The General Court of the European Union upholds the €2.42 billion penalty imposed on Google for the abuse of a dominant position (Case T-612/17 Google and Alphabet v Commission – Google Shopping).
The General Court of the European Union (“GC”) has dismissed the appeal brought by tech giant Google against the European Commission’s (“Commission”) decision fining it €2.42 billion, in 2017, for abusing its dominant position that it holds in the market for internet search services by favouring its product comparison service to the detriment of its competitors product comparison services.
This is the first judgment of the three penalties imposed by the Commission on Google for abuse of its dominant position, against which the company appealed. The judgment is not yet final, as it can be appealed before the Court of Justice of the European Union.
In its decision, the Commission found, firstly, that Google’s search engine positioned and presented the results of its products in a more attractive way than the results of its competitors and, secondly, that the latter, presented as simple generic results (in the form of blue links), were therefore likely to be downgraded by the ranking algorithms of Google’s general results pages.
The judgment concludes that Google abused its dominant position, validating the Commission’s arguments. The GC considers three basic background circumstances leading to a weakening of competition as a result of Google’s conduct: the importance of the traffic generated by Google’s general search engine for comparison shopping services; the behaviour of the users, who tend to stop or concentrate more on the first results; and, finally, the large proportion of “diverted” traffic.
Specifically, as regards abuse of the dominant position, the GC notes, first, that Google’s general search engine is universal in its vocation and is designed to index results containing all possible content. In this respect, it has the capacity to open itself up to results from external third party sources and to display them, which enriches it and gives it credibility. For this reason, the fact that Google promotes only one type of result, namely its own, in a special way implies, on its part, a “certain form of abnormality”.
Furthermore, the GC considers that the company’s general results page has characteristics similar to those of an essential service, given that there is currently no actual or potential economically viable substitute on the market. However, the GC considers that this is not a practice that must be analysed in the light of the “refusal to supply case-law”, but rather is based on a difference in treatment for the exclusive benefit of its own performance comparator.
Finally, the judgment states that Google’s differential treatment depends on the origin of the results, so that priority is given to results that come from its own comparison shopping service and not to results that are better than others. Therefore, even if competitors’ results were more relevant, they could not in any event receive the same treatment as Google’s in terms of ranking or display. On this point, the company’s argument that, subsequent to the imposition of the fine, it allowed its competitors the option of improving the quality of their results in return for remuneration has been rejected, because this would mean that these services would cease to be Google’s direct competitors and become its customers.
As regards the harmful effects on competition because of the penalised behaviour, the GC considers the Commission’s decision to be correct as regards the analysis of the consequences on traffic, in so far as it has taken into account both the impact on the display of the results of the comparison shopping service and the effect on the position of the results of competing services in the generic results. In this regard, it has relied on factors such as the correlation between the visibility of a result and the traffic received by the website from which the result originates, to establish the link between Google’s conduct and the overall decrease in traffic from Google’s general results pages to competing product comparators and, at the same time, the significant increase in traffic to its own services.
Moreover, the GC recalls that the Commission was not required to demonstrate the actual effects of Google’s conduct on the traffic of its competitors’ product comparators, being sufficient to show that it has the ability to restrict competition. Regarding this, Google had argued that competition in this market remained strong due to the presence of commercial platforms. However, according to the GC, these do not exert sufficient competitive pressure on Google, as long as they are not in the same market: the product search functions are not offered on the same terms and users do not use them for the same purpose, but in a complementary manner.
The only ground of Google’s arguments that has been upheld by the GC is that it has not been demonstrated that Google’s behavior had anti-competitive effects on the general search services market.
This ruling represents a victory for the Commission beyond this particular case, as it gives legitimacy to its thesis to apply competition law to large platforms and, in this sense, paves the way for the approval of the Digital Markets Act proposal, presented by the Commission last year, which is currently under discussion in the European Parliament and the Council. The proposed Digital Markets Act regulates digital platforms, and aims to achieve effective competition in digital services, preventing large digital platforms from using their position as gatekeepers to these digital services to limit companies’ access to end customers or to apply abusive conditions.
