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Investigators to take 'special care' over free service

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Google's business model is forcing EU regulators to take "special care" in their assessment of whether the search giant is abusing its market dominance in breach of EU laws, Europe's Competition Commissioner has said.

Joaquin Almunia told the International Bar Association's annual competition conference that the European Commission's ongoing investigation into allegations that the way Google operates its search engine breaches competition laws had to be particularly sensitive to the way the company works.

"We need to consider carefully in our analysis ... the fact that company operates a two-sided platform, where advertisers’ fees finance a service that users do not have to pay for," Almunia said in his speech. "This aspect of Google’s business is forcing us to take special care as we conduct our assessment of the relevant product and geographic markets, which is an important stage in our assessment."

Rivals to Google have complained to the European Commission that Google's search engine discriminates against them in the display of results, hampering their ability to reach new users.

The EU Commission, which enforces EU competition law, decided in December 2010 to investigate Google.

"The opening of formal proceedings follows complaints by search service providers about unfavourable treatment of their services in Google's unpaid and sponsored search results coupled with an alleged preferential placement of Google's own services," said a Commission statement in December. "This initiation of proceedings does not imply that the Commission has proof of any infringements. It only signifies that the Commission will conduct an in-depth investigation of the case as a matter of priority."

Almunia stressed last week that a finding that Google dominates its markets does not mean that it is breaking the law.

"As part of our current investigation, we are trying to determine whether the company holds a dominant position in internet search," he said. "But dominance is not the same as abuse of dominance. Abuse is a conduct that protects or extends dominance by illegitimate means, and we still have to conclude whether this is the case for Google."

Almunia said that investigators would have to act quickly in a market that is changing "at lightning speed".

"The Google case is also a good example that timely intervention is crucial in fast-moving technology markets, which often feature network and lock-in effects," he said. "As the Court of Justice has recently stated in the Telia/Sonera case, action is required 'before the anti-competitive effects of a strategy are realised'." ®

Copyright © 2011, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

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