Advanced Television

German watchdog sets sights on Google

January 6, 2022

By Colin Mann

Germany’s Federal Cartel Office the Bundeskartellamt has delivered its decision that Alphabet Inc., Mountain View, USA, and therefore also its subsidiary Google, is subject to extended abuse control by the competition authority.

A newly-introduced provision under the German Competition Act (Section 19a of the German Competition Act (GWB)), which entered into force in January 2021, enables the Bundeskartellamt to intervene earlier and more effectively, in particular against the practices of large digital companies. In a two-step approach the Bundeskartellamt can prohibit companies which are of paramount significance for competition across markets from engaging in anti-competitive practices.

“Since January 2021, we have a new instrument to monitor large digital companies,” advises Andreas Mundt, President of the Bundeskartellamt. “In less than a year, we have now taken the first official decision based on this provision and determined that Google is of paramount significance across markets. This is a very important step since based on this decision the Bundeskartellamt can now take action against specific anti-competitive practices by Google. We have already started to look into Google’s processing of personal data and to deal with the Google News Showcase issue in more detail. At the same time, we are vigorously conducting other proceedings against Amazon, Apple and Meta, formerly Facebook.”

Google is a multi-national group of companies which offers a large number of Internet services and software products. The parent company is Alphabet Inc. The best-known services and products offered by Google include the Google search engine, the mapping and navigation service Google Maps, the video service YouTube, the browser Chrome, the Android operating system, the app store Play Store and the email service Gmail. The services, which are usually provided to private users free of charge, are predominantly financed by advertising. In addition, Google also provides a range of different advertising services for the marketing of its own and third-party online advertising inventory as well as associated services, such as the tracking of user behaviour.

The Bundeskartellamt holds that Google is of paramount significance for competition across markets within the meaning of Section 19a(1) GWB. The company has an economic position of power which gives rise to a scope of action across markets that is insufficiently controlled by competition.

Holding more than 80 per cent of the market shares, Google has a dominant position on the market for general search services in Germany and is the main search advertising provider. In addition, Google is a powerful provider of a wide range of services in Germany and reaches a large number of users. With regard to the marketing of online advertising, Google also offers advertising services with a wide reach covering the entire value chain.

In its digital ecosystem, Google furthermore has significant influence over other companies’ access to its users and advertising customers (e.g. via Google Search, YouTube, Android, Play Store or its advertising services) and can set rules and conditions for other businesses across markets. In this respect, these services can be described as “infrastructure” since, for one thing, a large number of other services can to a great extent only be offered using Google’s services and, for another, Google’s services are of great importance for the business activities of third parties.

In particular, due to the wide reach of its services Google also has excellent access to data relevant for competition. Google’s large user base, its widely used advertising services and the large number of user data it can collect across services and partly also across devices allow Google not only to market targeted adverts but also to continuously develop its services. The competitive advantage resulting from this access to data and other resources, such as the ‘Google’ brand, can be used as shareable inputs in many ways across markets. This makes it easier to operate, improve and expand existing services or develop entirely new ones. Lastly, Google’s paramount significance for competition is evident in its market capitalisation, which is one of the highest worldwide and reflects Google’s large financial power.

The validity of the Bundeskartellamt’s decision is limited to five years in accordance with statutory provisions. Within this period Google is subject to special abuse control by the Bundeskartellamt in Germany as set out in Section 19a(2) GWB.

The Bundeskartellamt is currently already examining Google’s data processing terms (and the Google News Showcase service.

Google has announced not to appeal the decision and not to deny its status as norm addressee within the meaning of Section 19a(1) GWB. However, in doing so Google specifically has not declared that it necessarily agrees with all the facts as established by the authority in its decision and the conclusions drawn from these facts.

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