Germany Intensifies Scrutiny of Google with New Antitrust Proceedings

Germany’s federal competition regulator, the Bundeskartellamt, is continuing its focus on major technology companies. It has announced the commencement of two separate investigations concerning Google’s business practices.

Investigations Follow Similar Actions Against Other Tech Giants

This action builds upon earlier investigations targeting Amazon and Facebook. These prior proceedings aim to determine if these companies hold a position of “paramount significance for competition across markets,” as defined by German competition legislation.

Assessing Google’s Compliance with Amended Competition Rules

One of the Bundeskartellamt’s new proceedings will ascertain whether recently revised competition regulations, effective since January, are applicable to Google. If so, this would grant the regulator the authority to proactively intervene to promote competition within the digital sector.

In-Depth Analysis of Google’s Data Processing Terms

Concurrently, a second, parallel investigation will involve a detailed examination of Google’s data processing policies. This approach suggests a presumption that Google/Alphabet’s operations meet the criteria established by the GWB Digitalisation Act, potentially streamlining the process.

Parallel Procedures for Expedited Action

By conducting these two investigations simultaneously, the German competition authority aims to accelerate its response. This is contingent upon the first proceeding confirming its ability to intervene in Google’s operations.

Focus on User Data and Consent

The second investigation will identify potential issues to inform any subsequent intervention. The Federal Cartel Office (FCO) will assess whether Google/Alphabet conditions service usage on data processing consent without providing users with adequate control over how and why their data are utilized.

Examining Cross-Service Data Processing

The FCO will also investigate the extent to which Google’s terms allow for extensive cross-service data processing. Furthermore, it will seek clarification on how the company’s data policies apply to user data collected from third-party websites and applications, including those accessed through Google’s advertising services.

Protecting Consumer Choice in Data Processing

A crucial aspect of the investigation will be determining the level of choice users have regarding Google’s data processing practices. Protecting consumer choice is a fundamental principle of competition law.

Potential Outcomes: Simplified Consent and Limited Data Linking

Based on these areas of focus, a future order from the FCO could require Google to simplify its consent requests, ensuring genuine user choice. It might also restrict Google’s ability to combine first-party user data with information gathered from other online sources.

Bundeskartellamt President Highlights Google’s Ecosystem

Andreas Mundt, president of the Bundeskartellamt, stated that Google’s extensive ecosystem of services – including the Google search engine, YouTube, Google Maps, the Android operating system, and the Chrome browser – could indicate a dominant market position.

Data Processing as a Strategic Advantage for Google

Mundt emphasized that Google’s business model heavily relies on data processing, giving the company a strategic advantage due to its established access to competition-relevant data. He added that the FCO will closely examine Google’s data processing terms, particularly regarding user choice.

Google Responds with Claims of User Control

In response to the FCO proceedings, Google stated its commitment to full cooperation. However, the company refuted claims that users are compelled to use its services, asserting that it provides “simple controls” allowing users to “limit” data usage, according to spokesperson Ralf Bremer.

Concerns Over Forced and Manipulative Consent

The Bundeskartellamt’s scrutiny of Google’s data processing terms aligns with ongoing criticism that the tech giant relies on coercive or manipulative consent practices to obtain user data. This contrasts with the pan-EU legal standard requiring consent to be clear, informed, and freely given.

Past Fines and Jurisdictional Shifts

In 2019, France’s data protection authority fined Google $57 million under the EU’s GDPR for failing to provide “sufficiently clear” information to Android users regarding data usage for targeted advertising. Subsequently, Google shifted the legal jurisdiction for processing European users’ data to Ireland.

Irish DPC’s Slow Enforcement Record

This move made the Irish Data Protection Commission (DPC) Google’s lead data supervisor under the GDPR’s one-stop-shop mechanism. However, the DPC has yet to resolve a single GDPR complaint against Google, despite numerous ongoing investigations, drawing criticism for its enforcement record.

European Regulators Recognize Anti-Competitive Impact of Privacy Abuses

The increasing awareness among European competition regulators that abusing user privacy can be an anti-competitive tactic, enabling digital giants to consolidate their dominance by unfairly acquiring and linking user data, represents a significant development in Big Tech regulation.

FCO’s Previous Action Against Facebook

The Bundeskartellamt previously ordered Facebook not to combine user data across its different products in a “super profiling” case predating the amendments to German digital competition law. Facebook is challenging this order in German courts, and the case has been referred to Europe’s top court.

Facebook Case Remains Pending

The FCO confirmed that the Facebook case is still before the court, awaiting clarification on GDPR-related issues from the European Court of Justice. A final decision on the merits of the case will be rendered after these issues are resolved.

Experience Informs New Competition Law

The Bundeskartellamt’s extensive investigation of Facebook’s data practices, which began in March 2016, likely informed the amendments to Germany’s competition law introducing ex ante powers to address digital giants deemed to be of “paramount significance for competition across markets.”

EU’s Digital Markets Act and Germany’s Proactive Approach

The EU has proposed a similar ex ante approach for digital “gatekeepers” under the Digital Markets Act. However, its adoption and pan-EU application are likely years away, positioning Germany’s national law and the FCO as potentially significant actors in the interim.

EU and UK Also Taking Proactive Steps

The EU’s competition commission is also investigating Google’s adtech practices, while the U.K., outside the bloc, is developing its own ex ante regime to curb the market power of digital giants. This demonstrates a growing consensus among European authorities to proactively address digital market abuses.