Google search abuses dominant position to illegally favour Google Shopping: an economic review of the EU decision
| Published date | 14 May 2018 |
| DOI | https://doi.org/10.1108/DPRG-05-2017-0020 |
| Pages | 211-224 |
| Date | 14 May 2018 |
| Author | Korbinian von Blanckenburg |
| Subject Matter | Information & knowledge management,Information management & governance,Information policy |
Google search abuses dominant position
to illegally favour Google Shopping: an
economic review of the EU decision
Korbinian von Blanckenburg
Abstract
Purpose – This paper is concerned with the current decision of the European Commission regarding
Google’s comparison shopping service (Google Shopping). In 2017, the Commission has fined Google
e2.42 billion for abusing its dominant position as a search engine by giving illegal advantage to Google
Shopping. Consequently, Google has to stop its illegal conduct. In particular, the decision requires
Google to treat rival comparison shopping services and its own service equally. The purpose of this
paper is to analyse the decision from a perspective of two-sided markets. Google Shopping is an
integrated service of Google Search and acts as an intermediary between companies, offerings products
in the internet and people searching for products in the internet. This complies with the typical conditions
of a two-sided market. From the perspective of sellers of goods and services in Europe, Google may be
seen as a gatekeeper to the potential customers and thus as an essential facility. In the light of the current
decision, this paper provides a possible regulation alternative. It is shown that Google Shopping
represents a typical club good, so that welfare-optimising rules must be adhered to. In this context, it
should be noted that in the current Google Shopping search results, artificial rivalry is created among
sellers so as to ensure maximum willingness to pay for a top listing. The solution proposed in this paper
entails a summary score list of all sellers of a particular product, for which a turnover-dependent
contribution should be required, instead of a reduced score list, where positions are sold by auctions.
Design/methodology/approach – This paper uses methods of two-sided markets and public good
theory.
Findings – It is shown that Google Shopping represents a typical club good, so that welfare-optimising
rules must be adhered to. In this context, it should be noted that in the current Google Shopping search
results, artificial rivalry is created among sellers so as to ensure maximum willingness to pay for a top
listing. The solution proposed in this paper entails a summary score list of all sellers of a particular
product, for which a turnover-dependent contribution should be required, instead of a reduced score list,
where positions are sold by auctions.
Originality/value – To the best of the author’s knowledge, it is the very first paper about the decision of
the European Union (06/2017) concerning Google Shopping.
Keywords Google, Market power, Two-sided markets, Digital markets, Google Shopping
Paper type Research paper
1. Introduction
In June 2017, the European Commission decides that Google Inc. has abused its dominant
position in the market for general internet search services in the European Economic Area
(EEA) concerning its own comparison shopping service (Google Shopping). Google Inc. is
an American company, known especially for its internet-based services, like its universal
search engine Google Search, but also for its vertical search engines, such as Google
Scholar and Google Shopping. One of the allegations of the European Commission is that
Google Inc. systematically favours its own products – such as Google Shopping – in the
universal search results of Google Search. In isolation, this would not be much of an issue.
Korbinian von
Blanckenburg is Professor
at Ostwestfalen-Lippe
University, Lemgo,
Germany.
JEL classification – L40, L50,
L51, K21
Received 6 May 2017
Revised 21 December 2017
Accepted 10 January 2018
DOI 10.1108/DPRG-05-2017-0020 VOL. 20 NO. 3 2018, pp. 211-224, © Emerald Publishing Limited, ISSN 2398-5038 jDIGITAL POLICY, REGULATION AND GOVERNANCE jPAGE 211
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