This past summer the European Union (“EU”) fined Google because its price comparison feature tops the search results list while other price comparison services end up lower on the list.[1] Antitrust policies were the basis of this fine. These policies prevent monopolistic behavior, which exterminates competition and leaves consumers with only one supplier in a particular market.[2] Although this was a result of European law, American antitrust laws have similar policies to promote competition. This decision may be important for antitrust regulation in the U.S., as the Federal Trade Commission (“FTC”) has already investigated Google in the past.[3] Antitrust regulation is meant to protect consumers, but the EU’s decision has been criticized for not truly being in consumers’ best interests.[4]
The U.S. Supreme Court case, Standard Oil, is a perfect example to show the effects of a company dominating a market.[5] Depending on the good, this could be very dangerous. A company controlling 90% of the oil market, for example, could charge consumers (us) anything and we’ll still buy because we’re dependent on oil. Another company should then come along, charge less, and take some market power away from the monopoly. However, that won’t happen because the monopoly has the ability to drop prices so low that no new for-profit (or for-breaking-even) company will be able to compete for long.[6] This is where antitrust regulation comes in. Antitrust laws prevent companies from having too much market power, which would leave consumers no option but to pay higher prices for necessary goods.
Turning back to Google, antitrust regulation becomes more complex because consumers do not pay to use its search service and Google puts its own price comparison service at the top of certain search results. To analogize this to Standard Oil’s industry, Google’s search results displaying other price comparison sites towards the end of the list is like a traditional monopoly dropping prices. It is likely that many people do not look at results towards the bottom of the list just as many people would not buy from a supplier charging higher prices.
The EU decided that this is anticompetitive behavior because it most likely prevents users from exploring other price comparing websites. The EU believes that only using Google will drive other companies out of business and prevent innovation and improvement in the price comparison industry.[7] The EU’s goals are to prevent the Google Shopping widget from appearing at the top of the search results and to allow other price comparison websites to be closer to the top. The EU and Google’s competitors such as Yelp argue it is unfair for Google’s price comparison tool to get prime location on a Google search result.[8] They have a good point because most of the other price-comparing services don’t have a widely used web browser to make them the top search result. But antitrust is about competition, not about being fair.
If a person is searching Google to buy a phone, then they should get a list of links to vendors selling phones, allowing the shopper to look around. In actuality, the Google Shopping widget precedes that list while no other price comparison site appears near the top of the search results. In this instance Google’s search engine favors its own price comparison tool. But both are the same company, so is it really that unreasonable? Furthermore, Google has grown by consistently innovating user-friendly and efficient tools. The shopping widget that comes up is amazingly simple, and arguably the best price comparison tool on the web.[9] To top everything off, these search results don’t cost anything. But this constantly innovating company that charges its consumers nothing is being regulated worldwide by antitrust laws. Maybe it is to ensure there is always improvement in the digital shopping industry. Maybe it is to ensure there is competition to fuel that improvement. What is certain, however, is that Google has developed a very sophisticated search algorithm,[10] and the Google widgets are likely the ultimate result of years of innovating Internet searches. Thus, this is the pinnacle of innovation rather than anticompetitive behavior.
The antitrust regulation against Google is largely due to its becoming so widely used. This is because of many factors, but undoubtedly among them is that Google consistently gives users what they want more effectively than other search platforms do. On a very basic level, the digital price comparison industry is like the oil industry in that it is offering a good to consumers. However, unlike suppliers in the oil industry that will give you a virtually undifferentiated product capable of naturally existing in a perfectly competitive market, digital price comparison varies based on the platform being used. These platforms are more like sodas – each has a different flavor and composition. Antitrust regulation in the oil industry will prevent price increases, and thus be beneficial to consumers. However, regulating the price comparison industry by forcing Google to cease its price comparing service will hinder innovation and hurt consumers because the best product will no longer be available.[11] Antitrust regulation is meant to promote competition, which then results in “lower prices, higher quality products and services, more choices, and greater innovation” for consumers.[12] Regulating Google in this space would reduce competition in a priceless market without forcing any higher quality products for consumers.
[1] Michael Birnbaum & Brian Fung, E.U. fines Google record $2.7 billion in antitrust case over search results, Wash. Post (June 27, 2017), https://www.washingtonpost.com/world/eu-announces-record-27-billion-antitrust-fine-on-google-over-search-results/2017/06/27/1f7c475e-5b20-11e7-8e2f-ef443171f6bd_story.html?utm_term=.c517f658a0b3.
[2] See id.
[3] Brody Mullins, Rolfe Winkler & Brent Kendall, Inside the U.S. Antitrust Probe of Google, Wall Street J. (Mar. 19, 2015), https://www.wsj.com/articles/inside-the-u-s-antitrust-probe-of-google-1426793274.
[4] Klint Finley, The Real Impact of Google’s Big EU Fine, Wired (June 27, 2017), https://www.wired.com/story/google-big-eu-fine/.
[5] Standard Oil Co. v. United States, 221 U.S. 1 (1911).
[6] Monopoly Power, http://www.economicsonline.co.uk/Market_failures/ Monopoly_power.html (last visited Sept. 22, 2017).
[7] See Birnbaum & Fung, supra note 1.
[8] See The European Commission levies a huge fine on Google, The Economist (July 1, 2017), https://www.economist.com/news/business/21724436-its-case-not-perfect-it-asks-right-questions-european-commission-levies-huge; Nitasha Tiku, Yelp Claims Google Broke Promise to Antitrust Regulators, Wired (Sept. 12, 2017, 2:01 PM), https://www.wired.com/story/yelp-claims-google-broke-promise-to-antitrust-regulators/.
[9] Mark Hayes, 10 Best Comparison Shopping Engines to Increase Ecommerce Sales – Shopify: Shopify Ecommerce Blog, https://www.shopify.com/blog/7068398-10-best-comparison-shopping-engines-to-increase-ecommerce-sales (last visited Sep 22, 2017).
[10] Scott Matteson How does Google Search really work?, TechRepublic (Dec. 11, 2013, 1:26 PM), http://www.techrepublic.com/blog/google-in-the-enterprise/how-does-google-search-really-work/.
[11] See generally Robert H. Bork & J. Gregory Sidak, What Does the Chicago School Teach about Internet Search and the Antitrust Treatment of Google?, 8 J. Competition L. & Econ. 663 (2012).
[12] Federal Trade Commission, Guide to Antitrust Laws, https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws (last visited Sept. 22, 2017).
