The trial of strength comes with an inconspicuous file number: number B7 – 61/21. Will it be possible to put Google in its place? Can a national authority, the Federal Cartel Office, effectively curtail the internet giant’s market power? Much depends on this large-scale experiment, also for the distribution of power around the global network.
The test setup has been in place for a week. The cartel office had formally established the power of Google and communicated its results to the group. The summary of the case alone leaves no doubt as to the size of the task. “An overall appraisal of all the relevant circumstances in the present case has shown that Google has a cross-market economic power position,” said the Bonn authority Case report. This position gives Google “cross-market scope for behavior that is not adequately controlled by the competition”. The company can take on the “role of a rule-maker”, it has “broad and deep access” to user data, and with an 80 percent market share in this country, it can search the Internet. It is also vertically integrated via its mobile operating system Android and its “Play Store” app store. On Android phones, it can ensure that certain apps are preinstalled. Ultimately, the Cartel Office explains, Google can always penetrate new markets.
The decision was sent to Google one day before New Year’s Eve, and five days later the company waived any objection. The procedure is now under way. “This is a very important step, because on this basis the Federal Cartel Office can now pick up specific behavior that is harmful to competition,” says the head of the authority, Andreas Mundt.
The basis for this is a new passage in the Act against Restraints of Competition, the Section 19a. For over a year he has been giving the cartel office a handle against market abuse by the large platform groups. The authority could prohibit Google from preferring its own offers over those of its competitors. It could prevent any practice with which newcomers could be disadvantaged when offering apps, for example. Or prohibit deals in which content is displayed more prominently the more rights or data are given in return. The paragraph with its many sub-points appears very detailed – but it is open enough to include everything and nothing under it. That gives the cartel office a lot of leeway. At Google, the data processing conditions and the “Google News Showcase” news offer are already in their sights.
“This is completely new territory.”
“The exciting step is the one that comes now,” says Achim Wambach, President of the Mannheim Leibniz Center for European Economic Research and member of the Monopolies Commission. “The question now is: will you be able to intervene at a very early stage?” Because, unlike conventional abuse proceedings, with the new paragraph, the cartel office no longer has to laboriously prove abuse in order to intervene. It can now take action against the conditions that make abuse possible. “This is completely new territory.”
How the Cartel Office is using this uncharted territory, how the company is reacting to it and what the courts say about it – all of this can only be seen now, in step two of the proceedings. The determination of the “paramount cross-market importance” is the condition for taking this second step. For him, however, the legal process is shortened: it leads straight to the Federal Court of Justice. Google itself reacted calmly to step one. “We are confident that we will comply with the regulations,” said a spokeswoman. Should changes become necessary, “we will continue to work constructively with the Federal Cartel Office”.
But headwinds not only come from Bonn. At the European level, the “Digital Markets Act” is in progress, which will turn the operators of so-called digital ecosystems into “gatekeepers” who have to fulfill obligations. It could be enacted in the first half of the year, under the French Presidency. Just on Thursday, the French data protection authority CNIL hummed fines of 150 and 60 million euros respectively to the companies Google and Facebook – because users can easily agree to the use of cookies, but can only refuse them with a lot of cumbersome clicks. Even the cartel office does not want to leave it at Google. “We are vigorously pursuing further proceedings,” says the President of the authorities, Mundt. “Against Amazon, Apple and Meta, formerly Facebook.”