine market, it comes as no surprise that it has faced repercussions and criticism for abusing its dominant position. The European Union spent a decade investigating Google against antitrust laws, a slow and deliberate process, during which the company’s influence and power continued to grow in the market. Google has abused market dominance by preventing rival companies from competing in the online search advertising market. Google did not exhibit that the clauses created any regulations capable of justifying its misconduct.
Google earns its revenue predominantly through advertising on its search engine, it has substantial control over the placement of advertisements and search results and thus it is impossible to ignore Google’s dominance as a search engine and effect of that position. This status gives its power to determine the future of thousands of product developers. Google has illegally misused its market control and dominance by imposing a number of restrictive characteristics in contracts with third party websites which prevented Google’s rivals from placing their search adverts on the websites. The misconduct denied other companies the possibility to innovate, discover and compete on the merits and consumers the benefits of competition. Since 2010, the European Union has started three separate antitrust investigations into Google for violation of the union’s competition laws due to its strong influential position in the market. These accusations have resulted in formal charges against Google related to Google Shopping, Google AdSense, and the Android Operating System. To date, Google has been found guilty of breaching antitrust rules of EU in the cases related to Google AdSense and Android and has been fined over € 8 billion by European Commission. The EU has also started a full investigation of Google’s proposed acquisition of fitness health tracker company, Fitbit, under the EU Merger Regulations.
The Commission’s fine represents the duration and gravity of the infringement. The clear victor out of this antitrust scrutiny is, confidently, the consumer.
Google Shopping Charges
The European Commission on 10th November, 2010, started a formal investigation into Google’s search algorithm, following a member of complaints registered by smaller web companies against Google that it was downgrading their placement in Google’s search results and that Google was intentionally favouring their own products over competitors.
Five years into the investigation, the EC in April 2015, issued its first Statement of Objections against Google Shopping products in search results. The complaints issued by EC included:
- Google systematically arranges and prominently displays its own comparison-shopping services regardless of the merits of how well the Google Shopping results met the results of search query.
- Google’s conduct has a negative influential impact on consumers and innovation, the users do not necessarily see the most relevant shopping results in response to their queries.
- Google does not apply the system of penalties to its own comparison-shopping services, which it applies to other shopping services, that lead to the lowering of the position in which they appear in the Google’s search results pages.
- Froogle, Google’s first comparison shopping service, which did not give any preferential treatment and therefore performed poorly.
- Google’s systematic favouring of its comparison-shopping services resulted in higher rates of growth experienced by “Google Product Search” and “Google Shopping” than that of rival comparison shopping services.
Google was found guilty of the charges and was fined €2.4 billion in June 2017, the fine constituted over 2.5% of Google’s 2016 revenue. Google has denied the accusation issued by European Union and said ‘its services had helped the region’s digital economy grow’. After the fine imposed by EC, Google in order to abide by, is constructively separating its comparison shopping service, the Google Shopping service still will be a part of Google but will operate separately with its own profits and revenues. According to Bloomberg, this step will allow Google to avoid further fines as it complies with the European Union’s order of allowing fair and even treatment to businesses.
Google AdSense Charges
The Commission had also launched a Statement of Objections to Google on the ground that the company has placed on the ability of certain third-party websites to showcase search advertisements from Google’s competitors. The practices have empowered Google to protect its dominance in online search advertising and prevented existing and potential competitors from entering and growing in this commercially important field.
The complaints focused on how Google authorized AdSense and breached EU antitrust rules by imposing the following characteristics:
- Googles needs third parties not to source search ads from Google’s competitors.
- Before making any change to the display of competing search ads, Google requiring third parties to obtain their approval.
- Google requiring third parties to take a minimum number of search ads from Google. They reserve the most prominent space on their search results pages for Google search ads so that competing search ads cannot be placed above or next to Google search ads.
As a result, the European Commission imposed a fine of € 1.49 billion on Google for its abusive malpractices in online advertising in March 2019. In addition, Google stopped using the exclusive contract clauses in 2016.
Android and Mobile Apps Charge
The European Commission has started formal proceedings against Google to investigate if the company conduction in terms of Android mobile operating system has breached the antitrust rules of EU. In order to acquire the right to install application and service on Android devices, manufacturers need to enter into various agreements with Google. The majority of smartphone manufacturers use the Android operating system in collaboration with a range of Google’s exclusive applications and services.
Following on the complaints filed by Fair search and Aptoide as well as its own initial investigations, the Commission has opened an investigation focuses on following three allegations:
- Whether Google has illegally hindered the innovation and restricted the market access of rival mobile applications or services by requiring smartphone or tablet manufacturers to mandatorily pre-install Google’s own apps or services.
- Whether Google has prevented smartphone and tablet manufacturers from developing and marketing modified and potentially competing versions of Android who wish to install Google’s applications on some of their Android devices.
- Whether Google by bundling or tying certain Google applications distributed on Android devices with other Google apps and services.
Android is an open-source system and it can freely develop and used by any manufacturer to create a modified mobile operating system (“Android fork”). But, if a manufacturer wishes to install Google proprietary apps including Google Search and Google Play store, Google requires it to commits to not to sell devices running on Android forks and enter into an “Anti-Fragmentation” agreement.
The Commission believes that these illegal business practices may lead to the monopolistic dominant position of Google Search in general internet search services. These practices hinder the development of operating based on the Android source code and opportunities they would offer for innovation and development of new apps and services and therefore affect the potential of competing mobile browsers to compete with Google Chrome.
EU has fined Google € 4.3 billion in July 2018 for breaching of EU antitrust rules in relation to Android operating system. In compliance with the EU decision, Google announced in March 2019 that it will give European Android phone users an option of which browser and search engine they want on their phone at the time of purchase.
The European Commission on 4th August 2020 announces that it would be opening an in-depth formal investigation into Google’s proposed acquisition of the health platform and fitness tracker, Fitbit under the EU Merger Regulation.
The Commission believes that due to the data advantage, Fitbit’s fitness and health data in addition to Google’s existing personalization data would result in disadvantaging advertisers and publishers by lowering choice and increasing costs and also raise the barriers to entry for new entrants to the online advertising market. The Commission announced that it had 90 working days until December 9, 2020 to validate its findings from the investigation and take a final decision.
Breach of Antitrust rules of European Union
The implementation of antitrust provisions is defined in the Antitrust Regulation (Council Regulation No 1/2003), which can be applied by the European Commission and by the national competition authorities of EU Member States:
- Article 101 of the Treaty on the Functioning of the European Union (TFEU) decisions of associations of undertakings and prohibits anticompetitive agreements.
- Article 102 TFEU prohibits the abuse of a dominant position which may prevent or restrict competition and affect trade.
- Article 54 of the European Economic Area Agreement prohibits the abuse and misconduct of a dominant position.
The decision concludes that Google is dominant in the market for online search advertising intermediation in the European Economic Area since 2006. Market dominance is not illegal in particular under EU antitrust rules. But however, dominant companies have a special obligation not to abuse their powerful market position by not allowing and restricting competition. The dominant position in the market is based in particular on Google’s very high market shares, exceeding 85%-90% of the total. The market dominance is also characterised by high barriers to entry, which includes significant initial and ongoing investments required to develop and maintain general search technology, a search engine platform, and considerably a large portfolio of both advertisers and publishers.
The Commission based on broad range of evidences found that Google’s conduct harmed consumer and market competition and stifled growth and innovation. The rival companies were unable to grow and offer alternative online search advertising intermediation services. As a result, owners of websites had limited options for monetizing space on these websites and on the other, consumers were also forced to rely almost solely on Google.
Q.1. What Are the Three Separate Antitrust Investigations Against Google By European Union?
Ans. The European Union has started three separate antitrust investigations into Google, the accusations have resulted in formal charges against Google related to Google Shopping, Google AdSense, and the Android Operating System.
Q.2. When Did European Commission Announces the Investigation Against Fitbit?
Ans. The European Commission on 4th August 2020 announces that it would be opening an in-depth formal investigation into Google’s proposed acquisition of the health platform and fitness tracker, Fitbit under the EU Merger Regulation.
Q.3. How Much Did Eu Fined Google For Breaching Antitrust Rules in Relation to Android Operating System?
Ans. EU has fined Google € 4.3 billion in July 2018 for breaching of EU antitrust rules in relation to Android operating system. In compliance with the EU decision, Google announced in March 2019 that it will give European Android phone users an option of which browser and search engine they want on their phone at the time of purchase.
Scott, Mark (27 June 2017). “Google Fined Record $2.7 Billion in E.U. Antitrust Ruling”. The New York Times. ISSN 0362-4331. Retrieved 10 November 2017 ( https://www.nytimes.com/2017/06/27/technology/eu-google-fine.html )
Vincent, James (4 August 2020). “EU launches full investigation into Google’s Fitbit acquisition over health data fears” ( https://www.theverge.com/2020/8/4/21353947/google-fitbit-acquisition-eu-investigation-antitrust-health-tracking-data )
 Scott, Mark (27 June 2017). “Google Fined Record $2.7 Billion in E.U. Antitrust Ruling”. The New York Times. ISSN 0362-4331