EU court upholds 2017 decision that Google’s conduct was anticompetitive

EU court upholds 2017 decision that Google’s conduct was anticompetitive

By Sam Schechner

Updated Nov. 10, 2021 6:50 am ET WSJ

A European Union court largely upheld a $2.8 billion antitrust decision against Google, adding new momentum to the bloc’s assault on big tech companies.

The EU’s General Court in Luxembourg on Wednesday gave its endorsement to a 2017 antitrust finding by EU competition regulators that the Alphabet Inc. search engine had broken antitrust laws by directing users toward its own comparison-shopping ads at the expense of rival services.

At stake in the case, which was argued a year and a half ago, is a legal precedent that is the focus of intense scrutiny globally: Whether the internet’s biggest platforms have a special responsibility to avoid favoring their own in-house products and services over those offered by competitors.

“Google departed from competition on the merits,” the court said, finding that changes Google made to its search engine that favored its own ads didn’t create efficiencies “that would counteract its negative effects on competition.”

In a minor victory for Google, the court struck down one element of the EU’s case, saying that regulators hadn’t proven Google’s conduct distorted competition among general search engines. But the judges backed regulators’ finding that there had been harmful effects on the narrower market of comparison-shopping search engines. The judges also reaffirmed the amount of the fine Google had to pay.

A Google spokeswoman said it was too early to say whether the company would appeal the decision to the EU’s top court. “This judgment relates to a very specific set of facts,” she said, adding that the company would “review it closely.”

Google had previously argued, in opposing the decision, that EU antitrust regulators had misapplied their own precedents and ignored competition Google faces in the e-commerce sector from Amazon.com Inc.

Wednesday’s ruling is a victory for Margrethe Vestager, an executive vice president of the EU’s executive arm who leads its efforts to curb alleged wrongdoing by companies including Google, Apple Inc. and Facebook owner Meta Platforms Inc.

The Google shopping decision was Ms. Vestager’s first antitrust salvo against the companies—and the first in a trio that levied more than $9 billion in fines against the search-engine giant. Google has appealed the other two cases as well.

The European Commission, the bloc’s main antitrust watchdog, said Wednesday’s ruling “delivers the clear message that Google’s conduct was unlawful and it provides the necessary legal clarity for the market.” FairSearch, a group representing some complainants in the case, applauded the ruling and called for the commission to “tighten the screws on Google in other areas.”

Ms. Vestager’s victory in court against Google comes as she is also spearheading EU efforts to pass new regulations for big tech companies, including an online-competition bill called the Digital Markets Act. That bill, which is currently under debate by the bloc’s legislators and member states, would among other things ban very large tech companies dubbed gatekeepers from treating their own products more favorably in their rankings than those from third parties.

The U.K. has separately set up a new competition-enforcement unit targeting tech companies that have what it calls strategic market status, and is working on legislation that could empower the regulator to enforce codes of conduct for those companies. There have also been similar proposals in China and the U.S.

Markus Ferber, a center-right member of European Parliament from Germany, applauded the ruling but said that the protracted process demonstrated what he said was a need for the EU to pass new digital competition rules. “Going forward we need a legal basis that is watertight and allows for much swifter action to fight the abuses of ‘Big Tech’. It is simply not acceptable that competition cases like this drag on for years,” Mr. Ferber said.

Wednesday’s judgment stems from a dispute going back more than a decade between price-comparison sites and Google. Many of those sites depended on Google traffic until the company changed its algorithms in ways that lowered the rankings of sites the company said weren’t useful for users—and started showing its own ads atop search pages for popular products.

Google has argued that its changes were aimed at improving search results for users, and that it shouldn’t be treated like a utility, with an obligation to offer access to its products to competitors. The company also argued that the commission should have considered the heft of Amazon in its economic analysis, saying that many people start their product searches on Amazon—which may have more than Google to do with the changing fortunes in the shopping-ad sector.

But the court rejected many of those arguments in Wednesday’s decision, saying that the improvements in its search engine didn’t outweigh the cost to competition, and that merchant sites like Amazon constitute a different market than comparison-shopping ads, even if both offer search functionality.

The ruling also appears to leave intact Google’s compliance with the 2017 decision. That decision ordered Google to treat competing price-comparison-ad services “no less favorably” than its own. As a result, Google has been allowing rival shopping-comparison sites to bid for ad slots atop Google search results that those rivals can then resell.

Under pressure from the EU, and following complaints from rivals, Google has made changes to the system, changing the format for the ads in a way that is aimed at sending more traffic directly to the websites of shopping-comparison sites.

The Google spokeswoman on Wednesday said the company’s compliance with the 2017 decision “has worked successfully for more than three years, generating billions of clicks for more than 700 comparison shopping services.”
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