Vestager’s big tech tactics face a moment of truth with Google verdict – POLITICO


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Are antitrust cases the best way to tackle big tech giants like Google?

Margrethe Vestager will take part in the weekly meeting of the College of European Commissioners on Wednesday when she hears the answer to this question. The court verdict on its pivot Google Shopping the case is about to land, and she’ll want to avoid a sense of déjà vu.

The EU’s Head of Digital and Competition was at the College on July 15, 2020, when a member of her team handed her a note stating that Luxembourg judges had canceled her € 13 billion tax bill regarding Apple’s tax affairs in Ireland, as Vestager recently Related on POLITICO’s Global Insider podcast.

“I was at the College reunion and because you’re there you’re a little calm… You can’t completely collapse,” Vestager said, when asked how she reacted.

The tension will be at least as palpable on Wednesday around 11 a.m., as the eyes of the world will be on the upcoming judgment in the shopping case of the EU General Court in Luxembourg.

If the amount of Google’s antitrust fine (2.4 billion euros) is much lower than Apple’s tax bill, the potential repercussions are much greater.

A loss for Google could be a huge legal headache for senior management in Mountain View, Calif., Potentially forcing the company to make significant changes to its business model.

For Vestager, who desperately needs a win in one of its big competition cases, a favorable ruling could pave the way for more antitrust action against Big Tech. A loss could lead it to tackle similar practices with new regulatory powers being developed in proposed digital markets legislation.

In the first of three EU competition decisions against US search giant Vestager in 2017 fine Google 2.4 billion euros for unfairly favoring its own shopping comparison service over its competitors. It is the second biggest antitrust fine ever imposed on a single company by Brussels, eclipsed only by the Google Android case.

“Google abused its market dominance as a search engine by promoting its own comparison shopping service in its search results and demoting those of its competitors,” Vestager said in announcing the fine of 2017.

Google disputed the decision of the EU General Court in Luxembourg, stating that the changes made by the company to the presentation of its research results were aimed at offering better service to its clients.

After more than a decade of legal battles, following the first complaint against Google in 2010, the lower EU court will now deliver its judgment. And the stakes are huge, both for Google and Vestager.

“This was the case that Commissioner Vestager chose to prioritize at the start of her first term,” said Alec Burnside, lawyer at Dechert in Brussels, who has acted for numerous plaintiffs against Google. “Vestager chose Shopping as a vehicle to set a precedent. A dozen other plaintiffs have waited behind the scenes since then, hoping the Commission will apply the Shopping framework to their own grievances against Google.

Next step: Restaurants, flights and hotels?

The search giant could face a new wave of investigations into searches for restaurants, flights or hotels, if the judgment opposes them. And a defeat for Google would strengthen the hand of shopping comparison competitors who are claiming billions in damages for lost revenue.

This would add to the myriad of antitrust issues the company’s lawyers already face.

After the Shopping decision, Vestager fine Google a record 4.34 billion euros on its Android operating system in 2018 and 1.49 billion euros more The advertisement on other websites in 2019. In June, she opened another investigation, this one on Google online advertising practices.

In addition to legal challenges and arguments over the behavioral changes ordered by the European Commission, Google was the subject of three new investigations in the United States last year. Lawmakers on both sides of the Atlantic are also preparing new rules on digital gatekeepers that include a ban on unduly promoting their own services.

Beyond the battle with Google, Vestager’s overall antitrust approach to Big Tech is in line with the court’s impending purchase judgment.

The framework she used in the Google case of a dominant company using its control over a crucial online infrastructure (search results) to capture new markets (comparison shopping) applies broadly to other EU cases, including those involving Apple’s App Store, Amazon’s use of data, and Facebook’s Marketplace.

“The judgment will either uphold or reject the Commission’s antitrust approach to how tech giants wield their power over their platforms,” ​​said Friso Bostoen, an academic studying the regulation of anti-competitive behavior by online platforms at the ‘University of Louvain.

A defeat would also be further tarnish Vestager’s reputation as an effective competition authority after losing its big tax lawsuit against Apple.

Whatever the outcome, an appeal to the EU’s highest court, the European Court of Justice, is expected.

Google contends that the way it displayed results in general search was a product improvement and was part of its business model. “Shopping ads have always helped people find the products they are looking for quickly and easily, and have helped merchants reach potential customers,” Google said on launching its call.

If the court sided with Google on the basis of this “efficiency defense”, the European Commission could be encouraged in the future to pursue similar cases under a new regulatory framework for digital doorphones. Unlike antitrust cases, the Commission’s proposal for a Digital Markets Law does not allow companies to justify their behavior with efficiency arguments.

Critics revolve around

Wednesday’s court ruling will be closely watched by the many companies that have complained about Google’s behavior.

U.S. local business referral site Yelp, which saw its 2014 complaint frozen as Vestager decided to restrict its investigation to online shopping, is now hoping a favorable ruling will convince the EU to move the EU forward again. ‘case.

“We hope Vestager and the DG COMP team will undertake a local search assuming they win,” said Luther Lowe, Yelp’s public policy manager, referring to the EU Competition Department .

Travel agencies offering hotel and flight bookings such as Expedia and eDreams Odigeo also hope that a positive outcome will see their complaints progress.

“We encourage the European Commission to take action on travel, further pursuing complaints from EU Travel Tech members,” said Emmanuel Mounier, head of the industry lobby, EU Travel Tech.

Comparators of purchases are now two steps ahead in litigation. A court approval of the Commission’s decision could strengthen their arguments for damages and changes in Google’s practices.

In 2017, Google was ordered not only to pay a fine of 2.42 billion euros, but also to grant equal treatment to its competitors. To remedy this, he devised an auction system that has since been criticized by many rivals.

“We hope that with a positive decision (…) the Commission will act to improve and put in place a much better remedy than what we have in place in Europe”, said Richard Stables, managing director of the comparison site Kelkoo Award.

Kelkoo has several billion euros damage case against Google appearing before the courts of London and Paris, the latter for Le Guide, a French price comparison company that it acquired in 2016. The German site Idealo, a subsidiary of Axel Springer, owner of POLITICO Europe, in 2019 deposit a claim for damages of around 500 million euros in Berlin.

Kelkoo’s Stables said a number of companies are waiting to see what happens with the judgment.

“If the decision is upheld, I imagine there will be a large number of new [damages] cases in courts across Europe, ”he said.

According to Renato Nazzini, professor of competition law at King’s College London, a favorable judgment would be “clearly a step forward” for companies claiming damages, but no guarantee of profit. “The difficulty in these cases is to prove that your losses were caused by abuse by Google, ”he said.

The Commission is perhaps hoping that the prospect of more cases of fines and damages could force Google to make concessions, changing the way it displays its search results, not only in purchasing but also in other research services. Another option would be for national competition authorities to open new cases.

“I don’t know if the Commission has the urge to launch 10 more Google cases,” Nazzini said. “They have a number of other big tech investigations going on.”

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