EVALUATION OF GOOGLE’S DOMINANT POSITION

INTRODUCTION

In the field of competition law, it is seen that the competition authorities apply the existing rules with new approaches and take sector-specific dynamics into account due to the new order created by the information technology companies. It is a necessity that sectors related to information technologies should be subjected to a special evaluation in terms of competition since these sectors add new markets to traditional sectors and have a structure that classical applications cannot respond because of their rapid progress.[1]

There is an increase in the number of investigations and decisions in the European Union, especially European Commission (‘Commission’) and European Union Court of Justice (‘COJ’) as well as Member State competition authorities, as a result of the arising special attention to information technology companies within the scope of competition law. Especially, investigations about the abuse of the dominant position of big companies in the information technology sector, are frequently on the agenda.

Google Inc (‘Google’) who is one of the most important and largest companies in the world and its parent company Alphabet Inc (‘Alphabet’) have been investigated due to the investigations conducted recently into whether competition rules have been violated, and infringement decisions have been made against them. Google, whose dominant position was prominently displayed in the European region, also drew the attention of the Commission and was subject to sanctions on the grounds that it abused its dominant position.

1. A TECH GIANT IN FIGHT AGAINST THE COMPETITION LAW: GOOGLE

As one of the companies that are subject to the most serious sanctions under the European Union competition law, Google, is under the serious supervision of the European Competition Authority. Various investigations have been conducted by the European Commission about Google since 2010, and the investigation conducted on Google’s move to purchase Fitbit, announced on 4 August 2020, is the most recent example.

1. Evaluation of the Google’s Dominant Position

It can be seen by examining the investigations and decisions issued against Google that there are evaluations which Google is in the dominant position in the markets related to the digital sectors.

The first assessments regarding to Google’s dominant position is that it has a dominant position in the field of general internet searches.[2] At this point, in the detection made by the Commission, it is stated that Google is in a dominant position in the general internet search market in all countries throughout the European Union.[3] As the basis for this detection, Google’s market shares, the existence of barriers to expansion and entry to market, the infrequency of user multi-homing, the presence of brand effects and  the lack of countervailing buyer power were stated. It is also added that the result is valid regardless of the fact that public search services are offered free of charge and whether public search on static devices creates a different market than general search on mobile devices. It is also stated that there is an entry barrier due to the presence of network effects at the stated point of entry to the market. In addition, Google is in a monopoly position in terms of the data it has. In terms of barriers to entry to the market; the lack of qualified personnel who can operate in the relevant field, the difficulty of operations management, the network effect and the advantages of having too much data make it difficult to enter the market.[4] As stated in the Competition Board decision that is included in the explanation of Commission decision, Google’s dominance was also supported by numerical data, and it was stated that even Google’s biggest rivals, Yahoo and Bing, had difficulties in competing with Google. In this regard, it has been pointed out that the inability of the undertakings already in the market to compete with Google does not create a competitive pressure.[5]

In the Google Android[6] decision, the Commission concluded that Google dominates worldwide[7] each of the national markets to licensing smart mobile operating systems and for the Android application store, each of the national markets for general search services worldwide and within the European Economic Area. In terms of licensing smart mobile operating systems, the conclusion that it has a dominant position in the worldwide market is based on Google’s market share, presence of barriers to entry and expansion, and lack of countervailing buyer power. At the point of evaluation of the dominance in the Android application market, it is based on Google’s market share, the number and popularity of applications in the Google Play Store, the automatic update function of the Play Store, the fact that the only way for original equipment manufacturers to get Google Play Services is to acquire the Play Store, the existence of barriers to entry and expansion, the lack of countervailing buyer power from original equipment manufacturers, and the insufficient constraint from app stores for non-licensable smart mobile operating systems.[8] Lastly, the assessment of dominance in general search services in EEA countries is based on Google’s market shares, existence of barriers to entry and expansion, presence of brand influence and lack of countervailing buyer power.[9]

In the more recent Google AdSense decision, the Commission concluded that Google is in dominant position in the online search advertising intermediation market in the EEA since 2006.[10] It was stated in the explanation that Google had a very high market share that exceeding 85% for most of the period and also it is a market characterized by high barriers to entry. The barriers represent the crucial initial and ongoing investments required to develop and maintain general search technology, a search advertising platform, and a broad spectrum of publishers and advertisers.[11]

As it can be understood from the evaluations conducted, it has been determined by Commission that Google has a significant dominance in the areas which is subject to examination and Google operates. In this regard, current markets different from those defined as traditional markets, have been defined and competitive evaluations have been made in line with Google’s activities. As a result of the benefits of the technology, new markets have emerged as well as entry barriers for those markets and this has strengthened Google’s dominant position.

2. Google’s Anti-Competitive Behavior in Markets that Google is in Dominant Position and Decisions Related to Google

As stated earlier, the activities of a dominant company require more attention within the scope of competition law because it can be said that while the action of a company that is not in a dominant position does not create a purpose or an effect that violates the competition, anti-competitiveness arises if the same action is carried out by a company that is in dominant position.

With the progress Google has made in the last 15 years and the different companies it has incorporated, Google has become one of the largest and strongest companies in the world. By pioneering the developments in the markets that it operates and the policies it follows, Google has reached a dominant position in many markets in which it operates.

As a result of the adaptation of competition law to the age of technology by taking into account the dynamics of the developing technology and new sectors created by the information technology companies, the activities of Google that is in dominant position, are also subject to competitive evaluations and face severe sanctions after extremely serious evaluations.

3. Google Decisions in the EU Competition Law

As stated above, in the investigations initiated by the Commission against Google in the recent period, fines were issued due to the reason that Google abuses its dominant position. In the first decision regarding Google’s abuse of its dominant position, also known as Google Shopping[12], it was determined that the dominant position was abused by suppressing competition and at this point, it was stated that Google provides an illegal advantage to its shopping comparison service.[13] EU Competition Policy Commissioner Margrethe Vestager also made statements on the subject. In her statement, she stated that Google has introduced many life-changing innovative products and this will be considered good, but Google’s strategy is not only aimed at attracting customers by making the product in question better than its competitors, but also abusing its dominant position in the market by listing it in its own search results and pushing its competitors down.[14] She also emphasized that this behavior is contrary to EU Competition Law and prevents other companies from competing in a fair framework. The point that draws attention here is that Google brings its own service to the forefront by putting other services in the background. Also, at this point, the deterioration of equality among competitors has mentioned. It has been determined that this behavior, which breaks equality and prioritizes its own product, provides an illegal advantage.[15] It has been decided to impose sanctions on Google as a result of the reason that anti-competitive effects have arisen and may arise in national markets for comparison shopping services and general search services.[16] According to the decision, it has been decided that Google will pay a fine of 2,424,495,000 Euro for the violation, treat the service of rival companies and its own service equally, put an end to the abuse of dominant position, and refrain from behavior that may have the same or similar effect.[17]

The decision of the Google Android[18] investigation imposes a greater penalty against Google. In this decision, first of all, it is considered that Google’s linking of the Google Search application to the Play Store is an abuse of dominance. It is concluded that linking Google Chrome with Play Store and Google Search application is abusing Google’s dominant position in the world market for Android app stores and national markets’ general search services. Again, it is determined that Google has abused its dominant position in the world market for Android App Stores and national markets’ general search services due to the fact that license of Play Store and Google Search application are dependent on the acceptance of certain obligations by the hardware manufacturers.[19] In the decision, as another abuse of dominance, it is showed that Google pays original equipment manufacturers and mobile network operators only if they do not pre-install a competing general search service on any device within the agreed portfolio.[20] As it can be understood from the decision, it has been determined that various practices of Google, including restrictions on device manufacturers and mobile operators, are in breach of Competition Law. As a result of the evaluation of a single and ongoing violation, a fine of 4,342,865,000 Euro was determined against Google and a daily periodic penalty of 5% of Alphabet’s average turnover in the previous business year was imposed in case of non-compliance with the decision. As it can be seen, the relevant decision is very significant both in terms of the fine applied directly and the fine to be applied in case of non-compliance with the decision.

Another decision regarding Google is the decision made in 2019, known as Google AdSense[21]. It has been decided that there is abuse of dominance due to the set of restrictive clauses in the Google’s agreements with third-party websites that prevent competitors from placing search ads on those websites. In the decision, it has been determined that Google works as an online search advertising intermediation platform with AdSense which is the product in which Google operates as an intermediary between website owners and advertisers who want to take advantage of the areas around Google’s search result pages. It is provided that Google was the strongest player in online search advertising in the European Economic Area with over 70% market share by 2016, with over 90% market share in national markets for general search and over 75% market share for online search advertising in most of the national markets in 2016. The Commission had to examine many documents during the investigation process as there were agreements negotiated separately with each party for the provision of online search advertising intermediation services to major publishers. In the documents examined; it has been seen that the contracts containing the exclusivity clause in the early periods include the Premium placement clause in the later periods. With the contracts containing the exclusivity clause, it was provided that publishers were prohibited from placing any search ads on Google’s competitors’ search and with Premium placement, competitors are prevented from placing their search ads in the most visible place. In addition to that, with another clause in the agreements, Google requires publishers to obtain written approval from Google before making changes in the way competing ads are displayed. In this way, Google has gained the ability to keep the ads of its competitors under control. It has been evaluated that these practices are abusing of the position of Google that is dominant in the online search advertising market. Google was fined 1,494,459,000 Euro due to the fact that Google who operating in the market that also includes barriers to entry, have abused its dominant position by preventing its competitors from competing in the online search advertising intermediary market

In the latest and most recent investigation, Commission allowed Google to take over Fitbit. Within the scope of the investigation which was announced on August 4, 2020, the issues regarding Google’s purchase of Fitbit were evaluated.[22] The investigation is important for the reason that decision will be made whether a takeover that will further strengthen Google’s dominant position has taken place or not. Evaluations have been carried out in line with competitive concerns, due to the fact that Google, which is thought to maintain its dominant position with its big data collection takes over Fitbit, it will also obtain data on the health and fitness status of Fitbit’s users. It was thought that it would be difficult for its competitors to fight with Google since Google would be able to present the ads to be personalized through the search engine and be displayed on other internet pages with this data obtained. The issues of having strong position in the supply of online search advertising services in European Economic Area, having a strong market position in the supply of display advertising services and having a strong market position in the supply of advertising technology services in the EEA were evaluated within the scope of investigation. In the face of the evaluations and concerns that arose during the investigation process, relevant takeover was authorized as result of the commitments Google made to the Commission on advertising, Web API and Android API.

4. Google Decisions in Turkish Competition Law

In Turkey, as in the EU, investigations against Google were initiated by the Competition Authority and the activities of relevant undertakings were evaluated within the scope of competition law. As a result of the Google Android[23] decision dated 19.09.2018 and numbered 18-33/555-273, an administrative fine of 93,083,422,30 TL was imposed on the economic integrity of Google which was stated to be in a dominant position and violated Article 6 of the Act on The Protection of Competition. Considering the fact that all leading device manufacturers use Commercial Android Operating System within the scope of contracts signed with Google, except for Apple which uses its own operating system and does not request operating system, it has been determined that Google is the only mobile operating system provider of mobile device manufacturers in Turkey and it is unrivaled in the market. It has been stated that Commercial Android Operating System has dominated the licensable mobile operating systems market since 2013 and has maintained this position as almost the only provider since 2016 and it has been determined that Commercial Android Operating System is in a monopoly position. It was also added that Google’s indirect network effect, lack of buyer power in the relevant market and its market share in internet search service strengthened its dominant position.

On the other hand, Google Shopping Decision dated 13.02.2020 and numbered 20-10/119-69 was also concluded against Google and includes regulations in parallel with the Commission’s Google Shopping Decision[24] dated 2017. In this way, with the Shopping decision of the Board dated 2020, Google’s economic integrity which was determined to be dominant in the markets of general search services and online shopping comparison services, was fined 98,354,027.39 TL on grounds of the violation of Article 6 of the Act on The Protection of Competition. In the decision, it was stated that there are many undertakings that offer general search services, but it has been determined that the market shares of Google’s competitors in Turkey are low. It has also been stated that Google is a monopoly in terms of the data it holds, and entry barriers to the market in general search services are higher than in other markets. Barriers are listed as the limited number of skilled engineers in this field, the difficulty of managing millions of searches made at the same time, advantages of having big data and network effect. It has been stated that there are serious obstacles to the entry of a new undertaking into the relevant market, and even existing undertakings cannot create competitive pressure despite having technology and capital accumulation. In addition to these issues, the fact that Google operates in multiple interconnected areas is a situation that strengthens its dominance, and due to the fact that general search services are a multilateral platform, factors such as network effects, user habits, brand awareness, Google’s capital size, etc. create barriers to entry to the market. Moreover, additional obligations have been envisaged by Competition Authority in addition to the administrative fine, in order to ensure the termination of the violations. According to this, Google provides the conditions on the general search results page that competitor shopping comparison services will not be less advantageous than their respective services, removes the click feature of the Shopping Unit’s title in other channels to be compatible with mobile media, in the title and labeling of the Shopping Unit dispels any ambiguity that this domain is an advertisement, and in the case of the brand or site name of competitors that openly offer shopping comparison services along with the product name in searches on Google, the obligation to terminate the priority positioning of the Shopping unit has also been introduced.

Another decision resulted against Google is the Google AdWords decision dated 12.11.2020 and numbered 20-49/675-296. In this decision, it was stated that Google is in dominant position in the general search services market and by placing dense text ads whose advertising quality is uncertain, at the top of the general search results, Google make the activities of non-advertising organic results difficult in the content service market and this behavior is in breach of Article 6 of the Act on The Protection of Competition. Due to this violation, an administrative fine of 196,708,054.78 TL was imposed on Google by the Authority. In addition, it has been decided that Google will fulfill various obligations in order to ensure effective competition in the market. In this context, Google will be required to bring text ads in a way that does not exclude organic results within six months from the notification of this decision, submit the compliance measures to the Board and submit a report to the Authority annually for a period of five years following the implementation of the first compliance measure.

The most recent decision dated 08.04.2021 and numbered 21-20/248-105 was also concluded against Google. In this decision, an administrative fine of 296,084,899.49 TL was imposed on Google’s economic integrity on the grounds that Google has a dominant position in the general search market and violates Article 6 of the Act on The Protection of Competition by abusing this dominant position. It was stated that Google that is dominant in the general search services market, gives priority to its local search and accommodation price comparison services in terms of location and impressions on the general search results page compared to its competitors. In addition, it was stated that by preventing local search sites from entering the Local Unit, Google made the activities of their competitors more difficult and caused competition to deteriorate. As a result of these anti-competitive activities, in addition to the administrative fine, Google provides the conditions that Google’s competitor local search services and competitor accommodation price comparison services will not be in disadvantageous position on the general search results within six months, and within this scope, every year for a period of five years Google will submit a report to the Competition Authority.

CONCLUSION

In the last period, developments and changes are experienced in the field of competition law, as well as in every area of life, due to the effect of the developing technology. In this new order created by information technology companies, it has gone beyond classical and traditional practices and orders. The traditional systems in their simplest form have been transferred to digital environments and a new digital sector has been created at this point. In addition to the digitalization of traditional sectors, new sectors and markets were created with the developing technology. This new order has created the need to update or renew existing practices and rules.

Information technology companies, which have become stronger with the developing technology, are now much more in the spotlight. As a result of this, they are frequently scrutinized by the competition authorities and have come to the fore with investigations and penalties. It is also seen that more realistic and accurate evaluations for information technology companies have started with the review of competition rules for digital sectors and their implementation with a new understanding. New markets, activities and practices of information technology companies are now subject to different approaches by competition authorities.

Google has faced several investigations and serious fines by the Commission over the past decade. Google which has been subjected to investigations around the world as a result of the effects of investigations carried out in Europe, has been penalized by Competition Authority. Google, which is stated to be in a dominant position in many areas in which it operates, is subject to serious sanctions due to its behavior that was not subject to any legal review to date. Due to the fact that traditional understanding of competition is slow in the face of the development of technology and new approaches have started to emerge in the near future, there has been a tendency to examine the relevant company in the recent period. Due to its current dominant position, its activities are examined under competitive concerns, and in cases where it is determined that Google abuses or strengthens its dominant position, it is aimed to terminate anti-competitiveness with penalties and preventive measures.

REFERENCES

1. AKMAN, Pınar. The Theory Of Abuse In Google Search: A Positive And Normative Assessment Under Eu Competition Law, 2017.
2. JONES, Alison & SUFRIN, Brenda & DUNNE, Niamh. Jones & Sufrin’s EU Competition Law: Text, Cases, and Materials Oxford University Press, 7th Edition, 2019.
3. WHISH, Richard & BAILEY, David. Competition Law, Ninth Edition, Oxford University Press, 2018.
4. ÜLGEN Sinan, Avrupa Birliğinde Hakim Durumun Kötüye Kullanılması, TUSİAD,

Yayın No: T/98-12/247, İstanbul, 1998.

Decisions 

1. European Commission, Decision of 27 June 2017 in Case. AT.39740 Google Search
2. European Commission, Decision of 18 July 2018 in Case. AT.40099 Google Android
3. European Commission, AT.40411 Google AdSense
4. Rekabet Kurulu, 13.02.2020 Tarih ve 20-10/119-69 Sayılı Kararı
5. Rekabet Kurulu, 19.09.2018 tarihli 18-33/555-273 Sayılı Kararı
6. Rekabet Kurulu, 12.11.2020 tarihli 20-49/675-295 Sayılı Kararı
7. Rekabet Kurulu, 08.04.2021 tarihli ve 21-20/248-105 Sayılı Kararı

Other Resources

1. Organisation for Economic Co-operation and Development. Big Data: Bringing Competition Policy To The Digital Era, 2016.
2. SUNDKVIST, Hillevi. Business Strategy or Abuse of Dominance An Analysis of Different Approaches Towards Self-Preferencing Within the Meaning of Article 102 TFEU (Yüksek Lisans Tezi, Uppsala Universitet, 2019)
3. http://www.erdem-erdem.av.tr/yayinlar/hukuk-postasi/baglama-uygulamalari/

[1] John M. NEWMAN, Antitrust in Digital Markets, 72 Vanderbilt Law Review 1497, s. 1502, (2019) https://scholarship.law.vanderbilt.edu/vlr/vol72/iss5/2/ (Son Erişim tarihi: 20.01.2020)

[2] Case AT.39740, Google Search (Shopping) p.1

[3] Case AT.39740, p.7-10

[4] Pınar AKMAN, The Theory Of Abuse In Google Search: A Positıve And Normative Assessment Under EU Competition Law, 2017.

[5] 20-10/119-69 Karar Sayılı Rekabet Kurulu Kararı p.137-138

[6] Case AT.40099 — Google Android

[7] The term of ‘’Worldwide’’ is excluded from the People’s Republic of China

[8] Case AT.40099 p.6-9

[9] Case AT.40099 p.10-21

[10] Case 40411 Google Search (AdSense)

[11] Case 40411

[12] Case AT.39740

[13] Case AT.39740 p.9-13

[14] Case AT.39740 p.10

[15] Case AT.39740 p.14-19

[16] Hillevi Sundkvist, Business Strategy or Abuse of Dominance An Analysis of Different Approaches Towards Self-Preferencing Within the Meaning of Article 102 TFEU, (Yüksek Lisans Tezi, Uppsala Universitet,2019) s.45-51.

[17] Case AT.39740 p.31

[18] Case AT.40099 s.164, s.229, s.268

[19] Case AT.40099 s.164, s.229, s.268

[20] Case AT.40099, s.268

[21] Case 40411

[22] Merger Case M.9960 Google – Fitbit

[23] https://www.rekabet.gov.tr/Karar?kararId=7d9ba7e3-2b8f-4438-87a5-26609eab5443

[24] https://www.rekabet.gov.tr/Karar?kararId=828974ff-6cd9-4318-a9fa-ee43a21f9c07 , The decisions taken by the Competition Board due to Google’s abusing its dominant position in the general search market and making it difficulty for its competitors in the online shopping services market (Google Shopping) and making activites of text/Adwords ads and organic results difficult in the content services market (Google Adwords) were nominated in the category of ‘’The Best Decision or Enforcement Action From a Competition Authority or Court’’ within the scope of the Global Competition Revew Awards 2021.