‘Competition’ encourages companies to offer consumers goods and services on the most favourable terms as per the European Commission’s (“EC”) Antitrust policy. Competition promotes efficiency and innovation, while providing prices and offers that are consumer-friendly. In order for market competition to be effective, although companies are required to act independently of each other, they are subjected to pressures exerted by their competitors.
In light of this, the EC’s Antitrust policy is developed from two legislations - Article(s) 101 and 102 of the Treaty on the Functioning of the European Union (“TFEU”). On one hand, Article 101 prohibits anti-competitive agreements between two or more independent market operators. On the other hand, Article 102 prohibits abusive behaviour by companies holding a dominant position in any given market. In light of this, the EC helps to shape the European Union's (“EU”) overall strategy, proposes new EU laws and policies, monitors their implementation and manages the EU budget in the course of Antitrust laws and its implementation. Likewise, as France falls under the EU jurisdiction, the aforementioned model is followed across the territory.
The Competition Authority in France (“FCA”) is the one in charge with ensuring proper market competitiveness at the same time guaranteeing that the consumers can choose the best price. FCA evaluates anti-competitive practices and can decide to impose sanctions, fines or make the company change its commercial practices and behavior in the future.
While the FCA is the highest antitrust authority in France, the EC is highest antitrust authority for the EU as a whole. EU competition rules apply directly in all EU countries - the courts in the respective EU country will uphold them. These rules apply not only to businesses but to all organisations engaged in economic activity (such as trade associations, industry groupings, etc).
Some of the practices that are considered anti-competitive by the EC (and likewise, the FCA) include -
- horizontal and/or vertical agreement: those agreements that can prevent, restrict or distort competition by limiting access to a market, making prices higher or lower, limiting investment or technical progress, dividing markets or suppliers and other actions;
- abuse of dominance: excessive use of a dominant position in the French market;
- mergers: no company mergers are allowed for anti-competitive purposes like straightening buying power to put others in a position of economic dependence or for the purpose of lessening the competition on the market.
An antitrust suit by a competition authority under EU principles aims at bringing actions against companies who fail to practice fair business competition, and additionally prevent any enterprise from being monopolized. This article aims to unpack the antitrust suit filed by French authorities against Google, and the implications that flow out of the same.
Unpacking the French Antitrust Suit against Google
Recently the FCA fined Google nearly $270 million for abusing its dominant position in the online advertising industry after Google came into a final settlement with the authority. The FCA stated that Google had unfairly sent business to its own advertising services and discriminated against its competition. In light of this, Google has agreed to pay the said amount and change the way it operates its business globally in response to the antitrust lawsuit by France that hit the core of its online advertising power.
However, it is important to note the legal points that arise from this case. Among other legal issues, the issue around the practice of self-preferencing was raised against Google due to its advertising practices. In simple terms, self-preferencing is a practice which includes actions by operators designed to give preference to their products or services over those of their competitors.
As per FCA, Google misused its dominant powers by self-preferencing its two online advertising service tools -
- DoubleClick for Publishers (DFP), which allows publishers of sites and applications to sell their advertising space; and
- SSP AdX listing platform, which organizes auctions that allow publishers to sell their advertising space to advertisers.
The FCA also alleged that several other forms of self-preferencing from Google’s advertising-technology tools have been practiced, which includes SSP AdX’s offering better interoperability options to the DFP. As visible from the FCA’s statements, the advertising regime practiced by Google has harmed several publishers, as well as the competitors of various mobile-phone applications and websites. In regard to this, it stated that the responsibility of a company like Google’s with a dominant market position is to avoid unfair competition.
FCA Head Isabelle de Silva said: “Google used its vertical integration to skew the process and win almost every time. This case has a historic dimension, it’s the first one in the world to deal with the processes of display ads. It’s also the first time that Google entered into a transaction with a competition authority”. Further, she stated that “The fine, along with Google’s commitment to changing its practices, will make it possible to re-establish a level playing field for all players, and the ability for publishers to make the most of their advertising space.”
Further, the FCA has said that Google is expected to practice fair competition by making sure that competing platforms are able to accurately access into its server. It is also required to ensure that rivals are allowed to compete fairly and to allow publishers using rival advertising servers to access Google’s SSP Ad-X in time.
As part of its first step against this controversy, Google announced that it will make a number of changes to its advertising technology. Additionally, Maria Gomri, Legal Director of Google France stated that:
“We recognize the role that ad tech plays in supporting access to content and information and we’re committed to working collaboratively with regulators and investing in new products and technologies that give publishers more choice and better results when using our platforms.”
What are the Lessons that arise? On similar lines, a prominent case of self-preferencing is that of “Google Shopping”, where the EC had discovered the fact that the defaulting company has abused their dominant position by favouring comparative shopping companies, which in turn was discriminating against its competitors. The EC had also launched an investigation into Amazon and Apple on practices that are considered to be beneficial to their operations.
Further, France is not that only country to hold tech giants accountable for their actions. The following are examples from several jurisdictions across the globe:
- The US Department of Justice (“US-DoJ”) filed a lawsuit against Google in December, 2020, accusing it of violating antitrust laws. The lawsuit noted that Google has a "monopoly" in the field of online advertising, occupying more than 70% of the search advertising market.
- Several American states including Texas, Alaska, Florida, Montana, Nevada, and Puerto Rico have come together and filed a lawsuit against Google, accusing it of violating antitrust laws to promote its already dominant advertising business.
- According to a report, UK and European Union regulators simultaneously launched a formal competition investigation on Facebook. The UK Competition and Markets Authority (“UKCMA”) stated that it is investigating whether Facebook is abusing its dominant position in the social media or digital advertising market by collecting and using advertising data.
- The Competition Commission of India (“CCI”) vide its Order dated 22 June 2021, has directed an investigation upon finding a prima facie case of abuse of dominance against Google for allegedly compulsory tying of its 'must have' app , the licensable Android Mobile OS and Google Play Store with Android TV Operating System (Licensable OS developed by Google), Fire TV (Licensable 'forked android' OS developed by Amazon), etc. in the market for licensable Android smart TV operating systems in India, and the market for app stores for android mobile operating systems as well as in the associated relevant market for app store for Android smart TV operating systems in India after finding that Google is dominant in the said markets .
In light of the above discussions, it shall be interesting to see the positions taken by authorities from various jurisdictions around the globe, and the consequences that shall be meted upon Google for its practices. Not only shall this decide the future course for the company, but also act a precedent for other technology giants in the global market that hold dominance in their respective markets.