ICLE Scholars & Affiliates Provide Expert Antitrust Analysis of the EU Android Decision

In July 2018, European Union competition chief Margrethe Vestager hit Alphabet Inc.’s Google with a record antitrust fine of €4.34 billion ($5.06 billion). The EU’s antitrust regulator claims that Google abused the dominance of its Android operating system in order to promote its own apps and services.

For analysis of the decision by antitrust experts on both sides of the Atlantic, see the following work by ICLE scholars and academic affiliates under Related Resources below:

THE EU’S GOOGLE ANDROID ANTITRUST DECISION FALLS PREY TO THE NIRVANA FALLACY

It is sometimes said that the most important question in all of economics is “compared to what?” UCLA economist Harold Demsetz — one of the most important regulatory economists of the past century — coined the term “nirvana fallacy” to critique would-be regulators’ tendency to compare messy, real-world economic circumstances to idealized alternatives, and to justify policies on the basis of the discrepancy between them. Wishful thinking, in other words.

WHY THE COMMISSION'S GOOGLE ANDROID DECISION HARMS COMPETITION

Today’s Google Android decision could severely harm competition and innovation in the digital economy. It ignores the powerful rivalry that exists between Android devices and Apple’s iPhone. To compete against Apple, Google opted for an open-source project which entails a complex governance structure. By meddling with these rules, the Commission’s decision threatens the viability of the Android platform. Consumers will be the biggest losers.

Fine is Only One Click Away

In a US Senate Hearing in 2011, Eric Schmidt, Google’s CEO, stated that ‘competition is only one click away’. On 27 June 2017, the European Commission fined Google €2.42 billion for allegedly ‘abusing dominance as search engine by giving illegal advantage to own comparison shopping service’. Ruthlessly, a fine is only one click away too.

THE THEORY OF ABUSE IN GOOGLE SEARCH

In its investigation into Google’s search practices, Google Search, the Commission alleges that Google abuses its dominant position on the web search market by giving systematic favourable treatment to its “comparison shopping product” (namely, “Google Shopping”) in its general search results pages.

The Real Reason Foundem Foundered

A pair of recent, long-form articles in the New York Times Magazine and Wired UK — the latest in a virtual journalistic cottage industry of such articles — chronicle the downfall of British price comparison site and stalwart Google provocateur, Foundem, and attribute its demise to anticompetitive behavior on the part of Google.

The Challenge of Turning Economic Theory into Antitrust Policy

The award of the Nobel Prize in Economics to Professor Jean Tirole in 2014 has generated intense interest about his brainchild theory of two-sided markets. Against this background, this paper explores whether there is such a thing as a unified theory of two-sided markets and whether the two-sided markets literature can readily be applied by antitrust agencies, regulatory authorities and courts.