Out-Law News 2 min. read
11 Feb 2013, 9:03 am
The Initiative for a Competitive Online Marketplace (ICOMP) has claimed that Google entered into a "broad-ranging and illegal network of agreements with partners from across the IT sector" in order to build itself a dominant position in the EU search market. It has made a formal complaint on the issue to the European Commission.
Companies including Microsoft and Foundem back ICOMP. Both are among those to have previously raised objections as to how Google treats search results for their, and its own, services. The European Commission is currently reviewing proposals Google have submitted to it that would see it alter its practices in order to settle claims that its behaviour amounts to an abuse of a dominant market position. Google enjoys a near-90% share of the UK and other major European internet search markets.
EU competition law prohibits companies from entering into anti-competitive agreements with other businesses or from abusing a dominant market position. The rules are set out in Articles 101 and 102 of the Treaty on the Functioning of the EU, respectively. ICOMP's latest claims about Google's activity relate to an alleged breach of the Article 101 rules on anti-competitive agreements rather than alleging an abuse of dominance.
"Google partnered with computer manufacturers to ensure that every new computer they manufactured would have a search-enabled Google toolbar exclusively pre-installed," ICOMP said in a statement. "It agreed with web-browsers that Google would be the exclusive default search engine offered to their subscribers. Google paid computer manufacturers to make it the exclusive default search engine for Internet Explorer. It also agreed with major software providers that the Google toolbar would be bundled into their most popular consumer software products."
"Google is currently pursuing a similar strategy in mobile search. Partnership arrangements with major mobile internet providers gave it massive coverage in the early days of mobile internet. Google capitalized on this by developing its own mobile handset operating system, Android. Android is now offered to millions of European users through exclusive agreements with manufacturers, carriers, input manufacturers, and software developers. Google has even moved into handset manufacture, by acquiring Motorola (and its key patents)," it added.
"By creating an illegal network of exclusive relationships with these important partners, Google achieved its key objective: gaining scale for itself while preventing its rivals from doing the same. As a result, rival search engines do not have access to the data that they need to improve their algorithms and attract more users," ICOMP claimed.
The consortium body said that Google's alleged illegal agreements bolstered its presence in the internet advertising market. It further claimed that Google also places restrictions on the way its customers can engage with rival services. The European Commission should also take into account the alleged anti-competitive agreements when reviewing the issue of whether Google has abused its dominance, ICOMP said.
"Google is already reaping the benefits of its anti-competitive network of agreements," ICOMP said. "It overpays its key partners for the privilege of exclusive access to as many users as possible, but it tends to underpay smaller customers (both advertisers and publishers) who have little bargaining power and no real choice of provider. Things will only get worse if Google is allowed to consolidate its current position as the quasi-monopoly gateway to the internet. In due course, consumer welfare as a whole will also deteriorate. Innovation in search and online advertising will be stifled, and the European digital economy will suffer."
"Accordingly, ICOMP believes that these concerns need to be remedied by the Commission obliging Google to end its anti-competitive practices going forward, and to unwind the effects of its anti-competitive practices to date," it added. "In ICOMP’s view it is essential that the Commission gives careful attention to Google’s unlawful network of agreements as it continues to consider the ongoing complaints that Google has abused its dominant position. Unless the Commission addresses the underlying Article 101 problem, any remedies agreed for Article 102 will be ineffective at restoring competition. They would only treat the symptoms, not cure the underlying disease."
