Google Appeals EU Fine, Argues Legality of Self-Preferencing

Google is trying to overturn three European Union antitrust rulings, claiming that it had no legal grounds for imposing $9+ billion in fines. The EU found that Google had abused its dominance over smaller competitors. Google attorney Thomas Graf told the five General Court judges that, “competition law does not require Google to hold back innovation or compromise its quality to accommodate rivals.” Although a verdict is expected early next year, its rulings can still be appealed at the European Court of Justice.

The Wall Street Journal reports that, “the litigation is a test case for the EU’s competition czar, Margrethe Vestager, and the continuing probes into Facebook, Apple and Amazon for allegedly abusing their dominance to drive out smaller rivals.” Graf added that Vestager’s 2017 decision — which found that Google drove “traffic to its own shopping ads at the expense of rivals that operated their own shopping-comparison sites that linked to merchants” — was “wrong on the facts and wrong on the law.”

Google’s argument is that “self-preferencing is a new principle in competition law and that the commission had no legal basis to put it forward and to levy a €2.42 billion ($2.71 billion) billion fine based on it.” European Commission lawyer Nicholas Khan disagreed, noting that “the decision is not as unusual as Google suggests,” adding that a company legally should “not to use the levers of control conferred by its overwhelming dominance … to give itself an anticompetitive advantage.”

WSJ notes that, “at stake in the case is the legal precedent of self-preferencing and whether dominant tech companies have a special responsibility to avoid favoring their own in-house products and services over competitors.” Should the EU prevail in the case, “it could encourage the commission to pursue more antitrust probes such as one currently under way against Amazon.”

But reporting judge Lauri Madise appeared to side with Google when he noted that EU competition law currently has “no general prohibition for a business to favor its own products” and asked the European Commission to describe “exactly what made Google’s behavior anticompetitive.” The commission’s lawyer responded that, “in this specific case consumers were harmed because they were deprived of better search results from competitors and because Google was applying different standards to what it would display when it came to its own results and to rivals’ results.”

“This behavior needs to be stopped because otherwise competition will be destroyed in every other market Google decides to enter,” said a lawyer for the German publishers’ association. The Computer & Communications Industry Association, based in Washington, D.C., “sided with Google at the hearing and said the commission’s self-preferencing argument creates legal uncertainty.”

“We ask the court to re-establish clarity and coherence as to the law, to allow the tech sector to do what it does best: innovate,” said CCIA lawyer James Killick.