Thursday, July 14, 2022

Google in competition enforcement cross-hairs: (a) in Italy over obstruction of interoperability; (b) in South Africa over paid search results as well as Google Play Store

While Apple is facing even more antitrust issues (and deservedly so), Google is not a distant second in the discipline of drawing regulatory scrutiny and inspiring legislative action to combat various types of abuse of market power. And these days there's even more going on with a view to Google.

Today, the Italian competition authority--in Italian: Autorità garante della concorrenca e del mercato--announced that it has opened formal investigations of Google allegedly impeding interoperability (sharing individuals' data across platforms), with a particular view to weople, a service operated by Italian company HODA (Holistic data Activation). Weople describes itself as "the app to invest and protect your data," or "the first bank to invest your data and gain value from it, while protecting it and activating your privacy rights."

The European Commission manages an EU Framework Program for Research and Innovation, and its 2014-2020 edition named "Horizon 2020" scored Weople as a "high-quality project proposal in a highly competitive evaluation process." These are Weople's five goals as stated on its website:

  1. Give people an easy tool for them to apply the GDPR [General Data Protection Regulation] and act[ivate] their rights. Give people a tool for having, knowing and controlling their data.

  2. Give people a tool to earn money from their data, to participate in this growing and very important market with consciousness and highly protective privacy systems.

  3. Use data to help people and families to get services that can protect them, bring savings and make them feel better.

  4. Give people a high-level and reliable data storage service, with full data availability.

  5. Apply strong and modern principles of ethics and transparency. Apply an economic approach based on both voluntary margin limitations and sharing economy plus social sustainability principles.

These are laudable goals, and it means a lot that the European Commission considers it an interesting project. But according to the Italian competition authority, Google's conduc could compromise the right to portability of personal data as established Art. 20 GDPR and deprive consumers of certain benefits they could derive from their data. Where competition law comes in is the problem that Google's conduct is suspected of limiting the ability of third parties to develop innovative data-based services.

The Italian competition authority has already conducted a dawn raid of Google's Italian premises together with a special police unit named Guarda di Finanza (GdF).

In late October, this already happened in connection with Google's alleged abuse of a dominant position in the Italian market for display advertising.

Yesterday, South Africa's Competition Commission published a provisional report (press release, PDF) outlining various findings and recommendations 14 months into its Online Platforms Market Inquiry. Unlike the Italian investigation I just mentioned, that one isn't only about Google, but Google appears to be the primary target based on the list of "leading platforms" identified by the investigators:

"Apple App Store, Google Play Store, Takealot,, Airbnb, Mr Delivery, Uber Eats, Property24, Private Property, AutoTrader, and along with Google Search (including its specialist search units such as Google Shopping and Google Travel)." (emphases added)

The following paragrah about Google Search is particularly interesting:

"Among other findings, the Inquiry has provisionally found that Google Search plays an important role in directing consumers to the different platforms, and in this way shapes platform competition. The prevalence of paid search at the top of the search results page without adequate identifiers as advertising raises platform customer acquisition costs and favours large, often global, platforms. Preferential placement of their own specialist search units also distorts competition in Google’s favour. The Inquiry provisionally recommends that paid results are prominently labelled as advertising with borders and shading to be clearer to consumers and that the top of the page is reserved for organic, or natural, search results based on relevance only, uninfluenced by payments. The Inquiry also recommends Google allows competitors to compete for prominence in a search by having their own specialist units and with no guaranteed positions for Google specialist units. The Inquiry is also exploring whether the default position of Google Search on mobile devices should end in South Africa."

I agree that paid search results should be marked more clearly, and there is a point in at least limiting the extent to which non-organic search results appear at or near the top of a search results page.

As for app stores (Apple's iOS App Store as well as Google Play for Android apps), the initial recommendation is potentially helpful but in my view fails to address an even bigger problem than the app tax, which is the app review tyranny:

"In software application stores, there is no effective competition for the fees charged to app developers with in-app payments, resulting in high fees and app prices. The Inquiry’s provisional recommendation is that apps should be able to steer consumers to external web-based payment options, or alternatively a maximum cap is placed on application store commission fees."

A cap on app store commissions would be infinitely more helpful than the sham settlement proposed in the Northern Distict of California, where the attorneys-general of 36 U.S. states, Epic Games, and Match Group (to whose complaint Google responded this week) are still pushing for a meaningful result. In South Korea, Google will likely be fined soon over its bad-faith compliance with a statute relating to in-app payments, but if South Korea had simultaneously capped the commission (as is now being contemplated in South Africa), the situation would be clearer.

One of the most interesting antitrust investigations of Google was announced by Germany's Bundeskartellamt (Federal Cartel Office) last month and relates to the licensing terms for Google Maps.

While it's been quiet lately about the United States et al. v. Google antitrust litigation in the District of Columbia, that case will go to trial next year and has enormous potential. A joint status report by the United States Department of Justice, the 36 state AGs, and Google was filed on Tuesday (PDF). Yesterday the plaintiffs sought an extension of a deadline to respond to an expert report, which--just like the status report--suggests Google is not being as cooperative as the government plaintiffs would have hoped:

There's a lot going on, and I'm now keeping track of those issues more systematically than in the past.