Despite the €2.4B fine it imposes, the EU Google decision could be viewed as a failure of antitrust. It took too long, it does not (at least yet) set out standards for firms to follow, and it does not provide a clear remedy going forward. But algorithm-based Internet firms pose problems that antitrust has not previously had to address.
The European Commission began its investigation into Google search bias in 2010. At that time the Commission referred to complaints about “an alleged preferential placement of Google’s own services” in its search results. Almost seven years later, the decision tells Google to apply “equal treatment” to its own shopping services and those of its competitors. That is, the Commission is now telling Google to stop the preferential treatment it referred to in 2010.
It is not clear, though, exactly what Google did wrong, and therefore it is not clear what conduct Internet firms like Google should avoid. The Commission emphasizes algorithmic “demotions” of competitors’ web sites in Google’s search results. But one person’s demotion is another person’s quality assessment. The U.S. Federal Trade Commission conducted its own Google investigation and in 2013 concluded that Google’s goal, even when it hurt competitors, “was to quickly answer, and better satisfy, its users’ search queries by providing directly relevant information.”
The Commission has not yet issued its full decision, so perhaps that will clarify matters. But the Commission seems to be relying primarily on the fact that Google’s own shopping services were not subject to the same algorithmic rules as its competitors’. That is not “equal” treatment, but it is not necessarily treatment that hurts competition, either, if the other shopping services were less good than Google’s own. The Commission also refers to an internal Google document acknowledging that its own shopping service “doesn’t work,” but that document is from 2006, years before the investigation even began.
The claim here is not that Google’s conduct has been above-board. Google and its competitors providing shopping services make money when users click on their links to go to a seller, so Google has plenty of incentive to ensure that those clicks go through its own links, not through its competitors’. Therefore, it is not hard to imagine that Google might have used its power in the search market to injure its competitors. It is important, though, that antitrust have clear rules, so that firms know what conduct is allowed and what is forbidden.
In this respect, the Commission does not tell us what factors Google and other firms are, or are not, permitted to use in applying “equal treatment.” If Google believes that a feature of its own shopping services is valuable, and its competitors do not have that feature, may Google take it into account in its algorithm? What if its competitors have other features that they claim are analogous or even better? Must Google then treat all those features equally? Must Google survey consumers to determine which features are more equal than others?
These issues will have to be resolved when Google implements changes to its algorithms in response to the EU decision. In that respect, then, the decision is as yet more of a non-decision. As the case has proceeded, Google has three times offered “voluntary” commitments to try to resolve the Commission’s concerns. Each time the Commission decided that the commitments were not good enough. Now the Commission has effectively ordered Google to go back and do it again. Given the background, there is reason to doubt that Google will produce a remedy that will be satisfactory to the Commission.
On the other hand, a €2.4B fine changes the picture, as does the threat of more payments (5% of daily revenue) if Google does not comply with the “equal treatment” mandate. But non-compliance would have to be assessed in a subsequent proceeding, which makes it all the more problematic that “equal treatment” is as yet ill-defined. Perhaps the full decision will have more detail, and perhaps Google and the Commission have worked out a more clear understanding of this test, but the announcement today provided little clarity.
None of this is to say, really, that the Commission could or should have done better. The algorithms that Google and other firms use to determine what information to deliver are almost infinitely flexible, so a more specific remedy could perhaps have been evaded. Maybe it is indeed better to mandate a result—equal treatment—than a means of achieving it. Maybe this is the best way for antitrust to address a context in which “competition” takes place in a firm’s algorithms rather than in an traditional market, but it is not yet clear whether it will be a workable one.