Google’s failed appeal of shopping case underscores broader competition concerns in the EU

The penalty represents one of the largest antitrust fines on record (the biggest was also issued to Google when, in 2018, the European Commission fined the company €4.34bn [$5.1bn] for breaching competition law when it used its Android smartphone tech to promote its own search engine).

What’s the basis for the decision?

After the original decision in the shopping case was made in 2017, Google appealed the ruling multiple times, initially petitioning the EU’s General Court. Google claimed that the impact of its practices on competitors wasn’t “substantial,” but the court rejected the arguments in 2021.

Then, Google escalated its appeal to the CJEU. Now, 14 years after an initial investigation into the tech titan’s shopping business began, the CJEU supports much of the European Commission’s original decision, determining that Google’s practices were discriminatory and hindered competition in the price comparison market. Part of the ruling will not stand, however, as the CJEU determined that the Commission was not able to evidence that Google’s practices could have stifled competition in online search at large.

In a press release published today, the court said it agreed with the General Court’s findings that “Google’s conduct was discriminatory and did not fall within the scope of competition on the merits.”

“Of course a dominant company, as any other company, are free to innovate in all fields but in doing so they should compete on the merits of their innovation,” said the European Commissioner for Competition, Margrethe Vestager, at a press event this morning. “However, they cannot lean on the competitive advantage that they hold because of their market power.”

Vestager called the court’s decision “a landmark in the history of regulatory actions against big tech companies.”

Google is displeased with the verdict. “We are disappointed with the decision of the Court,“ a spokesperson said in a statement shared with The Drum.

The spokesperson said the company made changes to its business in 2017 to comply with the Commission‘s ruling. “Our approach has worked successfully for more than seven years, generating billions of clicks for more than 800 comparison shopping services.”

In any case, the company’s efforts to overturn the penalty have now reached a dead end, leaving Google with little recourse.

What are the broader implications for tech regulation?

This case – and similar competition cases – have already helped to reshape regulatory oversight of the tech industry, both in Europe and globally. Namely, beyond imposing penalties, the Commission’s various investigations into Google’s practices in recent years helped pave the way for the Digital Markets Act (DMA), a law enacted in 2022 that aims to prevent dominant tech companies from abusing their market power in a wide range of online services. The DMA has introduced more strict guidelines for companies like Google, Amazon and Apple that aim to protect market competition and consumer choice.

And in the telling of Dirk Auer, the director of competition policy at the International Center for Law & Economics, for these tech giants, “the DMA is is way stronger than competition law has much tougher provisions. “

However, the DMA has its limits. Most importantly, the law only applies to very large tech companies, leaving out smaller players. It’s a relevant consideration. As Daniel Friedlaender, senior vice-president and Europe head of the nonprofit organization the Computer & Communications Industry Association, pointed out in a statement today. “While the concerns raised in the original … [Google Shopping] decision from 2017 have been resolved in the meantime with the introduction of the Digital Markets Act and Google’s search service being subject to those rules, the case revolved around a bigger question …. At the core of today’s judgment is the question how non-gatekeeper tech firms should design their products and services to be compliant with EU competition law. That is, those companies that actually are not in scope of the DMA.”

For example, companies like Nvidia and OpenAI – hugely influential in the digital economy – currently fall beneath the threshold set by the DMA, meaning that they don’t have to comply with the same rules.

Furthermore, while policies like the DMA aim to support healthy competition in European markets and keep big tech’s dominance in check, there’s evidence to suggest that the EU faces real economic threats from inadequate levels of innovation and competition.

Just yesterday, the EU Commission published a damning report on the state of competition in the EU. Economist and former Prime Minister of Italy Mario Draghi penned the report, in which he contended that the EU faces dire consequences for its failure to foster adequate levels of competition in key markets. He said the bloc has “largely missed out on the digital revolution led by the internet” and that some policies put the EU in a position where it “must genuinely fear for [its] self-preservation.”

“It is remarkable that [this CJEU] opinion, demonstrating European hostility to innovation and backwards attitude towards the global, digital economy, would come out only one day after that report was released,” says Gus Hurwitz, senior fellow and academic director at University of Pennsylvania’s Center for Technology, Innovation, and Competition.

What about Google’s other open antitrust cases & appeals?

While this ruling brings the Google Shopping competition debate to a close in the EU, the search giant is still embroiled in a smattering of other legal battles. In the EU, it is appealing additional EU fines totaling around €8.25bn, which represents penalties related to its Android mobile operating system and its AdSense ad platform. Google is also facing ongoing investigations into its advertising business, which could result in even stricter regulatory measures.

Whether the CJEU’s verdict today will have any bearing on these other appeals remains to be seen, but Auer, for one, is skeptical. ”It’s not impossible, but it’s unlikely that on a subsequent Google Android appeal, [for example] the higher court, the Court of Justice, would set aside the lower court’s assessment.”

In the US, meanwhile, Google met the Justice Department on Monday on its first day of what’s expected to be a weeks-long trial over another antitrust case concerning the company’s adtech business. The Justice Department has accused Google of operating an unlawful monopoly over the digital advertising ecosystem by integrating its ad products, self-preferencing its ad exchange and acquiring adtech companies to stem competition.

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