Across the world, the internet giant Google has been facing numerous competition law challenges in the courts and before competition authorities, generally triggered by complaints from competitors and advertisers.
Although the specific concerns take various different forms, in essence they involve allegations that Google is illegally abusing its dominant market position as a search engine in that, in ordering the priority of advertisements on its search engine, it discriminates against advertisers who use competing search engines.
The main developments include:
In November 2010, the European Commission launched a formal investigation into possible abuses of dominance by Google, but as at March 2012 the Commission was still not in a position to say whether this investigation would lead to its issuing a statement of objections (that is, a formal allegation of infringement).
During 2011, the US Federal Trade Commission began an investigation into Google’s alleged discriminatory practices.
November 2011: The German competition authority, the Bundeskartellamt, formally urged the European Commission to investigate whether Google is dominant.
January 2012: The US Federal Trade Commission reportedly expanded its investigation to cover the new “Google+” social network site.
January 2012: In France, the Paris Commercial Tribunal found8 that Google Maps was liable for abuse of a dominant position, through providing to companies “how to find us” maps for their advertising free of charge – which was considered to be predatory (below-cost) pricing making it impossible for rival mapping companies to compete in the market. Google was forced to pay damages to a rival commercial mapping company of €500,000.
A couple of interesting points emerge from these cases:
Obligations of dominant businesses to their competitors: The cases are a reminder that – in all economic sectors – companies with a dominant market position have a special responsibility towards their competitors. Even in pursuing their own commercial policy (in Google’s case, ordering the advertising on its search engine, or choosing to sell mapping services free of charge), dominant companies cannot act in a way that involves leveraging their market dominance to make it harder for rivals to compete in the market.
In the technology sector, allegations involving dominance require competition authorities to carry out a difficult balancing exercise. On the one hand, the authorities are reluctant to conclude that a technology company has a dominant position, because the markets are so fast-moving and fluid that the market leaders of today will tomorrow succumb either to new market entrants or to technological alternatives. As the European Commissioner for competition, Joaquin Almunia, said in September 2011, technology markets are changing “at lightning speed”. On the other hand, precisely because technology markets move so quickly, it is all the more important to prevent attempts by incumbents to impede new developments. As Mr Almunia put it, “Timely intervention is crucial in fast-moving technology markets… before the anticompetitive effects of a strategy are realised”.