Google has much to gain, little to lose in legal fight against EU antitrust decision
8 August 2017. By Matthew Newman.
While many EU antitrust officials are enjoying holidays in the sun, Google lawyers are beavering away in gloomy Brussels on the tech giant's likely appeal against a 2.4-billion euro fine for abusing its market power as a search engine.
This isn't much of a surprise, given the high stakes in the European Commission's landmark antitrust decision after a seven-year investigation.
But Google executives are also facing their first crucial decision about their litigation strategy: Should the tech giant ask an EU court to suspend the commission's decision, pending the outcome of their main appeal? Or should Google keep it simple, and merely appeal?
On balance, Google would be wise to seek a suspension at an EU court in Luxembourg. Quite simply, the company has more to gain than to lose from a suspension.
Following the June 27 decision, Google's chief counsel Kent Walker said the company is considering an appeal. Google denies the commission's finding that it favors its own shopping service, arguing that it displays products with pictures, ratings and prices to compete against online retailers such as Amazon.com and eBay.
The company has two months and 10 days to file its appeal from the time it officially received the antitrust decision. Because the decision was at the end of June, the appeal is due in early September.
Along with its main appeal, Chief Executive Officer Sundar Pichai and other executives will have to consider whether to simultaneously apply for a suspension of the commission's decision.
Seeking a suspension might seem like an obvious choice. But the main problem with asking the EU's General Court for a suspension — known as interim measures — is that these requests are usually rejected.
Winning a suspension is difficult, because a company must fulfill three stringent conditions.
First, the grounds of the company's main appeal must appear, at first sight, to be well founded. Second, the applicant has to show that the measures are urgent and that it would suffer serious and irreparable harm without them. Finally, the measures must be balanced between the applicant's interests and the public interest of enforcing the decision.
All three conditions must be met. If the applicant can't convince the EU court that it would suffer irreparable harm, then the entire application fails.
In Google's case, it's very likely to show a prima facie case — that is, its appeal is legally and factually well founded at first sight. After all, there is a legitimate dispute over whether Google has abused its dominance in Internet search by favoring its own shopping service.
Google could argue that the commission wrongly considers that Google's product-shopping search results are an "essential facility" — such as a port or railroad — for which a rival must have access to compete.
Google could also argue that EU officials have misunderstood the shopping market by failing to include Amazon.com and eBay in the assessment of Google's market power.
So, the main hurdle the US tech company will face is convincing the court that it could suffer "irreparable harm."
How could a company that has more than 90 percent of the market in Internet search in Europe, and that made $22.4 billion in the second quarter this year, convince the court that it would suffer "irreparable" harm if the EU decision is implemented?
Another problem is that Google hasn't told the EU how it's going to implement the EU decision. It must provide this information within 60 days of receiving the decision, so by the end of August.
Without a clear idea on how the decision will be put into effect, it's difficult to know whether Google's business would be so badly harmed that it could convince a judge about "irreparable harm."
However large a 2.4-billion euro fine may sound, Google's vast coffers are likely to be the strongest argument that implementing the EU decision won't bring down the company.
And last, on the balancing test, the commission could argue that the public interest is served by forcing Google to abide by the decision after it allegedly favored its own service and harmed competition for years.
While all this adds up that likely loss for Google, there is still a strong case for pursuing interim measures — as counter-intuitive as this may sound.
The main argument is that Google's legal position won't change at all if it loses the suspension case. Its main appeal will still stand and won't be prejudiced by a rejection of interim measures.
The other benefit could be pure PR. An application for a suspension would show the public that it takes the case very seriously and that it strongly disagrees with the commission's case.
So, even if it loses, Google — as well as parent company Alphabet — can argue that it's doing everything possible to overturn the EU decision. In this context, fighting the fight — and being seen to fight the fight — is just what lawyers should be up to in the waning days of summer.