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Yesterday the news came out that the European Union fined Google for $2.7B because they, according to the EU, place their own services higher in the result than competitors.

Google suffered a major blow on Tuesday after European antitrust officials fined the search giant a record $2.7 billion for unfairly favoring some of its own services over those of rivals.

I wonder what this is based on though. Does Google actually have any (legal) obligation to provide an objective search result? It seems to me that they offer a service and it is up to the users to decide whether they want to make use of that or not.

If I make a search query on Amazon, I wouldn't demand of them to also show Google Shopping's results. So what is different the other way around?

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The relevant eu article is article 102 tfeu which forbids those who are in a dominant market position from abusing that position (e.g. price fixing, discriminatory practices as in this case when google made their products more likely to appear in a search than competitors).

The case summary is http://eur-lex.europa.eu/legal-content/EN/SUM/?uri=CELEX:62008CJ0236&qid=1498637439183#SM

The statement of the commission declaring the fine is http://europa.eu/rapid/press-release_IP-17-1784_en.htm

  • How does the EU know that Google's services are not "Naturally" in a better position? – Ole Jun 3 '18 at 0:54
  • My eu law professor told me that (if i recall correctly) the EU commision(who is responsible for charging conpanies for this) has to do a factual (what the presence of the company does) and counterfactual (what would happen if the company didnt exist) analysis of the market conditions to determine this kind of thing – Shazamo Morebucks Jun 3 '18 at 3:25
  • Seems like the right way to prove that Google is doing it is to create a "Clean room" of the Google search engine and then replicate all the traffic going into that search engine and thus you have an Apple to Apple comparison ... but creating the "Clean room" is not exactly a trivial matter ... Microsoft has been trying for a while with Bing ... – Ole Jun 3 '18 at 3:40
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It's based on EU law

Specifically, Consolidated version of the Treaty on the Functioning of the European Union - PART THREE: UNION POLICIES AND INTERNAL ACTIONS - TITLE VII: COMMON RULES ON COMPETITION, TAXATION AND APPROXIMATION OF LAWS - Chapter 1: Rules on competition - Section 1: Rules applying to undertakings - Article 102 (ex Article 82 TEC)

Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States.

Such abuse may, in particular, consist in:

(a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;

(b) limiting production, markets or technical development to the prejudice of consumers;

(c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;

(d) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.

This law says, in essence, that a business that is dominant in a market (e.g. Google in search engines) cannot use that dominance to unfairly advantage their own goods and services over their competitors.

The more general issue

Most jurisdictions have anti-trust (or anti-monopoly) laws as a matter of public policy.

This is because a dominant business (a trust, monopoly or oligopoly) is in a position where it can charge as much as its customers can bear because it has no competitors to force it to charge a price closer to the cost of production. While this is good for the business, it is bad for the consumers - in much the same way that armed robbery is good for the thief but bad for the victims.

This has been an issue since Roman times but modern competition law arose from the creation of "natural" monopolies in the late nineteenth century, specifically railroads in North America. Building railroads is expensive and owning the only link between say New York and Baltimore gives you the ability to charge people who want/need to use it whatever you like. That is you make extortionate (and I use the term deliberately) profits. First the Canadian and then the US government legislated to prevent it.

Your specifics

Does Google actually have any (legal) obligation to provide an objective search result?

Yes

It seems to me that they offer a service and it is up to the users to decide whether they want to make use of that or not.

Not if it is the only game in town - a business with market dominance is not offering users a choice between them and a competitor, they are offering a choice between them and nothing.

If I make a search query on Amazon, I wouldn't demand of them to also show Google Shopping's results. So what is different the other way around?

Amazon is not a search engine, it's a shopping portal. Amazon does not have market dominance in shopping portals the way Google does in search engines. Even the if they did, they are not abusing that position by marginalising competitors in another market the way Google search is influencing the online shopping market.

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