On September 10, the highest judicial authority in the EU, the Court of Justice, will rule on Google Shopping, closing a case opened 15 years ago and instrumental in changing the narrative on Big Tech. Christian Bergqvist summarizes the history of Google Shopping and discusses its possible outcomes.
There is very little about Google that is not impressive. Within just a few years of beginning its operations as a garage startup in 1998, it dethroned Microsoft and AltaVista as the owner of the preferred web browser (Chrome) and search engine (Google Search). Impressive is also the way Google has made the internet accessible to billions of people, and how it continually innovates and introduces new services to the joy of consumers. However, over the last decade, Google has fallen from grace as it arose to dominate the digital economy. The company is now subject to over 100 investigations worldwide. In early August, a United States district court ruled against Google for acting to maintain a monopoly in general search. Google’s other major U.S. antitrust case for monopolizing digital ad tech services is heading to trial now. Meanwhile, in the European Union, the Court of Justice, the EU’s equivalent to the U.S. Supreme Court, will rule on September 10 in another major case concerning Google’s abuse of its position in the search market to self-preference its shopping services.
The long and very slow making on Google Shopping
Google Shopping was opened in 2010 based on a complaint filed the year before by Foundem, a British price comparison website. Foundem alleged to be the victim of unfavorable treatment in Google’s search results. Google’s signature offering is its search engine (Google Search), which yields a list of organic blue links and other information in response to an inquiry. The service is free and financed by the ads and sponsored results blended into the text or appearing near it.
To manage ads enriched with product pictures and direct links to vendors, Google relies on its shopping unit (Google Shopping). Google will place ads from vendors selling on Google Shopping in separate boxes in the search results, allowing the user to compare the options easily and in a visually appealing manner.
Specifically, Foundem alleged in 2009 that when Google launched Google Shopping in 2002, it began to demote Foundem’s offerings in search results. Moreover, ads managed by Google through its shopping unit were enriched with pictures, while Foundem was confined to the blue links and could not display images.
Later, other companies joined Foundem’s complaint, claiming that Google more broadly and systemically favored its own services over competing offerings, scraped text and pictures from them, and relied on a network of exclusivity to tie up advertisers and websites, denying these for the competitors.
Both Google and DG COMP preferred a commitment solution
For many reasons, including the case’s complexity, both Google and the Directorate-General for Competition (DG COMP), EU’s principal antitrust enforcer, expressed early interest in a commitment solution that would oblige Google to make structural changes to its operations to improve competition. That would allow DG COMP to close its investigation without taking the additional and resource-intensive steps to make a formal decision, mirroring how the U.S. Federal Trade Commission’s case into the same issue ended in 2013. Moreover, in 2013, Google also managed to defeat a claim of anticompetitive self-favoring in a German court and in 2016 before a British court, indicating that Google could plausibly survive regulatory intervention again.
Between 2013 and 2014, Google and DG COMP reached an understanding on possible commitments at least two, possibly three, times, but third parties found these commitments lacking when opened to comment. This muddled DG COMP’s choice between closing the case with Google’s suggested commitments or restructuring the case and pursuing it to a formal decision.
Before or shortly after the arrival of Commissioner Margrethe Vestager in 2014, DG COMP opted for the latter. This involved separating the exclusivity issue into what eventually would become Google AdSense and adjusting the relevant theory of harm.
Initially, Google Shopping’s theory of harm appears to have involved self-favoring and how Google systematically promoted its own shopping marketplace offerings in search results, even where alternatives might be more attractive or relevant. However, when DG COMP advanced the case, it instead posited a theory of harm alleging monopolization of online price comparison services and how this was attained through a cocktail of anticompetitive action, including, but not limited to, self-favoring This was a prudent call, considering how courts in the U.K. and Germany, relying on the same rules as DG COMP, had rebutted taking issue with self-favoring.
What harms did Google allegedly commit in Google Shopping?
In June 2017, DG COMP concluded its investigation into Google Shopping, doling out to Google a record fine of 2.42 billion euros ($2.69b) for anticompetitive behavior in online price comparison services. Users rely on these to compare prices across suppliers, and Google systematically directed consumers towards its own offerings at the expense of competitors. This primarily served to monopolize a new market (online price comparison services), but DG COMP observed how it also could prevent online price comparison services from serving as a stepping-stone for developing alternatives to Google’s search engine, and thus, what in the U.S. would be considered monopoly maintenance.
To reach these findings, DG COMP relied on the body of evidence, including a) massive data indicating suspicious patterns, including sudden drops in competitors’ visibility following updates to Google search algorithm, and b) internal Google communications, suggesting that employees were not ignorant of these effects. The General Court (2021) upheld all operative elements of DG COMP’s decision but rejected the monopoly maintenance motive, as DG COMP had failed to substantiate this. An analysis of the ruling is available here. Google appealed to the Court of Justice, and on September 10, we will know its findings.
What did the General Court establish?
When the General Court confirmed all operative elements in DG COMP’s decision, it also added substantial considerations, including correcting matters that had not been fully developed.
First, the Court clarified how DG COMP’s decision had not taken issue with Google’s system of corrective algorithms, which sort away less relevant results, even when they lead to the demotion of competing offerings. Nor had the decision condemned that only Google’s marketplace ad offering came with pictures and was not exposed to the corrective algorithms. Apart, these two processes did not necessarily produce a theory of harm, but when operating in tandem they could, the Court argued. Second, the Court explained how companies in gatekeeper positions, such as Google, could become subject to a more rigid set of obligations, particularly if engaging in actions that defied users’ expectations. In this, the Court took inspiration from secondary legislation establishing principles of search neutrality and the obligations of companies benefiting from legal monopolies or legacy rights. However, as Google enjoys neither, the Court’s reading expanded case law that sits uneasily with our traditional understanding of EU competition law.
Third, the General Court described Google Search as akin to an essential facility. No legal obligations derived from this, making it more of a general observation than an attempt to develop legal principles, but regardless, it was somewhat unexpected.
Possible outcomes of the Court of Justice ruling
How the Court of Justice will rule on September 10 remains unknown. The advocate general for the case suggested upholding the General Court findings. Statistically, the Court tends to follow the advice of the advocate general. Given the strange patterns in which Google presented competing shopping offerings, upholding the General Court’s ruling is the most plausible outcome. This would close the case but not Google’s trouble regarding its shopping service, as several follow-on claims are pending, where alleged victims claim compensation.
However, other outcomes are possible, including a complete overturn. There are indications that DG COMP rushed its decision, delivering it prematurely. The most obvious evidence of this is the failure to align the theory of harm across the decision. In one part of its case, DG COMP described Google Shopping as involving self-favoring (and only self-favoring), while other parts refer to a cocktail of anticompetitive actions, including the suspicious demotion of competing offerings. This might reflect how the investigation was initially drafted, and when the theory of harm was adjusted in 2014/2015, not all parts were adequately updated. Alternatively, DG COMP just ran out of time. The General Court ignored this and provided a precise definition of the relevant theory of harm, but the Court of Justice might take a less supportive approach.
Even if the operative parts of the ruling are upheld, the Court of Justice could correct the justifications. According to DG COMP, Google aspired to monopolize a new and profitable service (comparison shopping) and protect its core business (the search engine). The General Court only accepted the first, as DG COMP had not presented evidence substantiating the second. DG COMP has not appealed this, and DG COMP never really relied upon it to build the case, making it unlikely that the Court of Justice will revisit the second motive.
The Court of Justice could also take issue with the General Court’s justifications for its findings. As outlined above, this relied on user expectations and regulations to evaluate if Google’s actions qualified as unusual and anticompetitive. However, secondary legislation should not be relied upon to interpret EU Competition Law, enshrined in the EU Treaty, and thus akin to a constitution. Moreover, the assumption on user expectation might not even be correct. Users are not oblivious to how companies tend to promote their own offerings in online ecosystems, understanding this to be a tradeoff necessary to finance these.
Finally, the Court of Justice could reject the General Court’s attempt to establish a concept of ultra-dominance, supporting an expanded set of obligations. Case law is not alien to the idea of some companies being more than just dominant, but in Europe it mostly deals with companies enjoying a privileged position: typically, monopoly or legacy rights or advantages. In this, the Court of Justice could reject references to the essential facility doctrine, but as no legal principle was derived from this, it’s more likely that it will just be ignored.
Entertaining the idea that the Court of Justice takes issue with the General Court’s findings, it will likely either correct these in a manner that upholds the findings or refer the case back to the General Court for re-evaluation. The latter would look like a big win for Google but offer limited respite taking the other cases into consideration.
What happens after the judgment?
Almost regardless of how the Court of Justice rules, September 10 will be a most memorable day in the annals of antitrust. While the verdict will close a chapter 15 years in the making, a verdict upholding the General Court’s findings will leave Google exposed to the many smaller claims related to the case. Moreover, it is unknown if Google, as ordered in 2017, has terminated its anticompetitive actions. That is Google’s position, but others disagree, and if DG COMP finds Google non-compliant, separate fines could be imposed on Google for this. These claims, in aggregate, could potentially dwarf the 2.42 billion euro ($2.69 billion) fine DG COMP ordered Google to pay in 2017.
Author Disclosure: the author reports no conflicts of interest. You can read our disclosure policy here.
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