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By Valentina Pop and Sam Schechner
This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (February 13, 2020).
LUXEMBOURG -- Alphabet Inc.'s Google told a court Wednesday that the European Union's antitrust enforcer had no legal grounds for awarding it a multibillion fine for allegedly abusing its dominance over smaller rivals.
The search giant is seeking to overturn three antitrust rulings it lost against the EU that have totaled more than $9 billion in fines. While a verdict isn't expected until early next year, the litigation is a test case for the EU's competition czar, Margrethe Vestager, and the continuing probes into Facebook Inc., Apple Inc. and Amazon.com Inc. for allegedly abusing their dominance to drive out smaller rivals.
"Competition law does not require Google to hold back innovation or compromise its quality to accommodate rivals," Thomas Graf, a lawyer for Google told a panel of five judges at the General Court in Luxembourg. The court is the bloc's second-highest and its rulings can still be appealed at the European Court of Justice.
In 2017, Ms. Vestager found that Google had abused the dominance of its search engine to drive traffic to its own shopping ads at the expense of rivals that operated their own shopping-comparison sites that linked to merchants.
Mr. Graf argued that Ms. Vestager's decision was "wrong on the facts and wrong on the law."
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.
The EU's decision to fine Google came from nearly a decade of formal investigations. The probes were prompted by complaints from companies that competed in some way with Google, including American firms like Yelp Inc. and Microsoft Corp. -- which had itself spent a decade under the EU's antitrust microscope.
More than a decade ago, many of the shopping comparison sites depended on Google traffic until the company changed its algorithms in ways that lowered the rankings of sites the company said weren't useful for users. Google then started showing its own product ads atop search pages for popular products.
Google argues 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 EUR2.42 billion ($2.71 billion) billion fine based on it.
The commission's counsel disagreed. "The decision is not as unusual as Google suggests," said Nicholas Khan, the European Commission's lawyer. He said a company is under legal obligation "not to use the levers of control conferred by its overwhelming dominance...to give itself an anticompetitive advantage."
If the court rules that it is illegal for tech platforms to promote their own products to the detriment of smaller rivals, it could encourage the commission to pursue more antitrust probes such as one currently under way against Amazon.
The reporting judge on the case, Lauri Madise, said EU competition law has "no general prohibition for a business to favor its own products" and pressed the commission to lay out exactly what made Google's behavior anticompetitive.
The commission's lawyer said that while there is no duty of neutrality on Google or other companies, 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.
European consumer organizations, German publishers and near-defunct rival shopping search engines argued in favor of the commission's findings and warned of similar behavior displayed by Google in other areas. "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 Washington-based Computer & Communications Industry Association, representing tech companies, 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 James Killick, a lawyer for the industry group.
Write to Valentina Pop at firstname.lastname@example.org and Sam Schechner at email@example.com
(END) Dow Jones Newswires
February 13, 2020 02:47 ET (07:47 GMT)
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