The point at which a company becomes subject to competition law, or ‘anti-trust’, scrutiny can be viewed as a coming of age. In particular, it is a recognition that the organisation has become sufficiently large, and hence threatening enough to its rivals or important enough for its customers, to justify regulatory complaints or legal claims.
It may also indicate that the company has become so large that its actions may shift the development of entire markets onto a different trajectory and that, as a result, competition law intervention may be justified. This point, which was reached by IBM as early as 1969 and by Microsoft in 1998, has now, unambiguously, been reached by Google.
From a situation where Google had been able to generate exponential growth largely free from regulatory interference, it now finds itself subject to competition law investigations by the European Commission, the attorney general of the state of Texas, the French and Italian competition authorities and (apparently, for now, on an informal basis only) the US Federal Trade Commission. Google is also defending itself against a number of private anti-trust actions before the US courts.
The complaints against Google are wide-ranging but, in essence, the common thread in most instances are allegations that the company has unfairly manipulated its non-sponsored search rankings to favour its own services, such as mapping or price comparison services, at the expense of the competing services of its rivals, which claim that they are being unfairly relegated in, or even excluded from, those results. The complainants range from small vertical search providers, such as Foundem and myTriggers, to software giant Microsoft.
News on 31 March that Microsoft had entered the fray by submitting a formal complaint to the European Commission is particularly interesting. On the one hand, the fact that Microsoft's Bing search service is a direct rival to Google, as well as the strategic threat that Google poses to Microsoft's desktop dominance, give it a clear interest in raising the regulatory temperature on Google.
On the other hand, Microsoft's past history with the competition authorities, which led to fines of more than €1bn by the European Commission for abuse of dominance and non-compliance with directions, adds a hint of irony to its new role as complainant.
Given that Google apparently commands over 60 per cent of online search in the US and over 90 per cent in parts of Europe, such behaviour, if proved, clearly has the potential to distort markets. The key question, therefore, is whether it can be proved to the requisite legal standard.
Before considering the prospects for the cases, it is worth making some general points about competition law. First, it applies broad prohibitions of anti-competitive conduct that, with limited exceptions, apply with equal force across all sectors of the economy.
Second, competition generally looks at the effect of particular conduct, rather than its form. This requires careful market analysis in each case to establish whether the conduct under examination is harmful and unjustifiable in the specific market context.
Because of the factual and technical complexity of such an exercise, and the procedural rights of companies under investigation, investigations typically take years to reach a conclusion.
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