Category Archives: Actors

First Impressions of Google AdSense Decision

By Viktorija Morozovaite

The Google AdSense decision has come out on the 20th of March, 2019. With imposition of €1.49 billion fine it marked an end to the third European Commission’s investigation into tech giant’s practices, each resulting in spectacular penalties (together rounding up to €8.2 billion – a sum equivalent to Benelux countries’ annual contribution to the EU budget) and advancing the debate between competition practitioners and academics worldwide. Admittedly, the outcome did not come as a surprise to many – over the past decade, European Commission seem to have become the nemesis of giant tech companies with investigations into practices of Google, Apple, Facebook and Amazon. While the full decision is not published yet and it is difficult to comment on its merits, this blog post aims at distilling some of the ongoing issues, placing the decision in the broader context.

Decision

The investigation concerned online search advertising intermediation market. Through AdSense platform, Google acted as advertising broker, between advertisers and website owners that want to profit from the space around their search results’ pages. Google is also active in online search adverts market. In fact, it is platform’s most profitable core business area (see). According to the Commission, Google was found to be dominant in both of these markets (70% and 75% market shares held in each respectively for over 10 years).

By acting as a gatekeeper to the online search adverts market, as well as competing within the same market, Google inevitably holds a peculiar position and special responsibility precluding it from favouring own services to advance its dominance. In this decision, Art. 102 infringement was found on the basis that Google conducted its online search advertising intermediation services through imposing individually negotiated contractual obligations with the most commercially important publishers. Commissioner Margrethe Vestager stated that this way, ‘Google has cemented its dominance in online search adverts and shielded itself from competitive pressure’ (see). The agreements included the following anti-competitive clauses:

  • Exclusivity provision (since 2006) – most commercially important partners were prevented from ‘placing any search adverts from competitors on their search results pages’.
  • Premium placement (since 2009, designed to gradually replace exclusivity provisions) – direct partners were required to take on a minimum number of ads from Google and display it on the most profitable ad space.
  • Written approval was required from Google before publishers would make changes in the way in which competitors’ ads were displayed (since 2009).

Type of abuse

It is clear that in Google AdSense, Commission focused on exclusionary nature of the abuses, aimed to foreclose competitors and arguably protect its market position in the core (in this case, online search advertising) business area. While the conduct generally seems to neatly fit within the ‘exclusive dealing’ category (see para 32, Communication), it is not unlikely that the full decision would incorporate the echoes of ‘essential facility’ reasoning, due to the structurally important Google’s position in the platform ecosystem (in this case, through intermediating online search advertising services).

Theory of harm

When establishing the theory of harm, the Commission seems to have focused on impeded consumer choice, as a result of Google’s restrictive agreements with key commercial partners. According to the decision, by, in effect, excluding rivals in online search advertising market, Google not only deterred competition but also stifled innovation which resulted in less choice of alternative types of ads. It is plausible to see consumer choice being treated as a value that ought to be protected in digital markets, especially those dominated by giant techs. In fact, in multi-sided markets context, a shift from price to other parameters of competition (choice, innovation, quality) becomes necessary. For instance, in Google AdSense, consumers are operating in the zero-price side of the market, where they apparently pay no monetary price for the service (on zero-price markets, see). Thus, developing a theory of harm becomes a more nuanced exercise than finding an increase in price. However, in this particular case it will be interesting to see how the decision deals with establishing and measuring the alleged consumer harm. Questions arise whether there is more utility for consumers in having a greater variety of ads i.e. is more choice always pro-consumer? Would rivals’ ads result in more or less qualitative service? These questions, of course, although important are not novel and have been pertinent in Google decisions saga.

Remedies

Regarding online search advertising intermediation market, Google was ordered to ‘at a minimum, stop its illegal conduct, to the extent it has not already done so, and to refrain from any measure that has the same or equivalent object or effect’ (see). It is noteworthy that Google has stopped its illegal practices a few months after the issued Statement of Objections in July 2016. Therefore, it seems that the Commission did not have to decide upon ordering potential effective remedies. While in this particular case it may seem unproblematic, this has been a point of critique in the previous Google decisions, considering that lack of clear steps do not comply with the principle of legal certainty (Akman 2017).

During the questions time, when asked to elaborate on the fact that there have not been effective remedies put in place and ‘cease and desist’ order may not result in restoring competition, Commissioner Vestager reinstated that while this is one of the things highly featuring in the decision-making process, in fast-moving markets, even with a speedy Commission’s reaction ‘the risk is that the market would have moved on and it is very difficult to restore competition as it were’ (see).  

Even though is it appreciated that each case should be assessed individually and that it is difficult to predict development of the fast-moving digital markets, moving forward it may be desired to incorporate clearer steps as to how platforms as Google may reach compliance with European competition law. Nevertheless, this involves further research in the nature and characteristics of the digital markets as well as more clearly defined competition law enforcement strategies (for recent reports, see this and this).

Bringing it all together

To understand the outcome of Google AdSensedecision it is important to put it in the broader context. The so-called ‘Google saga’ began in 2010, with European Commission opening a probe into Google’s search and comparison-shopping services. In 2015, the official proceedings were opened in relation to Google’s Android operating system, followed by an inquiry into search advertising intermediation market just a year later. In addition to heavy fines, Google Shopping and Google Android decisions resulted in an outright divide of competition law circles, criticizing or praising the difficult (policy) choices made by the Commission each time (to name a few, see: Akman 2018, 2017; Picker 2018Hoppner et al 2018). However, Google AdSense does not seem to have ‘stirred up the waters.’ While the decision was not unpredictable per se, the Commission’s reasoning (or its themes) could be expected to overlap with the previous Google decisions, thus having a crystallizing effect in regard to emerging competition law enforcement trends.

For instance, the decisions dealt with markets where Google, on the one hand, was a provider of a certain service and, on the other, an intermediary providing access point to that very same market. Indeed, a significant body of research recognises a central role that giant techs play in the platform ecosystem (to name a few, see: Van Dijck et al 2018Gillespie 2018Petit 2016). Without appropriate balance being struck between competition law and regulation, competition enforcement may appear to be the only means of curbing platform’ power. Arguably, that balance is not present yet. While economic, social and even political influence (and ramifications) of the Big Tech is undeniable, the question that competition practitioners and academics have grappled with for over a decade now is whether competition law is the right means to curb this power? And, if so, is it suitable to address the challenges posed by digitalisation? 

All in all, in Google AdSense, Commission delivered a clearly identifiable exclusionary abuse, established a theory of harm that could still be subject to debate as well as omitted the question of effective remedies. The decision itself was in many ways predictable and fits well within the rest of ‘Google saga’. One is left to eagerly await the full details of the reasoning regarding this outcome.

Brexit and the ways forward for the UK and EU agencies

By Lisette Mustert, Béla Strauss, Miroslava Scholten and Matthew Wood

Brexit raises the question of which way forward for the UK in its relationship with the EU and with EU agencies. For future research and legislative design, this in turn raises a more fundamental question of when which type of agreement between a third country and EU agencies is appropriate, in light of  factors such as salience and the interests on both sides. Having analysed all EU agencies’ founding acts, we show in this post that there are three types of formal relationships that exist at this moment between EU agencies and other countries: full membership, observership and cooperation. We argue that the type of this relationship would vary for the UK depending on the score of ‘Brexit salience’, a concept that we introduce. The higher the ‘Brexit salience’ rating is, the more formal the arrangement – full membership or observer – the UK (and the EU) would need to have with an EU agency. According to our scores, this would concern the European Medicines Agency (EMA) and the European Aviation Safety Agency (EASA). In the case of EU agencies that score low on our salience rating, the UK (and the EU) would want to opt for a relatively limited form of cooperation with EU agencies. This would be the case for Cepol, EIGEACERFrontex and CPVO. Surprisingly, the seemingly highly salient agency in the public debate – the European Border and Coast Guard Agency (also known as Frontex) – scores the joint lowest rating. How is this possible, when for the UK immigration is so important during the Brexit vote? It is because, first, our Brexit salience measures do not focus on what is salient in general for the British or European public. Rather, we are concerned with practical matters of policy implementation. As a matter of policy, Frontex has a clear and well-resourced opposite agency – the UK Border Agency – and its operation does not affect a discrete and well-defined policy area.

EU agencies and third countries: three types of formal relationships

Having studied founding acts of all EU agencies, we have seen three types of formal relationships that exist between EU agencies and third countries:

  • Full membership: the essential feature here is that the third country has a place in the agencies’ main organ – like a management board. Therefore, the third country has the same rights and privileges as EU member states in the agency, except the right to vote (Lavenex 2015) The agencies that currently have at least one third country member are EASAERAEEAEFSAEMCDDAEMSAFrontexEIOPAGNSS. The EFTA states are almost exclusively the ones that cooperate in this manner with the agencies, although in two instances (EEA and EMCDDA) Turkey is also a member. Frontex is the only agency where the EFTA states have some voting rights, so it might be seen as the most intense participation of third countries in any of the agencies. The reason the EFTA states have this special position in the Frontex management board is that participation in Frontex was negotiated in special separate agreements.
  • Observership: the term ‘observership’ is used very frequently, but never defined. The term obviously suggests a less intense form of participation than membership, a form of collaboration where the third state is simply there to passively take in the events that unfold in the EU agency. This makes it hard to distinguish membership from observership, especially because third country ‘full members’ generally also lack a vote, which otherwise could serve as the distinguishing feature between the two. In many instances, EFTA states are, if not members to an EU agency, at least observers. However, unlike the membership model which is almost exclusively applicable to EFTA states, the observer status is more widely available, in particular to (potential) candidate countries for accession to the EU such as Macedonia, Bosnia and Herzegovina, Albania and Serbia. Currently, there is at least one third country observer participant in EASAENISAEBACedefopEMAEurofoundEASOEU-OSHAECDCECHAFRAEFSA. Only EFTA and (potential) acceding states are observers to the EU agencies. 
  • Cooperation: EU agencies increasingly make use of this option by adopting working arrangements or memoranda of understanding with third countries. The basic regulations of the EU agencies frequently mention the need for cooperation with third countries. The following agencies have these provisions: EFCAEASAERAEBAESMAGNSSEuropolEurojustCepolSatCenEMAEASOEU-OSHAECDCEEAEFSAEMCDDAEDAEIOPA and Frontex.   

Brexit salience concept

Brexit salience can be defined as the extent to which Brexit may affect EU agencies’ internal workings, how important their role may be in ensuring maintenance of regulatory standards, and how closely they are connected to key areas of the UK economy. To conceptualise and analyse the extent to which Brexit-specific arrangements may be required between EU and UK regulatory agencies so as to enable a smooth form of regulatory alignment after Brexit, we propose to analyse EU agencies with respect to their ‘Brexit salience’ across three aspects:

  1. Connections internally with British staff: this is the extent to which, after Brexit, EU agencies may internally face some instability in their labour force. EU agencies are staffed by members chosen both to represent a range of member states, but also, crucially for our purposes, to bring relevant and specific expertise in the relevant regulatory field. While overall the UK seems to contribute relatively few staff to EU institutions compared with France or Germany, some agencies rely heavily on British staff and expertise. The EMA, for example, has voiced worries about how ‘our activities will be impacted [by Brexit] and we need to plan for this now to avoid the creation of gaps in knowledge and expertise’.
  2. UK agencies’ capacity to maintain regulatory standards:this is the extent to which the UK has similar regulatory capacity to the EU level to maintain regulatory standards. If this is the case, then EU agencies are likely to be less salient as the regulatory environment is likely to stay largely similar, so long as the UK maintains standards on, for example, environmental pollution. However, where the UK does not have regulatory capacity in the form of well-resourced agencies capable of implementing regulatory, information sharing and communication activities that regulatory agencies undertake, EU agencies are more likely to be salient in continued collaborative efforts to maintain regulatory standards.
  3. Economic interconnectedness: lastly, and from the perspective of the UK, EU agencies are more likely to be significant where the UK has significant economic interests tied to the economic sphere those agencies have jurisdiction over. Areas in which the UK economy is especially embedded in global supply chains – for example in financial services – are most likely to elicit interest from UK policymakers with regard to cooperation with agencies I those areas.

This tripartite framework for assessing Brexit Salience in EU agencies covers the salience of Brexit for agencies (their internal workings and employment of UK nationals as staff), salience for the EU (ensuring the UK has the requisite capacity to maintain similar regulatory standards) and salience for the UK (the extent to which agencies cover the regulatory areas that it is concerned with). Brexit salience is a multidimensional concept and not all elements of it will always pull in one direction. 

The score board below includes initial salience rating developed inductively scoring ‘low’ (1), ‘medium’ (2) and ‘high’ (3) for each of the agencies for each of the three aspects described above and then adding the scores together to produce an overall ‘rating’ out of 9. The ratings are preliminary and will be further developed through double coding and comparison before final publication.

Preliminary brexit salience score board

 AgencyOverall Salience
1.European Aviation Safety Agency (EASA)8
2.European Medicines Agency (EMA)8
3.European Fisheries Control Agency (EFCA)7
4.European Maritime Safety Agency (EMSA)7
5.European Banking Authority (EBA)7
6.European Agency for Safety and Health at Work (EU-OSHA)7
7.European Agency for Network and Information Security (ENISA)6
8.European Union Agency for Law Enforcement Cooperation (Europol)6
9.The European Union’s Judicial Cooperation Unit (Eurojust)6
10European Foundation for the Improvement of Living and Working Conditions (Eurofound)6
11.European Chemicals Agency (ECHA)6
12.European Environment Agency (EEA)6
13.Fundamental Rights Agency (FRA)6
14.European Food Safety Authority (EFSA)6
15.European Agency for Railways (ERA)5
16.European Securities and Markets Authority (ESMA)5
17.European Global Navigation Satellite Systems Agency (GSA)5
18.European Centre for Disease Prevention and Control (ECDC)5
19.European Monitoring Centre for Drugs and Drug Addiction (EMCDDA)5
20.European Centre for the Development of Vocational Training (Cedefop)4
21.European Union Satellite Centre (EUSC; SATCEN)4
22.European Asylum Support Office (EASO)4
23.European Defence Agency (EDA)4
24.Body of European Regulators for Electronic Communications (BEREC)4
25.European Insurance and Occupational Pensions Authority (EIOPA)4
26.European Agency for Law Enforcement Training (Cepol)3
27.European Institute for Gender Equality (EIGE)3
28.Agency for the Cooperation of Energy Regulators (ACER)3
29.European Boarder and Coast Guard Agency (Frontex)3
30.Community Plant Variety Office (CPVO)3

About the authors:

This blog post is a result of a research project and academic paper (forthcoming) exercised by Lisette Mustert and Béla Strauss, two legal Research Master students at Utrecht University, under supervision of Miroslava ScholtenRob Widdershovenand Matthew Wood.

Appointment of EU agency directors

EU agencies’ number and powers have grown tremendously in the recent years. Despite the so-called Meroni ‘non-delegation’ doctrine, EU agencies perform a wide range of tasks. They can contribute to or pass (soft) rules of general applications and impose sanctions for violation of EU laws vis-à-vis private actors (Scholten and Luchtman 2017). The increase of powers and hence impact of EU agencies on society raises the urge for legitimising these institutions. One of the major ways to legitimize institutions is establishing proper governance structures and ensuring suitable top-level officials who manage agencies and bare responsibility for agencies’ performance. In this blog post, we offer a comprehensive evaluation of EU agency directors’ functions and appointment procedures and requirements. We show that the appointed directors fit the profiles of EU agencies that they head well, nevertheless we quest the necessity of the existing excessive variety of appointment procedures (12!), which in our view hinders legitimacy. Continue reading

The European Production Order – Tackling the Problem of Enforcement Jurisdiction and Extraterritoriality in Cyberspace

On April 17th, 2018, the European Commission proposed new legislation to facilitate and accelerate access to digital evidence across borders in criminal investigations. The proposal aims at providing enforcement authorities with new tools for cross-border investigations in the digital era. European Production and Preservation Orders (the Orders) would allow law-enforcement authorities of a Member State to compel service providers – both domestic and foreign – offering services in the European Union to disclose or preserve user data, regardless of the data’s location. With this proposal, the European Commission moves away from territoriality as the determinative factor for enforcement jurisdiction in cyberspace. Thereby it could possibly set an international precedent to modernize international law in the area of transborder access to e-evidence. Continue reading

The external effects of the EU’s regulation of sulfur dioxide (SOx) emissions

On 10 November 2017, I had the honor to be the sole opponent for the (successful) public defense of Philip Linné’s doctoral thesis on ‘Regulating vessel-source air pollution: standard-setting in the regulation of SOx emissions’, at Gothenburg University (Sweden). The thesis concerns the regulatory response, at different scales, including notably the EU scale, to tackle the environmental and human health impacts caused by sulfur oxide (SOx) emissions from the exhausts of seagoing ships. In this post, I reflect on the international legality and especially the external effects of relevant ‘unilateral’ EU action to tackle SOx emissions, i.e., action that goes beyond what is required by international law. Building on, but also adding to Philip Linné’s insights, I argue that by taking unilateral action, the EU has accelerated the calendar for strengthening global environmental standards in respect of SOx emissions. Continue reading

‘EU Agencies’ label: to what extent should we treat them all as ‘one’?

Twenty years ago, Alexander Kreher wrote one of the first articles on EU agencies arguing for the growing importance of this ‘institutional phenomenon’, which was almost completely ignored within the academic literature of that time. Judging from the countless number of academic articles and the tremendous growth of the cumulative budget (via-s-via the Commission, see Figure 1), it seems that the importance of EU agencies has only grown. The development in researching and governing EU Agencies has gone from gathering the somewhat scattered creations of agencies in different policy areas, under different treaty provisions, with different powers and for different purposes, etc. to bringing them under one ‘EU agencies’ umbrella as part of the EU executive machinery distinct from the EU Commission. Indeed, EU agencies have been treated as an ensemble for the budgetary purposes, also at the European Parliament, where the practice of three agencies’ directors would defend budgetary proposals on behalf of all ‘EU agencies’. We have seen the creation of the ‘Common Approach’ and later a roadmap with a view of streamlining the creation and revision of the founding acts of EU agencies. Furthermore, EU agencies’ directors have organized themselves in a network of agencies’ directors to discuss common challenges. To what extent, however, should we treat them as one? Continue reading

How Failing Aggregates Brought About a Landmark Decision of the CJEU

by Kilian Klinger & Linda Senden

Copyright: Tablexxnx

The Court’s recent ruling in the Elliott case can be seen as a landmark decision as it was the first time the Court had to decide upon the normative value of European harmonised technical standards (HTSs). This took its starting point in the mere question brought before the Court, whether or not such acts, adopted by private European standardisation bodies (ESBs), are subject to the Court’s jurisdiction to give a preliminary ruling on their interpretation pursuant to Art. 267 TFEU. Before substantiating on the central argumentative underpinnings of the Court’s judgment, let us first briefly summarize the facts of the case. Continue reading

Ripples from across the pond: Extraterritorial Effects of the Microsoft Ireland Case

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One of the big internet cases of this year, the Microsoft Ireland case, has come to an end about a month ago as the 2nd Circuit Court has handed down its ruling in favour of Microsoft. The case made quite a splash and has been covered  before at the RENFORCE blog. With the verdict in, the time is ripe to revisit it and look at it again, this time from a different angle. Continue reading

(R)evolution in the EU System of Political Accountability: Joint Parliamentary Scrutiny mechanism

 

Source: Lex van Lieshout

Source: Lex van Lieshout

On 11 May 2016, the European Parliament adopted a new regulation for Europol, which will enter into force on 1 May 2017. This Regulation establishes the – so far unprecedented political accountability mechanism in the EU – Joint Parliamentary Scrutiny. The introduction of a mechanism, which links political accountability fora of the EU and the national levels, is a revolutionary development for the evolving multi-level accountability system (of EU agencies). To enhance democratic legitimacy of the EU structures and decisions, the legislative and accountability roles of the European Parliament have grown significantly in the last decennia (Scholten 2014). Yet, never before did national parliaments become involved in holding EU entities to account, too. Continue reading

Going it alone – the EU adopts its own maritime emissions monitoring scheme as the IMO lags behind

9507368339_93b407a9be_mWhile the consequences of climate change have activists up in arms, the international community’s response has been fraught with stagnation, and remains somewhat disillusioning. After a series of disappointing Conferences of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC), all hopes are set on the Paris summit to be held later this year. In the midst of this stalemate, the EU has been profiling itself as a protagonist of the global climate, with an ambitious Climate and Energy Package. In its latest move, the EU has adopted Regulation (EU) No. 2015/757 (‘the Regulation’), which came into force on 01 July 2015, and lays out a monitoring, reporting and verification scheme (MRV) for ships. The MRV requires ships to monitor their CO2 emissions according to a verified monitoring plan, and report the results to the Commission. This step has been on the EU’s agenda for over five years, and forms the first concrete phase of the inclusion of maritime emissions in the Union’s own reduction commitment. While according to the EU, the scheme would bring ‘momentum for international agreement’, the shipping industry reacted coolly, warning that the EU initiative risked putting multilateral negotiations ‘in jeopardy’.

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