Professor Dr Josef Drexl, LL.M. (Berkeley), Dr Gert Würtenberger and Professor Jeremy Phillips, the seminar opened with a paper, "Abuse of dominance in digital markets: The case against Google" by Dr Thomas Höppner (Partner, Olswang Germany LL.P., Berlin). Thomas drew attention to the information asymmetry that existed between Google and its users, explaining the mechanism by which advertisers fed in their advertisements, other advertisers their keywords and users their queries. This is the three-sided platform on which Google's search engine business model is based. Building on this, Google added further information portals which it filled with its own content, user-generated content and other third-part content. This made the Google universe far more attractive both to users and to advertisers, rendering it unnecessary to visit other websites and harder for others to compete with Google.
Demotions are also an important part of the Google business plan. This happens when Google's algorithms are adjusted and websites find that their traffic falls 70-80% overnight. The adjustment of Google algorithms do not affect its own websites however.
Google Panda algorithm, which caused a massive drop in non-Google shopping trade, a drop which was only partially redressed by Google's introduction of fees for listing others' online shopping products. In April 2015 this was held to be an abuse of dominant position by the European Commission). Nb: complaints about this were first received in 2009; formal proceedings were instituted a year later but it was only on 15 April 2015 that the Commission issued its Statement of Objection.
Does Google's dominance equal abuse? Google says "no", and this is effectively an essential facilities matter -- while Google never refuses to deal with anyone. Really, said Thomas, it's a matter of monopoly leveraging, using a monopoly in one market in order to eliminate competition in another, an American invention. Google has offered various Commitment Proposals, none of which have been warmly welcomed by the Commission, not least because they are so favourable to Google.
A further consideration is how the size of the market is measured? Is it only by volume of search? This would be strange since the facility to do a search is not sold or paid for. And what about multi-platform searches: how would they be treated? In a dynamic market with low or no switching costs, even a market share of over 90% can be regarded as non-dominant, as the European Commission concluded in its Microsoft investigation. Google cannot stop innovating: if it did, it would instantly lose market share.
|Google's services: an umbrella|
for all search, but not needed
If the Commission were right, what would be the right solution?
- Showing 300+ shopping boxes on the search page?
- Presenting results of competitors in the Google Shopping box?
- Presenting only "the most relevant service"?
- Removing Google Shopping from all European web pages?
Each of these had its drawbacks, as Torsten explained.
UK, German and Dutch courts deal with the bulk of competition law litigation, in competition with one another. The British courts are happy to have a UK company at the heart of the case, so that they can bring non-UK businesses into the equation too. The rules on disclosure and the availability of injunctive relief made UK competition litigation attractive, particularly from the point of view of the claimant. In an appropriate case, damages can be huge, and UK proceedings are reasonably transparent, subject to the necessary respect for confidentiality.
Streetmap v Google raised some elements that fell outside of the Commission's investigation (ranking, bundling and map pricing). It goes to trial next week on bundling only. I Plus V v Google, a French action launched in 2012, has been stayed pending the Commission's ruling.