Google In Dire Straits As EU Court Upholds EC’s $2.8B Antitrust Ruling

Google just lost yet another legal battle against the European Commission which has so far imposed over $9.8 billion in fines on the Internet giant for anticompetitive practices. Following the court’s verdict that upholds a $2.8 billion penalty in a case lasting 11 years, Google will either have to fork out the cash or appeal in Europe’s highest court.

Internet giant Google’s attempts to overturn an antitrust ruling against it by the European Commission has failed to bear fruit. The General Court, European Union’s second-highest, said that Google indeed engaged in anticompetitive behavior and “recognizes the anticompetitive nature of the practice at issue.”

The court upheld the original €2.42 billion (~$2.8 billion) fine imposed by the EC, the EU’s executive branch. The fine was imposed in 2017 after almost seven years of investigations led the EC to conclude that the search giant abused its dominance in the online/web search space to give itself an unfair, not to mention an illegal edge over smaller competitors.

In its ruling in 2017, EC said Google exploited its near-complete dominance in the web search domain to promote its own comparison shopping service while demoting those offered by competitors. If you weren’t aware, Google enjoyed a 90%+ market share in 2010 and 86%+ share in June 2017 at the time of the ruling.

In the same year, competition commissioner Margrethe Vestager saidOpens a new window , “What Google has done is illegal under EU antitrust rules. It denied other companies the chance to compete on the merits and to innovate. And most importantly, it denied European consumers a genuine choice of services and the full benefits of innovation.”

The fine of $2.8 billion was the biggest-ever when it was announced. It was later dwarfed by a €4.34 billion ($5 billion)Opens a new window fine Google received in 2018 for abusing the dominance of its Android mobile operating system. Besides these two, Google has also been penalized €1.49 billion ($1.74 billion)Opens a new window for AdSense in 2019, and is being investigated by the EC over its online advertising or Ad Tech business since June 2021.

Google’s Ad Tech business also drew the ire of France’s antitrust watchdog, the French Competition Authority, which fined the company €220 million ($268 million)Opens a new window in June this year. Put together, all four amount to over $9.8 billion.

See More: Fourth Time’s the Charm: EU Probes Google Ad Tech Over Antitrust Behavior

The upholding of EC’s judgement by the court is not, however, the final nail in the coffin for Google. The company can still appeal to the European Court of Justice (ECJ), the highest court in the EU. However, it goes to show that the EU, with all its governing bodies, means business when it comes to protecting fair business practices.

The General Court’s finding also doesn’t bode well for other Big Tech companies, such as  Apple, Amazon, and Facebook, who are dealing with their own antitrust cases in the EU. For instance, it was reported in October that the EU was preparing to charge Apple for anti-competitive practices. The charge is based on an earlier investigation launched in 2020 to determine if the Cupertino giant promoted Apple Pay at the cost of other contactless payment services by limiting the use of NFC chips in iPhones.

It remains to be seen if the Digital Markets Act (DMA), proposed in December 2020 as a legislative measure against technology companies will change the way things are currently. With DMA, the EU will essentially move to prevention rather than going back to discipline transgressions of the past.

For instance, have a look at what the General Court saidOpens a new window :

• It “recognizes the anticompetitive nature of the practice at issue”
• “The Commission correctly found harmful effects on competition”
• It “rules out any objective justifications for Google’s conduct” since “Google has not demonstrated efficiency gains linked to that practice that would counteract its negative effects on competition.”

It simply reiterated the previous findings without conceding anything, and rejected all of Google’s arguments. No one is the winner here. In fact, with inflation at play, it could be financially advantageous for Google to appeal to the ECJ.

But as a silver lining for Google, the court did acknowledge that Google Search specifically, not comparison shopping results, does not hamper competition, even if the company plans to expand into a neighboring market. 

There is no word from Google on whether it plans to appeal to the ECJ. However, web search rival Yelp lost no time in applauding the General Court’s ruling. Luther Lowe, Yelp’s SVP of public policy, said, “While the decision focuses on comparison shopping, it establishes a framework for the swift assessment of the illegality of this type of conduct in other verticals, namely local search. The local search market has not yet tipped, and European consumers conduct local searches on Google billions of times per week.”

“Rather than accept a Pyrrhic victory, the European Commission must now take this favorable precedent and prosecute Google for its parallel abuses in the local search market and allow services like Yelp to compete on the merits.

“It may be hard to remember now, but Google and its Big Tech ilk were not always this unpopular. In 2015, Vice President Vestager exhibited incredible courage by showing the world that Google’s abuses were not acceptable. She should be commended for this courage.

“But history’s verdict on this period will be based on whether this odyssey ultimately produced a tangible impact for European consumers, which is why it is vital that these tools be utilized in markets where competition remains salvageable,” he added.

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