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            EU vGoogle – What does it mean for Google?

            The European Commission's decision to fine Google €2.42 billion for breach of EU competition law is significant for Google – but also exposes failings in the Commission's processes.

            Date: 29/06/2017

            The Commission's decision finds that Google abused its market dominance as a search engine by giving preferential treatment in search rankings to its own comparison shopping service.  Google is to be given just 90 days to remedy the abuse, which may require wholesale modification of how its algorithms operate. 

            For Google

            • The record fine has dominated headlines, but is unlikely to be the most significant factor for Google – whilst it equates to over 9% of Commission fines in all cases since 1990, it is only around 3% of Google's annual revenue.
            • More significant long-term is the finding that Google has a dominant market position in "general internet search markets" in every one of the 31 countries of the EEA – opening the door to challenges across a range of products where Google's search engine is the gateway for consumers.
            • Implementation of the decision will be another headache for Google – Commission objections to how Microsoft complied with abuse findings landed it with additional fines of €1.4 billion.
            • Finally, whilst Google is likely to appeal the decision, it will in the meantime face "follow-on" damages claims from any business that can show it has suffered losses as a result of the abuse – and claimants can rely on the Commission decision as establishing that Google has broken the law, without any need for further proof.  Indeed, at least one claimant (Kelkoo) had already launched a damages claim in the UK even before the Commission ruling. 

            For the Commission

            • Issuing a decision in the case is undoubtedly a milestone, but will do little to encourage complainants – the case was originally opened as long ago as 2010, several lifetimes in technology markets.  Victims of competition breaches seeking a speedy remedy may turn to the courts rather than the Commission – if they stay in business long enough.
            • Moreover, comparison shopping services were only one part of the broader case initiated in 2010 – and arguably a minor one.  Thorny issues such as Google's use of newspaper publishers' content in its search engine remain unresolved.
            • The case's long gestation also raises questions over why the Commission entertained no less than three offers of settlement through commitments offered by Google, rather than pursuing enforcement.  The case has been dogged by allegations of political interference on both sides, putting at risk the Commission's reputation for applying competition rules impartially and objectively.
            • The case also risks becoming another battleground for commentators – largely US-based – who see the Commission as engaged in a witch-hunt against major technology businesses because they are big, American and rich – and because their activities and methods are often at odds with the highly regulatory and protectionist instincts of EU policymakers. 

            What next?

            Appeals and implementation are the immediate issues, but in the longer term the Commission can be expected to conclude more abuse cases.  It has already issued Statements of Objections (provisional charge sheets) over Google's practices in relation to the Android mobile operating system and advertising exclusivity restrictions through its AdSense platform. 

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