Competition

The judiciary confirmation of the Google Shopping case reinforces the legislative path to stricter rules on Big Tech

Today’s ruling of the EU General Court Tribunal confirming the fine of 2.42 billion euros to Google / Alphabet is destined to have wider and more significant effects beyond the mere pecuniary aspect. Two and a half billion euros is an enormous sum, but no one believes anymore that certain heavy sanctions can be sufficient to rebalance the digital markets now dominated by the few American players, the so-called GAFA (Google, Amazon, Facebook and Apple).

The European ruling, however, is significant from two points of view: because it acts as a formidable political viaticum for the European Union which aims to regulate the dominant digital platforms, applying to them, in addition to antitrust rules, ad hoc rules such as the ones of the Digital Market Act (“DMA”); and because it technically and fully supports the legal reasoning of the European Commission and above all of its Directorate General for Competition (“DGCOMP”), that is the apparatus run by the Danish Commissioner Margarete Vestager, who conducted the investigations on Google and who continues to manage them others and important ones against Google itself and the other GAFAs.

The political significance and impact on DMA

For years, the perception has emerged that it is not possible to re-establish competition in the Internet market with simple antitrust interventions. Perhaps this was possible at the beginning of the Internet age, when the market was still under development. In fact, the famous fine of 497 million euros imposed on Microsoft in 2004 by the then Competition Commissioner Mario Monti (predecessor of Vestager) certainly had a virtuous effect, facilitating the entry into the market of new operators (including Google itself), that otherwise they would not have made it if the Seattle giant had been left free to exploit its dominance over the PC operating system, preferring its own products and applications for the same, and discriminating against third-party companies.

But those times have passed and financial penalties no longer seem capable of intimidating those Internet giants whose turnover is now more than the GDP of certain sovereign states; nor can the requirements contained in an antitrust decision appear sufficiently effective and exhaustive, given that technology changes and the GAFA now seem omnipresent on any new market, also thanks to an acquisitions policy aimed at eliminating, albeit with rich prebends for sellers, any potential emerging competitor. 

Thus the Commission has proposed to adopt a new instrument of action, the DMA, which will allow it to immediately impose, and without preliminary investigations, ex ante rules on the Internet giants in relation to abusive behavior that are familiar to antitrust practice. Among these, the prohibition to benefit one’s services and products, compared to those of competitors, when this occurs with a ranking system on the platform itself (Article 6.1d of the DMA proposal): and this is precisely the core of the Google Shopping case which is the subject of this appeal rejected by the EU general Court today . 

DMA presents also other rules that crystallize the accusations most frequently brought by the EU against the GAFA: the obligation to keep the data separate (Article 5.a); the prohibition of using broad favorable clauses for one’s services (article 5.b); the obligation to allow business users to promote offers to end users acquired through the main platform service, which could have important implications for the Apple App Store ((Article 5.c); the ban on the use of non-public data generated by commercial users in competition with the platform, as hypothesized in the pending case with Amazon (article 6.1a); the obligation to allow the installation and effective use of third-party app stores (Article 6.1c), which could once again have important implications for Apple; and others that we cannot report here for reasons of brevity.

Had the EU General court upheld Google’s appeal against the Commission in the present Shopping case, the legislators who are negotiating the DMA proposal in Brussels, i.e. the Council and the European Parliament, would probably have wondered if DMA itself is really necessary, or, if anything, the Commission’s competition policy should not be revised. Currently the negotiation are stalling and lobbying forces against the legislative draft are fierce. But contrary to that, the EU General Court recognized that anti-competitive abuses exist and are serious, and now the political power can only hurry to entrust the Commission with every more effective interventions tools, including the DMA.

The doctrine of the essential facility 

It is surprising that the European Court has largely confirmed the legal approach of DG COMP, and has left only the crumbs to Google’s appeal. This was not taken for granted, as the case was extremely complex from a legal, procedural and economic point of view,  and in recent months there have been decisions by DG COMP annulled or reformed by the Luxembourg courts. The almost total victory therefore represents a formidable viaticum for the ongoing proceedings, against Google itself but also against the other GAFAs: Apple, Facebook and Amazon.

Particularly striking is the Court’s statement that Google’s search engine can, in principle, constitute an “essential facility”, that is to say, a resource whose importance for the market prevents the holder from doing what he wants with it: like the last mile of telecom incumbent network, to be clear. This is a legal recognition that paves the way for DG COMP in ongoing proceedings.

Case closed?

Given the importance of the issues at stake, which go far beyond the confirmed pecuniary sanction, it is to be expected that Google and the parent company Alphabet will appeal and attack the decision of the EU Court before the European supreme jurisdiction, the European Court of Justice, which is also located in Luxembourg. A final decision is foreseeable no earlier than 2023, but by that date the DMA should have already been adopted. Google’s efforts may therefore be vain.

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