Should Google’s Secret Sauce Be Organic?

Posted by Social Science Research Network

Should Google’s Secret Sauce Be Organic? Florian Wagner-von Papp (University College London)

Abstract: This commentary discusses the European antitrust investigation into Google and the international implications of the case. It focuses on Google’s alleged dominance and the allegations concerning Google’s self-preferencing of its Google Shopping results on general web search result pages, which form the subject matter of the Statement of Objections that the Commission sent on 15 April 2015.

The EU Commission’s international jurisdiction to prescribe is found to be unproblematic. However, the tendency towards overenforcement resulting from the cumulation of national and supranational investigations by competition authorities worldwide counsels caution in borderline cases. And Google is a borderline case.

While it seems possible to construct a story of dominance and consumer harm, the paper doubts Google’s ability to act to an appreciable extent independently of its competitors and customers. Ultimately, this is an empirical question, and the Commission may have sufficient evidence at its disposal. However, the publicly available evidence does not seem to support a finding of dominance despite Google’s high share of user searches.

A finding of abuse would require changing the goalposts: one would have to accept that instead of a constructive refusal to deal, it is already abusive if services are not provided to third parties on identical conditions, or that instead of requiring coercion of consumers to acquire a tied product or service, it is already abusive if consumers are merely nudged to preferring the vertically integrated firm’s products. These changes would amount to a paradigm change. Traditionally, competition is to force producers to be responsive to consumer preferences. Consumer choices are taken to reveal their preferences unless coercion can be shown. Allowing intervention already below the threshold of coercion, when consumers are merely nudged to make particular choices, risks substituting the competition authority’s assessment for consumer preferences.