Combating anti-competitive practices online

In Monitoring No. 3 we examined the norms of regulation in individual countries of various practices of abuse by platform dominance. Let us now consider the application of these norms in specific proceedings.

The EU and Great Britain

experience

In September 2024, a number of antitrust proceedings were conducted against Google and Amazon in the UK, Germany and Italy.¹

In a case against Google (UK), the Competition and Markets Authority alleged Google's abuse of dominance in three parts of² the ad tech stack chain: Google operates ad buying tools (Google Ads and DV360) and the DFP server for advertisers to publish ads, as well as the AdX ad exchange.

Advertising exchanges auction advertising space by aggregating requests from advertisers (sites where ads are published) and responsive bids from advertisers (with prices at which they are willing to buy advertising space). An auction is then held where an auction fee of 20% of the bid amount is charged. All 3 platforms are owned by Google, which dominates the market.

In September, an investigation began against Google for giving preferential treatment to its own services:

− Providing AdX with exclusive or preferential access to advertisers that use Google Ads’ platform.

− Manipulating advertiser bids so that they have a higher value when submitted into AdX’s auction than when submitted into rival exchanges’ auctions.

− Allowing AdX to bid first in auctions run by DFP for online advertising space, effectively giving it an ‘right of first refusal’ - with rivals potentially not having any chance to submit bids.

To date, a verdict has not yet been issued against Google, the investigation is ongoing.

In Italy, in September, the Advocate General published an assessment of Google's abuse of its dominance in the operating system³ market. Google developed the Android opensource operating system. In 2015, Google launched Android Auto, an app for mobile devices with an Android operating system that enables users to access certain apps on their smartphone through a car’s integrated displays, was launched in 2015. Third-party developers can create their versions of their own apps that are compatible with Android Auto by using templates provided by Google. Enel X reported that Google refused to connect its JuicePass app with features for electric cars because the app is not compatible with Android Auto (Enel did not use a specific Google template for compatibility).

Interestingly, the Advocate General used⁴ the Bronner criteria to assess Google's market position - the practice whereby a dominant undertaking denies access to infrastructure developed by that dominant undertaking for its operations. In doing so, such a refusal has the effect of eliminating competition in the relevant market because there is no alternative infrastructure provided by other undertakings. However, counsel recognized the Bronner criteria as inapplicable because the platform (Android Auto) was not developed by the dominant Google for its own exclusive use, but for connecting third-party applications.

It is worth noting that there was an⁵ investigation in Russia against Apple in 2020, when Apple introduced technical restrictions to iOS in terms of configuration profile settings, which forced Kaspersky Lab to degrade the functionality of the Safe Kids app (some technological components had to be removed, otherwise access to the App Store was banned). The FAS recognized an abuse of Apple's dominant position using criteria like Bronner's the App Store was the only distribution channel for iOS apps, with the App Store being the only way for third-party app developers to gain access to iOS devices.

Nevertheless, in Italy, Google's actions were found to be abusive because the denial of the Enel application was not objectively justified. Such a refusal could be “objectively justified” if access to the Android Auto platform was technically impossible or would affect its performance. However, the denial due to the need to develop a special template for the Enel application does not result in the technical risks cited, but only requires time and cost on Google's part.

In fact, the Russian FAS recognized the App Store as the only platform for access to iOS devices, using the Bronner criteria, whereas in Italy the lawyer took a different position (referring to the technical capabilities of the platform), although Android Auto, like the App Store for iOS, is the only way for app providers to gain access to Android machines. In both cases, however, the platforms were created not only for the companies' own app-hosting activities, but also to connect third-party apps to the devices.

Amazon is under 2 ongoing proceedings⁶ in Germany (launched in 2022):

1) In connection with Amazon's implementation of algorithm control of price by third-party sellers on the Amazon marketplace. As a result, Amazon may block or restrict sales of items from such sellers if the items are overpriced.

2) Regarding the system of brandgating issue: Amazon creates a register of brands and their distributors who can confirm their intellectual rights to sell goods with the corresponding trademark. This is necessary to exclude sellers from the site who do not have intellectual property rights to the trademark of the goods sold. The antimonopoly authority plans to check the conditions for the admission or exclusion of sellers from Amazon's site, taking into account whether they have rights to use the brand (trademark).

In September 2024, the antitrust authority Bundeskartellamt launched an online survey of 2,000 third-party retailers to examine the impact of Amazon's prices on access to the platform.

Experience of China

On September 1, 2024, China's Interim Provisions on Combating Unfair Competition on⁷ the Internet that defines banned practices, will take effect:

1) Use of false and misleading advertising: dissemination of false information about transactions, ratings of sellers and their products, traffic; misleading by offering discounts to consumers only for positive reviews.

2) Falsification of user reviews and other practices with reviews, such as using images to disguise negative reviews, placing positive ratings at the beginning of the list of reviews, etc.

3) Damaging the business reputation of competitors, e.g., distributing false risk warnings, letters of complaint, etc.

4) Inserting links, including forcing links to interfere with other vendors' products.

5) Creating products that are incompatible with other vendors' products.

6) Buying up a vendor's own products to leave positive reviews or downgrade other vendors.

7) Malicious actions of taking possession (adding to a shopping cart on the marketplace or booking) of goods for a short period of time without payment.

8) Wholesale purchases with subsequent return or refusal to receive the goods, etc.

9) Use of frequent pop-up windows that cannot be closed, etc.

10) Disrupting the normal operation of other suppliers' products, e.g. by launching other applications against the user's wishes, failure to provide functions for uninstalling applications, etc.

Russia’s experience

To date, the FAS has developed a set of market practices that define abuses in digital⁸ markets. However, unlike the approach of China or EU countries, such principles do not include a list of abuses related to the anticompetitive use of data accumulated by platforms or the refusal of interoperability with third-party services, etc.

⁹ https://fas.gov.ru/p/protocols/1666

From the monitoring issue No. 9, September 2024. Download the full issue (PDF) · issue page at the Gaidar Institute