Germany Targets Google Market Power in Expansion of Tech Rules
May 25 2021 - 8:51AM
Dow Jones News
By Sam Schechner
Germany's competition regulator is investigating whether Google
is dominant enough to be subject to the country's new
digital-competition law, broadening its efforts to brandish new
powers against companies including Amazon.com Inc. and Facebook
Inc.
Germany's Federal Cartel Office said Tuesday that it has opened
a probe into whether Google, the main unit of Alphabet Inc., is of
"paramount significance for competition across markets." That
designation allows the regulator to impose changes to a dominant
digital company's business practices under a law passed in
January.
The investigation follows similar probes the Cartel Office has
opened in recent months against Amazon and Facebook, seeking
similar designations. Under the new law, German regulators can
order companies it finds to be of paramount importance to cease
certain practices deemed anticompetitive through a faster procedure
than traditional competition enforcement.
Google "could be considered to be of paramount significance for
competition across markets," given the products it offers, said
Andreas Mundt, the president of the Cartel Office. "It is often
very difficult for other companies to challenge this position of
power."
"People choose Google because it's helpful, not because they're
forced to, or because they can't find alternatives," a Google
spokeswoman said, adding that the company will cooperate with the
Cartel Office.
Amazon said it would cooperate with the Cartel Office, and
pointed to its investments in Germany. Facebook didn't immediately
comment.
Germany's push puts the country on the forefront of a new trend
in efforts to curb the power of big tech giants. Pushed by
competition specialists and activists, policy makers are
increasingly seeking new laws that are aimed to ensure that new
tech rivals can emerge to challenge bigger companies in the
industry -- rather than relying on traditional, lengthy competition
investigations.
The European Union in December proposed a bill that could force
digital platforms designated as gatekeepers to refrain from some
potentially anticompetitive actions, such as promoting their own
products over those of competitors. The U.K. plans legislation
empowering a new digital-competition unit to enforce codes of
conduct for companies that dominate strategic digital markets.
China, too, has been using competition rules as part of its tech
crackdown.
The new German law, passed in January, would likewise allow the
country's competition regulator to order companies it deems to be
of paramount significance to stop certain activities, such as
preferencing their own services or impeding the entry of
competitors into a market through use of data.
In parallel with the investigation into Google's market power,
the Cartel Office said Tuesday that it has also opened an
investigation into Google's data processing terms, and whether
consumers have "sufficient choice as to how Google will use their
data." A spokesman for the office said the second probe could use
the designation from the first to impose remedies.
The Google spokeswoman said, "German consumers have enormous
choice online and we give people simple controls to manage their
information and limit the use of personal data."
The Cartel Office says it also has previous competition probes
open into Amazon, including whether it is influencing the prices of
third-party sellers on its platform using algorithms. The Cartel
Office said last week that if it finds the new law applies to
Amazon, it could potentially use it to impose remedies on the
company. Amazon declined to comment on the specifics of the
investigations.
When it comes to Facebook, the regulator said in January that it
will investigate whether it can use the new powers to impose
remedies in an investigation it had opened in December. That
investigation involves what the Cartel Office described as linkage
between Facebook's Oculus virtual-reality products and its social
media platform.
Write to Sam Schechner at sam.schechner@wsj.com
(END) Dow Jones Newswires
May 25, 2021 08:45 ET (12:45 GMT)
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