The Impact of the European Union on American Businesses: Google Fined for Antitrust Violations

Source: CNBC

Source: CNBC

In March, the European Commission fined Google LLC and its parent company, Alphabet Inc. (Google), €1.49 billion (which equals almost $1.7 billion) for abusive online advertising practices that broke the European Union’s (EU) antitrust rules.[1] Google’s practices prevented or limited its rivals from working with companies that were doing business with Google and shielded Google from competitive pressure. This is the third multi-billion dollar penalty the EU has recently laid on Google.[2]

Google’s as Online Search Advertising Brooker

When a consumer conducts a search through a search function that is embedded in another website, the website delivers search results as well as search adverts which appear alongside the search results. Google provides these search adverts through its program AdSense for Search (AdSense) and acts itself as intermediary between the advertisers and the website owners. For years, AdSense contracts gave Google a wide range of control over the adverts.[3]

European Commission

Source: European Commission

EU Antitrust Rules and the European Commission’s Decision

EU antitrust policy is developed from two central rules set out in the Treaty on the Functioning of the European Union (TFEU).[4] The first rule is article 101 TFEU which prohibits agreements between independent market operators that restrict competition. The second rule is article 102 TFEU which prohibits market participants that hold a dominant position on a given market to abuse that position. The European Commission is empowered to apply these rules and impose fines.[5] It has done so with its decision finding that Google has abused its market dominance by preventing rivals from competing in the online search advertising intermediation market.

Google Antitrust Threads in the US

Although one of the most significant characteristics of the new antitrust approach in the United States has been the increased focus on innovative companies in high-tech industries,[6] the most serious antitrust thread Google faced in the United States was an investigation without penalties conducted in 2013 by the Federal Trade Commission.[7]

Conclusion

The EU is one of the largest partners of the United States,[8] and it appears that the EU is increasingly setting standards that American companies must meet to remain competitive in the global marketplace: As a result of the fines by the European Commission, Google has changed how it does business.[9] Given the tendency of the EU to generally attribute a higher priority to protection of consumer rights and the minimization of free-market distortions resulting from monopolies or unfair trade practices, the increased impact of EU regulations may be welcomed by many consumers.

Julia Robert is the incoming Executive Editor  for the Denver Journal of International Law and Policy and a 2L at the University of Denver – Sturm College of Law.

[1]European Commission Press Release IP/19/1770, Antitrust: Commission fines Google €1.49 billion for abusive practices in online advertising (Mar. 3, 2019).

[2]European Commission Press Release IP/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); Commission Press Release IP/17/1784, Antitrust: Commission fines Google €2.42 billion for abusing dominance as search engine by giving illegal advantage to own comparison shopping service (June 27, 2017).

[3]For details, see European Commission Press Release IP/19/1770, supra note 1.

[4]Consolidated Version of the Treaty on the Functioning of the European Union, Oct. 10, 2012, 2012 O.J. (C 326) 47 [hereinafter TFEU].

[5]TFEU, supra note 4 at art. 105.

[6]Geoffrey A. Manne & Joshua D. Wright, Google and the Limits of Antitrust: The Case Against the Case Against Google, 34 Harv. J. L. & Pub. Pol’y 171, 173 (2011).

[7]Federal Trade Commission, Press Release, Google Agrees to Change Its Business Practices to Resolve FTC Competition Concerns In the Markets for Devices Like Smart Phones, Games and Tablets, and in Online Search, https://www.ftc.gov/news-events/press-releases/2013/01/google-agrees-change-its-business-practices-resolve-ftc (Jan. 3, 2013).

[8]Countries and Regions, United States, European Commission, http://ec.europa.eu/trade/policy/countries-and-regions/countries/united-states/ (last updated Apr. 15, 2019).

[9]EU Fines Google $1.7 Billion Over ‘Abusive’ Online Ad Strategies, NPR(Mar. 20, 2019, 1:25 PM), https://www.npr.org/2019/03/20/705106450/eu-fines-google-1-7-billion-over-abusive-online-ad-strategies.

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