FairSearch applauds EU General Court Google shopping decision
10 November 2021
The following is attributable to Thomas Vinje, spokesman and counsel for FairSearch:
Google got whacked with this judgment and it is reverberating all the way to its Mountain View headquarters. The Court unsurprisingly refused to buy Google’s benevolent monopolist defence. The judgment is a vindication of the Commission’s persistence over a decade in putting a stop to Google’s abuses.
If Google is smart, it will take a page out of Microsoft’s playbook after its 2007 General Court failure, cut its losses, forego an appeal and move on. It did Microsoft a world of good.
This victory is only the first step. Today’s judgment gives the European Commission the ammunition it needs to tighten the screws on Google in other areas where it is throwing its weight around, like in online advertising, app stores and video streaming.
BACKGROUND:
This case was sparked by a complaint 12 years ago from Foundem, a UK-based comparison shopping service, whose business had suffered from mistreatment by Google. Foundem filed its complaint with the European Commission on 3 November 2009.
It took years for the Commission to investigate and reach a decision. Finally, it found on 27 June 2017 that Google had given itself a boost at the expense of its competitors and fined the company €2.42 billion. In addition, the Commission was supposed to impose remedies but Foundem stated that the remedies were too little and too late.
The case came about because Google leveraged its near monopoly position in general search (nine out of 10 Europeans use Google search) to enter Foundem’s market in comparison shopping services.
Google made its money by collecting data monitoring people’s searches and then matching ads to their interests. Searching for shoes? An ad or ads for shoes pop up and you can click on them. When you click, Google gets paid.
Foundem and others took a very different approach with their comparison shopping services. Search for shoes and Foundem’s search box would pop up, showing five pairs of shoes of your precise choice, along with the price and where they were available. When you clicked on your choice the merchant would pay the comparison shopping service a fee.
Google decided to take over that business and started its own shopping service but few were interested. They were satisfied with established players like Foundem and saw no reason to switch.
But Google ran the platform and had the power to manipulate it. So, Google re-wrote its algorithm to boot Foundem and other shopping services to page four or worse of a search request. Most people do not look at search results beyond the first page so this was like being sent to Siberia.
At the same time, Google exempted its own service from the algorithm and placed it at the top of the results on the first page. That worked. People went with what they saw first.
For all practical purposes, the others had disappeared.
It is a violation of competition law to use your dominance in one market (general search) to take over an adjacent market (comparison shopping). That is what Google had done, and why the European Commission found it violated competition law.
End