Google's (Non-) Compliance with the EU Shopping Decision
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Google's (Non-) Compliance with the EU Shopping Decision a study based upon empirical data of 25 comparison shopping services Google’s (Non-) Compliance with the EU Shopping Decision a study based upon empirical data of 25 comparison shopping services September 2020 FOREWORD On 27 July 2017, the European Commission adopted a decision in proceedings pursuant to Article 102 TFEU (Case AT.39740) addressed at Google Inc. and Alphabet Inc. (Google). In its Decision, the Commission found that, between January 2008 and 27 July 2017, Google infringed Article 102 TFEU by positioning and displaying more favourably, its own comparison shopping service (compared to competing comparison shopping services) in the general search results pages of its search service “Google Search”. This study assesses whether the measures taken by Google since the Decision conform with the obligations imposed by the Decision’s operative part. The study is based upon empirical data (for example, data covering consumer traffic, conversions, revenues and customer reactions) provided by 25 European comparison shopping services1 operating in 21 European markets 2, including the market leaders in 7 of the 13 commercially most relevant countries3. Such services have combined their data for a representative economic and legal market analysis of the implications of Google’s chosen compliance mechanism. Following an executive summary (see below at pp. 14 et seq.), as well as a summary in 13 illustrations with corresponding explanations (see below pp. 35 et seq.), the main analysis will first outline the core elements of the Decision (Chapter 1) before explaining the measures that Google implemented to remedy the abuse (Chapter 2). The central assessment then follows in Chapter 3, examining the economic impact of Google’s chosen compliance mechanism and in Chapter 4, examining the mechanism’s compliance with the Decision. Chapter 5 outlines the consequences of the findings for Google and the Commission. September 2020 Dr Thomas Hoppner Professor for Business Law, Technical University Wildau Partner, Hausfeld 1 These are in alphabetic order: Ceneo.pl, Choozen, Ciao, Compare Group, Biano, FAVI, Geizhals, Glami, Guenstiger.de, Heureka, idealo, Kelkoo, Koopkeus, KuantoKusta, LeGuide, LionsHome, Nextag.de, Preis.de, Preis.info, Preissuchmaschine.de, PriceRunner, Testberichte.de, Trovaprezzi, Ladenzeile.de/Shopalike.com, x24factory_Moebel24. 2 Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, the Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Spain, Sweden, Switzerland and the United Kingdom. 3 Germany, Poland, Czech Republic, Hungary, Italy, France, Slovakia, all figures are based on data from SimilarWeb (category “E-Commerce price-comparison”), 25 September 2020. 4 The author would like to thank Jan Weber, Luke Grimes, Johannes Wick, Eva Bendin and Philipp Westerhoff of Hausfeld for their invaluable support with the creation of the many illustrations and the final editing. Many thanks also go to Niels Frank, Jan-Michael Kreis and Steffen Sirries of Lademann & Associates for explaining the outcome of their independent data analysis and providing economic statistics. All mistakes remain those of the author. LEGAL NOTICE The information and views set out in this study are those of the author and do not necessarily reflect the official opinions of the companies that participated in the study. Since the study is based upon data provided by external parties, the author does not guarantee the accuracy of the data included in this study and cannot be held responsible for the use which may be made of the information contained therein. Any requires regarding this publication should be sent to the author at [email protected]. ISBN 978-3-00-066800-5 © Thomas Hoppner, 2020 Reproduction is authorised, provided the source is acknowledged. The reproduction of the artistic material contained therein is prohibited. 5 BRIEF TABLE OF CONTENTS FOREWORD .......................................................................................................................... 4 BRIEF TABLE OF CONTENTS ................................................................................................. 6 TABLE OF CONTENTS ........................................................................................................... 7 EXECUTIVE SUMMARY ........................................................................................................ 14 A SUMMARY IN 13 ILLUSTRATIONS ...................................................................................... 35 MAIN ANALYSIS ................................................................................................................. 62 Chapter 1: Google Search (Shopping) Decision .......................................................... 63 Chapter 2: Google’s Compliance Mechanism .............................................................. 79 Chapter 3: Economic impact of Google’s Compliance Mechanism ........................ 107 Chapter 4: Legal assessment of Google’s Compliance Mechanism ....................... 171 Chapter 5: Consequences for Google and the Commission .................................... 317 LIST OF ABBREVIATIONS .................................................................................................. 321 LIST OF REFERENCES ....................................................................................................... 323 LIST OF ILLUSTRATIONS.................................................................................................... 332 ANNEX 1 – SCREENSHOTS OF VARIOUS SHOPPING UNITS .................................................. 338 ANNEX 2 – ANALYSIS OF ‘CSSS’ TAKING PART IN GOOGLE’S CM ...................................... 386 6 TABLE OF CONTENTS FOREWORD .......................................................................................................................... 4 BRIEF TABLE OF CONTENTS ................................................................................................. 6 TABLE OF CONTENTS ........................................................................................................... 7 EXECUTIVE SUMMARY ........................................................................................................ 14 A SUMMARY IN 13 ILLUSTRATIONS ...................................................................................... 35 MAIN ANALYSIS ................................................................................................................. 62 Chapter 1: Google Search (Shopping) Decision .......................................................... 63 A. Introduction 63 1. Overview: decision – remedy – compliance mechanism – monitoring .................... 63 2. Industry concerns regarding the inefficiency of Google’s Compliance Mechanism .............................................................................................................. 66 B. Interplay of abuse, remedy and compliance in competition law 69 1. Requirements for an effective remedy in digital markets......................................... 69 2. Compliance in the framework of the remedy imposed ............................................ 72 C. The Google Search (Shopping) decision 73 1. The identified abuse ................................................................................................ 73 2. The imposed remedy ............................................................................................... 77 Chapter 2: Google’s Compliance Mechanism .............................................................. 79 A. Shopping Ads 80 1. The new design and features of the CM-Shopping Units ........................................ 80 1.1 New “Product View of Shopping Unit” for price comparison ............................. 81 1.2 New “Showcase View of Shopping Unit” for grouped offers ............................. 84 2. The new auction mechanism for Shopping Ads in Google’s CM-Shopping Units ........................................................................................................................ 85 3. The bidding of Google Shopping Europe (GSE) and competing CSSs for Shopping Ads .......................................................................................................... 89 4. Discounts and free support for merchants that use CSSs other than GSE – the combination of “SpendMatch”, “self-service” and account “waiver” ................... 91 4.1 How Google described the CSS Partner Program and the SpendMatch discount scheme............................................................................................... 92 4.2 How the market understood the CSS Partner Program and SpendMatch – rise of agencies acting as ‘CSSs’ with pretence frontend and no backend ............................................................................................................ 94 4.3 Rise of white label ‘CSSs’ for merchants’ “self-service” ................................. 100 4.4 Google granting free customer support to merchants that switch to another CSS signing a “waiver” to reactivate the GSE account ..................... 101 4.5 Google’s broadest possible definition(s) of a ‘CSS’ to gloss over the statistics .......................................................................................................... 102 B. Comparison Listing Ads 104 7 TABLE OF CONTENTS Chapter 3: Economic impact of Google’s Compliance Mechanism ........................ 107