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New horizons for the policymaker after the Commission’s decision on Google?

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By Giovanna De MinicoProfessor of Constitutional law at the University of Naples. In June the European Commission levied a €2.42 billion fine against Google for breaching EU antitrust law.  In addition, the Commission ordered Google to give equal treatment to rival shopping services.  While the full decision of the Commission is yet to be published, in this post Professor De Minico considers the strength of the case against Google and its significance for the future.

The facts

The focus of the case, inferred from the press release, can be stated as follows. The Commission focuses on Google’s behaviour as a provider of a “comparison shopping service”. Through this service Google “allows consumers to compare products and prices online and find deals from online retailers of all types, including online shops of manufactures, platforms and other re-sellers.”

Two components of the case are especially important.

First, Google holds a dominant position in the market of search engines. As the European Commission points out, it has a 95% market share. However, this could not be considered per se an evil. As will be outlined below, EU antitrust law does not punish market dominance as such, but only its abuse.

Second, as the Commission recognizes, the markets for Google’s services as a search engine and its comparison shopping service are deeply interconnected. The more a search engine is addressed with queries, the more attractive it becomes to advertisers. From Google’s perspective, it makes business sense to invest in the search engine and gather a greater mass of data. However, the result is to create barriers to prevent newcomers from entering the search engine market allowing Google to transfer its dominant position from the original field to the market of comparison shopping services.

The Commission therefore concluded that Google abused its power as a search engine to gain a privileged position in the comparison shopping market, bringing serious harm to competition. For example, Google purposely presents their own products on the first page of search results. This inevitably favours Google’s products in the customers’ choice over competitors’ products.

 The legal framework

The Commission’s legal authority to proscribe Google’s behaviour emanates from Article 102 of the Treaty on the Functioning of the European Union (TFEU) and Article 54 of the EEA Agreement. Both of these provisions prohibit the abuse of a dominant market position.

The specific sanctions deployed by the Commission are inspired from the remedies provided in the Telecommunications Directive Package 2002, as modified in 2009. This allows the National Regulatory Authorities to mandate that former monopolists – when they are incumbents and are both Internet access and services providers – to share their own fixed network with other communication services providers who do not own a network. The incumbent (in this case Google) will have to provide access to its competitors with the same contractual and technical conditions granted to its own divisions.

Thus, the remedy that the Commission gave Google is not substantially different from the remedies of  asymmetrical regulation. This defines the rules aimed at imposing a unilateral obligation, namely only on one part of a relation, in order to equalize the different initial position between contractors. In the telecommunication field this duty basically consists of a specific obligation: the ex-monopolist, as owner of the network,  must allow other operators  to access  its line so that  all the entrepreneurs could begin the competition from the same starting point. The objective of this intervention in contractual autonomy is to create a competitive market through fictio iuris, with conditions similar to those that a competitive market would produce on its own.

Turning to our Google case, let’s compare the remedy stated by the Commission and the quoted asymmetrical regulation.

The difference is that in this case the obligation of equal treatment is an ex post sanction, aimed at restraining an already performed abuse of dominant position; on the contrary, the asymmetrical measures are enacted ex ante and with the objective of avoiding the illegal degeneration of the ex-monopolist’s market power into an abuse of power. Finally, the former tend to restore the competition status quo, as it was before the infringement occurred; while the asymmetrical remedies look forward and tend to improve the existing level of competition. Here, different preconditions and ends are connected to a substantially equal conduct: i.e. making its own asset available as an essential facility.

In other words, the antitrust law is autonomous from the asymmetrical, and the latter is not applicable here because the European legislator has evaluated the general antitrust rules sufficient to keep the market competitive.

The Case Against Google

Google’s alleged violation of antitrust law stems from the way Google answers questions.  For instance in response to a typical question such as: “which hotel has these given characteristics in this given area?”, the reaction of the engine is prompt, unilateral and per facta concludentia.  It will show the hotels sponsored by Google in the first results page, and those indicated by the competitors only in the following screens.

The algorithm has been designed by Google with selective and self-oriented criteria, so much so that the competitor’s indication is inevitably positioned after the first page. At the same time, Google’s own “comparison shopping service” appears at the top of the list. This happens for the simple reason that the latter service is exempted from the algorithm’s test. This is well explained by the Commission in its press release:

“Evidence shows that even the most highly ranked rival service appears on average only on page four of Google’s search results, and others appear even further down. Google’s own comparison shopping service is not subject to Google’s generic search algorithms, including such demotions”.

But could one expect an objective assessment from a researcher which is inherently and permanently affected by a conflict of interests? Google uses the asset of the upstream market – the comprehensive data generated by our questions to the search engine – when it wears the vendor’s jacket, thus dressing up its “comparison shopping service” in order that it may look better than the competitor’s one.

Remedial Response

In light of these facts, we can consider the Commission’s decision from a legal perspective. The Commission should be given credit for focusing not only on the search engine market – where Google is an uncontested master – but the market of comparison shopping services and recognizing that Google has used its power unfairly. Further the Commission should also be credited for having imposed a sanction equal that highlights the illegal behavior. In the future, Google will have to grant to its competitors the same treatment it gives to its “comparison shopping service”. In sum, no unjustified advantage will be admissible from now on.

 The Future

Despite some strengths in the remedial response, the Commission has perceived only a fragment of the problem. Google has built its economic strength upon our data, i.e. the very personal and non-personal information it acquires from us in exchange for its mail or cloud services. These services are, of course, only nominally free: the user pays for them by transferring parts of herself of which she loses track. We have even less rights than a minority shareholder, who is at least entitled to know how things are going in a company governed by others.

Thus, there are at least two affected values: the market and the right to self-determination of the virtual identity. Therefore, although the Commission has taken the antitrust law as a starting point, what is necessary is the development of sanctions in defence of the person’s dignity. These sanctions should be designed to protect this new aspect of privacy, related to those chaotic and constantly growing masses of data, which generate more information, always new and unpredictable at the moment when data is collected: the big data.

Such a concept of privacy is so unprecedented that we could be in doubt whether it is still the ‘right to be let alone’ or a new fundamental right. It is quite different from the traditional right of privacy, which is satisfied by some basic rules: informed consent, minimisation of collection – as to its time and object – and specific purposes. Now, the traditional triad is torn apart by the impact with big data. Indeed, how could the consumer consciously consent if she is not aware of the further use of her data? How can she be made aware if such further use is unpredictable, with the consequence that any ex ante consent would be inutiliter datum? Also, the safeguard given by the specificity of the aim vanishes because the biggest profits come exactly from the secondary and collateral uses, which are still undefined when the data are collected. For the same reasons, the gathering of data will not be limited to its duration and object, because the broader is the gathering, and the bigger the data set, the higher the probability of drawing useful behavioral predictions.

Then, will privacy disappear? No. Simply, under pressure from the big data revolution the old categories of the fundamental rights are falling to pieces. This is a radical shift and a new concept of privacy is struggling to find its way.  It will involve different demands: from informed consent to a juridical liability for those who gather data, or – more precisely – to a demand of preventive policies and risk-assessments.

The same rule, from the data producer’s point of view, translates at least into a right to  know of the search engine’s modes of operation; into a right to clear and unambiguous  information about the subject collecting our data (such as Google) and the one offering goods on the basis of this data; but also in a right to an impartial third party’s oversight on the reliability of the data gathering algorithm and, finally, into a claim to challenge any unreliable behavioral predictions inferred from the big data. This list is not exhaustive and so it doesn’t exclude other responsive solutions.

Such an ambitious result is not attainable by the Commission alone.  As a market watchdog, the Commission is inapt to look after the protection of the fundamental right to one’s privacy. Consequently, it would be necessary for the Commission to engage in dialogue with the European authorities for data protection, be it the National Data Protection Authorities of the Member States, the European Data Protection Supervisor or the European Commission’s Data Protection Officer. Indeed, such decisions – born in one market, the data one, and moved to another market, the shopping comparison one – affect both the competitive balance and the individual’s right to know what is happening to herself. The latter interest is still absent in the European decision-making process, and has barely emerged in the European Regulation on personal data. But now the value represented by the respect of the person calls for much stronger actions. The European political decision-maker faces a challenge: either to redesign the decisional processes on the basis of new models – open to more Authorities, serving more values, and porous to the value of personal integrity – or to keep the jurisdictional framework unchanged, thus accepting the sacrifice of individual rights.

To summarise: the Commission’s Google decision opens new horizons to the policymaker. Will she be able and willing to explore them?

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This entry was posted on August 27, 2017 by in Uncategorized.
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