Google's record fine may boost old foes' claims of abuse
(Bloomberg) -- If you’re suing Google, European Union enforcers have just saved you a lot of legwork.
For dozens of companies that have brought lawsuits claiming Google effectively crushed them by abusing its dominance in internet searches, Tuesday’s announcement will likely ease their attempts to show their much larger rival improperly boosted its business at their expense. The decision could resurrect lawsuits stayed by national regulators awaiting the commission’s ruling.
The 2.42 billion-euro ($2.7 billion) fine topped the current $1.2 billion record and caps a seven-year probe into Google fueled by complaints from News Corp. and Microsoft Corp. In the U.K., Kelkoo and Foundem are among companies that stand to gain from a formal ruling from the EU.
"Having the decision from the European Commission means they don’t have to prove infringement themselves," said Rona Bar-Isaac, a partner at Addleshaw Goddard LLP. "The question for these companies then will be, can you tie that infringement back to whatever harm it is that Kelkoo and Foundem say they’ve suffered?"
Price comparison websites Foundem and Kelkoo were the first of their kind to sue in Britain. Foundem went to court after Google allegedly dropped the company from its listings in 2006. Kelkoo also went after the U.S. technology firm, saying in its lawsuit that Google gave its own search results unfair prominence over Kelkoo and other rivals. Foundem won a ruling in 2015 that enabled it to submit documents to aid the EU in its investigation of Google.
“There’s a huge amount of evidence and they’re going to face lots and lots of claims across Europe," Richard Stables, chief executive officer of Kelkoo, said about Google. Everybody knows that Google "is dominant, but the European Commission has collected everybody’s data and laid that all out."
Alphabet Inc.’s Google, which said Tuesday that it “respectfully disagrees” with the EU’s findings, didn’t respond to an email seeking comment on the lawsuits issue.
Google is "liable to face civil actions for damages that can be brought before the courts of the member states by any person or business affected by its anti-competitive behavior," the EU said in its statement. "The new EU antitrust damages directive makes it easier for victims of anti-competitive practices to obtain damages."
The EU moved to accelerate the release of its decision in recent days, pushing up the announcement from July.
The rapid pace comes after a seven-year probe fueled by complaints from small shopping websites as well as bigger names, including German publisher Axel Springer SE. European politicians have called on the EU to sanction Google or even break it up while U.S. critics claim regulators are targeting successful American firms.
The long probe hasn’t hurt Google, which did its initial public offering in 2004, selling shares for $85. Alphabet shares ended last week at $986.09.
“The really key thing to look out for will be how far the commission goes in actually setting out what the effects were of the abuse of dominance," Bruce Kilpatrick, a partner at Addleshaw Goddard, said ahead of the announcement. "That will obviously help or hinder other litigants. In an abuse of dominance case, it isn’t always obvious that the claimant can tag the infringement to the losses, and to quantify the damages they have suffered."
The EU’s declaration that it had found evidence of sudden drops in traffic to rival websites of 85 percent in the U.K., up to 92 percent in Germany and 80 percent in France will "hearten" Google’s rivals, Bar-Isaac said.
"These sudden drops could also not be explained by other factors," the EU said in the statement. "Some competitors have adapted and managed to recover some traffic but never in full."
Since it started changing its search function in order to promote its own comparison shopping service, traffic to Google’s comparison shopping service increased 45-fold in the U.K., the EU said in the ruling.
But bringing plaintiff cases in the U.S. will be challenging, especially after the Federal Trade Commission closed its investigation of Google in 2013, according to Melissa Maxman, managing partner of Cohen & Gresser LLP in Washington.
In many plaintiff lawsuits, there is a U.S. conviction or sentence that forms the basis of the evidence. Any cases that allege harm pointing to the EU settlement will still have the burden of proof, Maxman said.
"It’s easier to get a judgement when you have a guilty plea in the U.S. -- not so much when you have notice of an EU decree Google is still denying,” Maxman said. “Google can point to the FTC’s decision to close its case here. If you are going to sue Google, you had better be prepared for a long and hard fight."
Multiple lawsuits in Europe and the U.S. have been stayed, pending the outcome of EU probes into shopping, the Android operating system and advertising. This result could be the beginning of a thaw that brings those cases back to life, according to Tim Cowen, a lawyer at Preiskel & Co, who advises companies including Kelkoo and Streetmap. Even more significant could be a "non-discrimination obligation" imposed on Google, he said ahead of the announcement.
"That’s going to make a bigger difference to a broader number of companies and make a massive difference to Google and its ability to self-promote its own stuff," he said. "That could restructure the way in which people find things on the internet."
--With assistance from Sara Forden