Senior Vice President, International Regulatory Affairs & Antitrust, U.S. Chamber of Commerce
June 28, 2017
Being found to have abused a dominant position under European Union (EU) antitrust laws is not exactly surprising. Close antitrust observers have long pointed out that EU law is different than U.S. antitrust law.
The need to abide by different laws in different countries should not come as a surprise to Google. Companies doing business in foreign jurisdictions agree to comply with the laws where they operate – even when those laws are different or questionable. However, there are several aspects to this case that raise questions or concerns.
Reasons for concern start with the fact that this investigation was originally launched back in 2010, seven years ago. To be dragged out for so long is procedurally appalling. No company should face such a tortured path to determining its legal fate.
The decision is also making news for its eye popping fine of $2.7 billion. What makes this fine in particular so questionable is it comes as a result of a dominance case that took seven years to determine if Google was dominant and in fact abusive in its conduct. Dominance cases, unlike cartels, are subjective determinations, sometimes highly subjective. But the European Commission can't on one hand take seven years to find a violation, while at the same time levy the largest antitrust fine the world has ever seen. Surely, if Google's conduct deserved such a record fine, the case against Google would have been concluded long ago.
For all that care about sound competition enforcement, an even bigger problem has come in the form of the imposed remedy. The Commission’s conduct remedy could put Google at risk of perpetually violating the European Commission's order. Today it is not at all clear how far Google must go to satisfy the Commission’s order. The penalty for non-compliance is stiff, set as a percentage of average daily worldwide revenue for each day Google is found to be out of compliance. Not only are these additional penalties for non-compliance extraterritorial in nature, but a company should not be constantly looking over its shoulder to know how to comply with the law.
Further, all companies should take note that the EU has sent a signal that it is prepared to judge algorithms in the overwhelming procompetitive era of big data as a matter of competition concern. If heavy-handed approaches to big data are taken as a matter of competition enforcement, innovation will be threatened. After all innovation is the very thing all companies rely on to compete.
Others may charge the European Commission’s decision as being biased against an American firm. However, upon a closer look, what is clear is the Google decision exposes the difference between U.S. and EU's antitrust laws, the Commission’s poor ability to run a timely proceeding, and the problem of potentially overreaching remedies.