Google Shopping: beware of ‘self-favouring’ in a world of algorithmic nudging

February 2018

CPI Europe Column edited by Anna Tzanaki (Competition Policy International) & Juan Delgado (Global Economics Group) presents:

Google Shopping: beware of ‘self-favouring’ in a world of algorithmic nudging By Nicolo Zingales (Sussex Law School)¹

Introduction

On 27 June 2017, the European Commission closed its investigation in the Google Shopping case. It found a breach of article 102 TFEU in relation to Google’s “more favourable positioning and display of its own comparison shopping service compared to competing comparison shopping services” (hereinafter, “the conduct”).² The Commission’s Decision is important for several reasons. First and foremost, it constitutes the first application of the leveraging theory in an algorithmic context, where as a result of certain algorithmic design choices³ a dominant undertaking systematically directs (“nudges”) consumers towards its own goods or services in a secondary market. Google apparently did not see it coming, as it argued both in the proceedings before the European Commission and in the appeal it lodged against the Decision⁴> that the Commission used a novel theory of abuse, and therefore in accordance with its previous practice should not have imposed a fine. However, the Commission rejected this argument, noting that it had already used a self-favouring theory to establish abuse in a number of cases.⁵ It therefore imposed a fine of almost 2.5 billion euros and ordered Google to take a