This case study looks into the operation of Google in Europe. Margrethe Vestager issued a statement of objections against Google Search and Google has presented its argument. The case study looks into the possible solutions to the issues.
Laura Phillips Sawyer
Harvard Business Review (717004-PDF-ENG)
August 04, 2016
Case questions answered:
- Do you agree with Margrethe Vestager’s decision to issue a statement of objections against Google Search and why?
- Evaluate the different approaches to competition policy in the EU and US, particularly in the domain of “abusive dominant firm position”!
- What is the political and economic logic of competition policy?
- What is Google’s argument and what are the possible solutions for this case?
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Case answers for Google in Europe: Competition Policy in the Digital Era
Question 1. Do you agree with Margrethe Vestager’s decision to issue a statement of objections against Google Search and why?
Margrethe Vestager objections against Google Search were comprised of two main things: anti-competitive business practice and the objection on the android.
1. Stemming any anti-competitive business practices in Google Search and maintaining specialized search services in local markets, which includes price comparison websites and shopping review sites.
- Discriminating rivals’ platforms against search services.
- PCW reduced the asymmetry of information and improved information flows.
- Bundling: shifting away from rival firms and diminished competition.
2. Additional statement of objection on android.
- It is giving android device manufacturers a share of revenue and financial incentives.
- Required pre-installation of Google Search and Chrome to accelerate Google Play in android devices.
There are massive impacts for the EU stakeholders: the EU economy, business competition, and impact for the consumers. The Google domination made stifle competition and restricting innovation in the EU region. For the business competition, it caused harm and injury rival competitors, such as Yelp, TripAdvisor, and other smartphone manufacturers. And lastly, for the consumers, deprived of superior results and cheated by the review results and price comparison. It is inevitable breaking the Treaty on the Functioning of the European Union (TFEU) of Article 101 Section 1 & 3: restriction of competition within the internal market and Article 102: abuse of dominant firm position.
So, Vestager’s objection was plausible, moreover if we refer to the comparison of the Google universal search versus organic search that shown Google domination on Exhibit 7 as below:
Question 2. Evaluate the different approaches to competition policy in the EU and US, particularly in the domain of “abusive dominant firm position”!
Chronologically, the US came earlier than EU with the competition policy (also known as antitrust) by issuing The Sherman Antitrust Act in 1890, and they had amendments in 1914 by the Federal Trade Commissions (FTC) and followed by Clayton Act. The law banned individual firms from monopolizing.
While in Europe, the antitrust laws have drawn…