German competition regulator initiates proceedings against Google

On Tuesday, Germany's competition regulators initiated two proceedings against Google. [EPA-EFE | Roman Pilipey]

Germany’s Federal Cartel Office initiated two proceedings against Google on Tuesday (25 May), looking into the Internet giant’s market power and its handling of user data. EURACTIV Germany reports.

After Facebook and Amazon, this is the third instance of investigations of  American tech companies since the amendment to the German competition law came into force. The proceedings are directed against Google Germany, Google Ireland, and its parent company, Alphabet.

In the first proceedings against Google, German anti-trust authorities are taking aim at the company’s cross-brand power position in particular.

“Due to the large number of digital services such as the search engine, YouTube, Maps, the Android operating system or the Chrome browser, Google is considered to have an overriding importance for competition across markets,” explained Cartel Office President Andreas Mundt.

The second legal proceeding examines Google’s handling of user data, in particular, the company’s “strategic advantage” and its “established access to competitively relevant data”.

Since Google’s business model is fundamentally based on the processing and analysis of user data, the competition body questions “whether consumers have sufficient choices about the use of their data by Google when they want to use Google services,” Mundt said.

A Google spokesperson stressed to EURACTIV that the tech company will “cooperate extensively with the German competition authority.” At the same time, Google rejected the German competition authority’s accusations.

“People choose Google because it’s helpful, not because they’re forced to, or because they can’t find alternatives. Consumers in Germany have enormous choice online and we give people simple controls to manage their information and limit the use of personal data,” the Google spokesperson told EURACTIV.

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Modernised competition law

Germany’s antitrust authorities had already initiated investigations against Facebook and Amazon in January and early May.

The proceedings are based on a new antitrust law instrument that was enacted in January with the amendment of the Act against Restraints of Competition (GWB).

The core objective of the reform was to make the digital space fairer and to create a competition law tailored to digital companies “that establishes clear rules for the digital markets”, as German Economy Minister Peter Altmaier (CDU) explained.

Due to the dynamics of the digital economy and the rapid growth of digital platforms, the law seeks to prevent the dominant position of digital companies by intervening more quickly and effectively and prohibiting behaviour by tech companies even before it leads to problems.

The Federal Cartel Office emphasised that the amendment makes German competition law an “international pioneer.” However, new competition law provisions are also currently being forged at the European level.

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Commission wants penalties for rule violations

Just last December, the European Commission presented its legislative initiative to regulate digital markets. The Digital Markets Act (DMA) obliges large digital companies – so-called “gatekeepers” – to fulfil a large number of requirements to prevent one company from achieving a dominant market position.

The DMA takes a new approach to this. Instead of proving a digital platform’s market-dominating behaviour in lengthy proceedings, the DMA starts at the preliminary stage and creates a far-reaching catalogue of rules to ensure fair competition.

In its preliminary form, the DMA provides for high penalties in the event of rule violations. Up to 10% of the annual revenue of digital companies can be imposed in fines.

Intensive negotiations on the draft are currently taking place at the EU level. Germany is particularly concerned about the question of responsibility. In its current form, the European Commission alone would be responsible for enforcing the DMA, which would largely leave the member states out in the cold.

The business newspaper Handelsblatt reported on Tuesday (25 May) internal information on Germany’s further approach to the DMA. According to this, the government wants to enforce a central role for national authorities in the review of digital companies.

Together with the Netherlands and France, Berlin intends to submit a letter with corresponding demands to the Commission in the coming days.

On Thursday (27 May), the relevant EU ministers will discuss the way forward on the DMA in the meeting of the Competitiveness Council.

[Edited by Zoran Radosavljevic]

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