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Google Wins Vertical Search Antitrust Case In Germany
In a German case that could have broader antitrust implications in Europe, Google defeated a petition for an injunction brought by a German online weather trade group, Verband Deutscher Wetterdienstleister. The case is interesting because it involves a private antitrust action against Google and directly addresses the “search bias” argument made by Google critics.
The case and petition for injunction against Google were brought on behalf of third party publishers by the weather association. I obtained an English translation of the German court’s opinion. The translation is a bit awkward however, requiring a bit of interpretation on my part.
Below is the essence of the argument made by the petitioner against Google:
The Petitioner states that the Defendant [can] place its space-consuming weather forecast box featuring its own contents at the top in front of the list of organic search results. For a person who started a search request using the term “weather“, this means that it is no longer necessary to heed the links in the organic search list below because they can retrieve all the important information from the weather box at the top. Accordingly, the design of the search engine of the Defendant . . . results in the user being dissuaded from following the links of other providers. In consequence of the fact that these sites are less frequently visited, the providers lose advertising revenue resulting in the profitability of their business models being jeopardized.
The above, familiar argument distilled into bullets goes like this:
- Google can put its own “weather box” at the top of search results
- Third party weather sites become less visible (or effectively invisible in this case)
- Visiting third party weather sites becomes less necessary or even unnecessary
- The decline in organic traffic harms publishers and decreases revenue, jeopardizing their businesses
The court rejected these arguments entirely.
It spent some time addressing the challenges of defining the market for purposes of the competition analysis. It came to the preliminary conclusion that the entire internet (including Twitter and Facebook) should be used as the relevant context for analysis. However it didn’t dispose of the injunction petition on that basis.
The German court specifically rejected the notion that Google owed any obligation or duty to the weather sites (or by implication any set of vertical-content publishers) at the expense of doing what Google considered to be right for users:
It is not the objective of the ban on the abuse of a market-controlling position to safeguard traditional business models that can no longer withstand change. The ban sought by the Petitioner would amount to precisely this: the Defendant . . . would be prevented from enhancing its search approach in that, rather than making reference solely to links of other providers, it provides its own contents direct, the reason being that what the Petitioner is claiming for itself and its members should also apply to other search terms.
Put differently: the Defendant . . . should forgo the innovation it considers to be proper so that other companies such as the members of the Petitioner are included in the result list as usual and are thus able to continue generating revenue via this placement and the advertising space thus obtained . . .
Whereas the Petitioner is aiming at leaving everything unchanged as far as possible because its members have enjoyed much success with the traditional business model in the past, the Defendant . . . is attempting to secure a position in the competitive flux. The discrimination against or threat to business models cited by the Petitioner thus proves to be a reflex reaction of dynamic competition.
Indeed the court argued that the weather association was essentially seeking to protect ad-revenue stability for its member publishers and shield them against the impact of market competition. It further asserted that Google was changing precisely in response to market forces and competition and that it had a right to do so, to provide what it regarded as the best overall user experience.
The plaintiff-petitioner Verband Deutscher Wetterdienstleister has two weeks to appeal the decision. They have not yet indicated whether they intend to do so.
The proposed antitrust settlement between Google and the European Commission (EC) is likely to happen. However, if it were for some reason to fail, the logic of this German case suggests the EC would face legal challenges were it to become involved in litigation against Google. Recognizing this, the EC will in all probability finalize the formal settlement proposal on the table after the one-month “market test” period is over.