Europe’s new top antitrust official, Margrethe Vestager, last week moved forward with a major antitrust suit against Google. At issue is the same “search bias” question that the U.S. Federal Trade Commission (FTC) investigated for two years. The FTC, however, closed its investigation due to lack of evidence of an antitrust violation and any feasible remedy likely to benefit consumers. The European Commission disagrees and is accusing Google of abusing its dominant position in search by favoring its own products, particularly its online shopping service.
{mosads}Google believes it can better serve its users by directly answering their questions rather than simply referring users to other sites. For example, when users search for “best TV deals,” Google provides a list of deals — prices, products and where to purchase them — in addition to links to other shopping sites. The FTC determined that such actions had a pro-competitive rationale and there was insufficient evidence of consumer harm. In closing the case, the commission stated this clearly: “The totality of the evidence indicates that, in the main, Google adopted the design changes that the [c]ommission investigated to improve the quality of its search results, and that any negative impact on actual or potential competitors was incidental to that purpose.” Contrary to some press reports, the decision to drop the case was supported by all the relevant FTC offices, including the Bureaus of Competition and Economics and the general counsel’s office.
While U.S. antitrust authorities are appropriately skeptical of complaints by competitors — who are viewed as trying to use the process to raise their rivals’ costs — European authorities are less so. In important respects, the Google case is a testament to the persistence of Microsoft and other Google rivals who mounted a concerted campaign, first with the FTC and then with the European authorities, to keep Google in the antitrust cross hairs and eventually embroiled in major litigation.
Google is not alone in being in the cross hairs of European regulators. On the same day that the European Commission filed its “Statement of Objections,” an influential Brussels think tank held a conference, “The Google Antitrust Investigation and the Case for Internet Platform Regulation in Europe.” The discussion focused on the supposed need to regulate Internet platforms such as Google, eBay, Facebook, Apple, LinkedIn, Amazon, Uber and Airbnb. All of these are U.S. companies. One need not be totally paranoid to detect a whiff of protectionism, which is also reflected in a series of recent speeches by EU digital commissioner Gunther Oettinger. As reported in The Wall Street Journal: “The European Union should regulate Internet platforms in a way that allows a new generation of European operators to overtake the dominant U.S. players, the bloc’s digital czar [Oettinger] said, in an unusually blunt assessment of the risks that U.S. Web giants are viewed as posing to the continent’s industrial heartland.”
Since the FTC closed its case in 2013, the search space has become, if anything, more competitive. In addition to competition from general search engines such as Bing, Google faces competition from Facebook, Apple (Siri) and Amazon — all of which perform search functions. There is vigorous competition in shopping sites in Europe with Amazon and eBay being the major players. Numerous local shopping sites provide additional competition. In fact, Google is a minor player with a very small share of this (online shopping) market. And there is a whole new world of apps through which consumers search for a variety of information, including product information.
Thus, despite the fact that Google’s share of general search is higher in Europe than in the U.S., it is unlikely the European authorities will now find harm to consumers or to competition where the U.S. authorities didn’t.
This case should have settled years ago, as Margrethe Vestager’s predecessor tried to do. Now, Vestagar should do what’s best for consumers and innovation and find more productive activities.
Lenard is president and senior fellow at the Technology Policy Institute.