By Madison Boyer
Since 2017, Google has racked up over $8 billion in fines from the European Union (“EU”) for antitrust violations.[1] The heftiest is a $5 billion (€4.34 billion) fine—the largest fine ever imposed by the European Commission (“EC”) for an antitrust violation.[2]
The EC is the primary enforcer of EU competition laws.[3] In 2017, the EC fined Google $2.7 billion for abusing its dominance in the market to boost its own shopping comparison tool over that of competitors.[4] In 2018, the EC handed out a fine of $5 billion, finding that Google forced smartphone makers to preinstall its apps and other functions exclusively.[5] The most recent fine came in 2019, when Google was hit with a $1.7 billion fine concerning its online advertising practices.[6]
The EU’s competition laws roughly mirror those of the United States. American antitrust jurisprudence began over a century ago[7] with the enactment of the Sherman Antitrust Act of 1890 (“Sherman Act”),[8] which comprises two sections. Section 1 of the Sherman Act prohibits agreements amongst competitors that unreasonably restrain trade.[9] Section 2 of the Sherman Act prohibits monopolization and attempts to monopolize by one entity.[10] Section 2 does not forbid an entity from merely existing as a monopoly power or having market dominance.[11] A violation of section 2 involves two elements: “(1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident.”[12]
EU antitrust law is based in Articles 101 and 102 of the Treaty on the Functioning of the European Union (“TFEU”).[13] Article 101 focuses on anticompetitive agreements amongst competitors or “cartels,” while Article 102 focuses on monopolization or “abuse of dominance” of a single entity.[14] Like the Sherman Act, Article 102 does not consider market dominance to be illegal per se—but in both systems, using that dominance to restrict competition is an illegal violation.[15]
In 2001, Microsoft was prosecuted for violating section 2 of the Sherman Act for allegedly tying its operating system, Windows, to its internet browser Internet Explorer.[16] This made it difficult for computer manufacturers, such as Dell or HP, to distribute products made by Microsoft’s competitors.[17] The court found that Microsoft had a market share exceeding 95% of the market for Intel-compatible PC operating systems.[18] Microsoft, though, argued that this was incorrect and that the court had excluded other relevant market competitors—namely, Apple’s Macintosh Operating System (“Mac OS”).[19] Microsoft alleged that Apple’s Mac OS “has competed with Windows for years” and thus, the court’s definition of the market was too narrow.[20] The court, however, determined that Windows and Mac OS were not interchangeable for consumers due to the considerable difficulty in switching from Windows to Mac OS, the higher price of Mac OS, and the fewer applications supported on Mac OS.[21] The Circuit Court affirmed the District Court’s findings of a monopoly, the first element in a section 2 violation.[22] Microsoft also failed to justify the decision to integrate its web browser and operating system, thereby violating the second element of section 2.[23] Because there was no procompetitive explanation offered for the decision to tie Internet Explorer to Windows, the court found that Microsoft violated section 2.[24]
Now, nearly two decades later, Google has been hit with nearly identical charges.[25] The EC found that Google established market dominance comparable to that of Microsoft in 2001, at over 90% “in the markets for general internet search services, licensable smart mobile operating systems and app stores for the Android mobile operating system.”[26] Google’s Android operating system powers 80% of smartphones in Europe and around the world.[27] The EC found that Google abused its dominance by “requiring manufacturers to pre-install Google Search and Google’s Chrome browser . . . as a condition to license certain Google proprietary apps,” namely, the Google Play Store, the marketplace for Android-compatible smart phone applications.[28] By conditioning the licensing of the Google Play Store on manufacturer’s agreement to preinstall Google Chrome and Google Search, Google seems to have effectively made the same error as Microsoft—illegally tying its products together in order to maintain its longstanding monopoly power.
Like Microsoft two decades ago, Google has disputed the EU’s findings. In a statement by CEO Sundar Pichai, Google claims that its business model surrounding Android (which is free to download and implement) creates more choice for consumers, not less.[29] By allowing Android to be used across many manufacturer’s devices, Google claims that it has enhanced “[r]apid innovation, wide choice, and falling prices” which are “classic hallmarks of robust competition.”[30] Google even raises the same defense as Microsoft—by pointing fingers at Apple. In his statement, Pichai states that the EU’s definition of the market “ignores the fact that Android phones compete with iOS phones.”[31]
Google has appealed the 2018 decision to the European Court of Justice in Luxembourg.[32] Although Google hopes to have the EC’s decision completely annulled,[33] if history tells us anything, the outcome for Google looks bleak.
[1] Google Is Appealing a $5 Billion Antitrust Fine in the EU, NPR (Sept. 27, 2021, 11:28 AM), https://www.npr.org/2021/09/27/1040889789/google-eu-android-appeal-antitrust.
[2] Id.
[3] Competition, European Comm’n, https://ec.europa.eu/info/departments/competition_en (last visited Oct. 26, 2021).
[4] Lauren Feiner, Google’s Antitrust Mess: Here Are All The Major Cases It’s Facing in the U.S. and Europe, CNBC (Dec. 18, 2020, 5:47 PM), https://www.cnbc.com/2020/12/18/google-antitrust-cases-in-us-and-europe-overview.html.
[5] Id.
[6] Id.
[7] The Antitrust Laws, Fed. Trade Comm’n, https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/antitrust-laws (last visited Oct. 26, 2021).
[8] Act of July 2, 1890, ch. 647, 26 Stat. 209 (codified as amended at 15 U.S.C. §§ 1–38).
[9] 15 U.S.C. § 1; see also United States v. Reading Co., 253 U.S. 26, 57 (1920).
[10] 15 U.S.C. § 2.
[11] See United States v. Grinnell Corp., 384 U.S. 563, 570 (1966).
[12] Id. at 570–71.
[13] Consolidated Version of the Treaty on the Functioning of the European Union art. 101-02, Oct. 26, 2012, 2012 O.J. (C 326) 88–89 [hereinafter TFEU]; see also Implementing EU Competition Rules: Application of Articles 101 and 102 of the TFEU, EUR-Lex, https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=legissum%3Al26092 (July 31, 2015) [hereinafter Implementing EU Competition Rules].
[14] Implementing EU Competition Rules, supra note 13.
[15] European Commission Press Release P/18/4581, Antitrust: Commission Fines Google €4.34 Billion for Illegal Practices Regarding Android Mobile Devices to Strengthen Dominance of Google’s Search Engine (July 18, 2018), https://ec.europa.eu/commission/presscorner/detail/en/IP_18_4581.
[16] United States v. Microsoft Corp., 253 F.3d 34, 63–64 (D.C. Cir. 2001).
[17] Id. at 66.
[18] Id. at 51.
[19] Id. at 52.
[20] Id.
[21] Id.
[22] Id.
[23] Id. at 67.
[24] Id.
[25] Foo Yun Chee, EU Hits Google with Second Antitrust Charge, Reuters (Apr. 20, 2016, 5:33 AM), https://www.reuters.com/article/us-eu-google-antitrust/eu-hits-google-with-second-antitrust-charge-idUSKCN0XH0VX.
[26] European Commission Press Release IP/16/1492, Antitrust: Commission Sends Statement of Objections to Google on Android Operating System and Applications (Apr. 20, 2016), (bold emphasis omitted) https://ec.europa.eu/commission/presscorner/detail/en/IP_16_1492.
[27] Id.
[28] Id. (bold emphasis omitted).
[29] Sundar Pichai, Android Has Created More Choice, Not Less, Google: The Keyword (July 18, 2018), https://www.blog.google/around-the-globe/google-europe/android-has-created-more-choice-not-less.
[30] Id.
[31] Id.
[32] Alexander Martin, Google’s Appeal Against EU Record £3.8bn Fine Starts Today, as US Cases Threaten to Break the Company Up, Sky News (Sept. 27, 2021, 4:59 PM), https://news.sky.com/story/googles-appeal-against-eu-record-3-8bn-fine-starts-today-as-us-cases-threaten-to-break-the-company-up-12413655.
[33] Id.
Post image by Rudy Herman on Flickr