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Google and Competition in Europe

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Recently, Google Inc. was suspected to incur on anticompetitive practices, in Europe and an investigation was followed by European Commission (EC) to check whether there was evidence on an anticompetitive behavior or not.

Some outcomes from that investigation came out. EC presented four concerns, which can compromise competition: the fact that Google prioritizes its own specialized search mechanisms (as Google Local or Google Flights) on a simple web search, creating a competitive disadvantage for other specialized searchers; the content usage of other searchers from Google; the creation of exclusivity agreements with publishers on the display of Google ads; and the contractual restrictions on online search advertising campaigns.

To settle those concerns, Google proposed some antitrust concessions. The resolutions proposed were: labeling their own specialized search services and separate it, to promote a general results list; allowing other specialized searchers on its web search to prevent situations of content usage; giving publishers more freedom concerning to the display of ads on their web sites from others advertisement competitors; dropping restrictions on advertisement campaigns.

EC’s concerns were mostly based on article 102 from the Treaty on the Functioning of European Law, which states actions, or the result of actions, which may be reported as abuse of dominance. Excluding competitors from the market or highly increasing difficulty to enter in the market by anticompetitive measures, may be part of a growth strategy. However compromising innovation, and limiting market matching to customers needs is a matter that risks even more growth.

Is it a Déjà vu? 

Not so far ago, the same antitrust investigation occurred in US, however the US Federal Trade Commission did not seem too worried. Well, in fact there are differences regarding those cases, even though it is the same company in line, the geographic market changes and so does market structure. While in US 30% of market share respects to Yahoo and Bing (comScore Explicit Core Search Share Report, November 2012), in Europe Google is more popular, according to EC statements, it has around 90% of market share.

From Competition Policy principals, the minimis approach is a good way to justify authorities positioning. Taking the same actions in US the expected results are not so relevant to intervene as it is in Europe – keep in mind that, no matter the intervention done, it always creates distortions to the market which is not functioning freely, thus the decision must be taken regarding the benefits for competition vis-à-vis the cost of distortions.

Ana Santos

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Author: studentnovasbe

Master student in Nova Sbe

One thought on “Google and Competition in Europe

  1. Unfortunately for companies such as Bing, even if Google takes a big hit on this it will only hurt them in the short term. Long term, they are likely to remain the dominant force in the market.