Google’s Antitrust Problem

By John Underhill

American companies have found it much more difficult to freely conduct business in Europe as compared to the U.S. Google is a prime example of this phenomena. The European Commission, which is the EU’s Antitrust regulator, has aggressively pursued Google with large fines and penalties that strike at the core of its business.

On June 27, the Commission fined Google $2.7 Billion. Not only did it levy this record fine, it ordered Google to change the way results appear on its online shopping service. When one used Google’s search engine to search for a product, Google displayed shopping ads from Google’s shopping service at the top of the results. The Commission also said Google was demoting rival comparison shopping services. This behavior paired with Google’s 90 percent market share of search engines, left the commission to determine that Google was “abusing its dominance in general internet search.”

Google has since made tweaks to their search engine to comply with the order but is also appealing this decision. Some have complained that this tweak is not enough and whether or not Google succeeds in their appeal it is unlikely to be the end of Google’s EU legal troubles. There are ongoing investigations into other areas of Google’s businesses including bundling with its Android mobile operating system. The commission is also looking into complaints involving other google searching services including google maps.

Google is not the only American tech company to get caught in the crosshairs of the Commission. The Google fine is coming off the heels of Apple being ordered to pay back $14.5 billion in back taxes and Intel was fined $1.45 billion due to violation of antitrust rules. Is this aggressive regulation being used intentionally to make European companies more competitive against U.S. companies? President Barack Obama thinks so. “Americans have owned the Internet. Our companies have created it, expanded it, perfected it in ways that [European companies] can’t compete, and oftentimes what is portrayed as high-minded positions on issues sometimes is just designed to carve out some of their commercial interests.” A study looking at EU antitrust enforcement between 1990 and 2014 found no evidence that the Commission was using its authority for protectionist ends. However, it seems clear that these large American companies are finding a much more stringent regulatory regime compared to the U.S.

The actions of the commission are important to follow as it could cause companies to think twice before making large investments into the EU. It could also affect negotiations of the Transatlantic Trade and Investment Partnership if negotiations resume. At the very least, if the Federal Trade Commission decides to step up its aggression on large internet companies it will know where to start looking.

References

Klint Finley, Google’s Big EU Fine Isn’t Just About the Money, wired (June 28, 2017), available at https://www.wired.com/story/google-big-eu-fine/ (last visited Oct. 21, 2017).

Natasha Lomas, Google Tweaks search ads after EU shopping antitrust ruling, Tech Crunch, (Sept. 28, 2017), available at https://techcrunch.com/2017/09/28/google-tweaks-search-ads-after-eu-shopping-antitrust-ruling/ (last visited Oct. 21, 2017).

Sean Farrell & Henry McDonald, Apple ordered to pay €13bn after EU rules Ireland broke state aid laws, (Aug. 30, 2016), available at https://www.theguardian.com/business/2016/aug/30/apple-pay-back-taxes-eu-ruling-ireland-state-aid (last visited Oct. 21, 2017).

James Kanter, Europe Fines Intel $1.45 Billion in Antitrust Case, The New York Times (May 13, 2009), available at http://www.nytimes.com/2009/05/14/business/global/14compete.html (last visited Oct. 21, 2017).