Proceeding against Google based on new rules for large digital players (Section 19a GWB) – Bundeskartellamt examines Google's significance for competition across markets and its data processing terms

The Bundeskartellamt has today initiated two proceedings against Google Germany GmbH, Hamburg, Google Ireland Ltd., Dublin, Ireland, and Alphabet Inc., Mountain View, USA, based on the new competition law provisions applicable to large digital companies. In the past months, the authority has already commenced investigations against Facebook (see press release of 28 January 2021) and Amazon (see press release of 18 May 2021) based on this new competition law tool.

In January 2021, the 10th amendment to the German Competition Act (GWB Digitalisation Act) came into force. A key new provision (Section 19a GWB) enables the authority to intervene earlier and more effectively, in particular against the practices of large digital companies. In a two-step procedure, the Bundeskartellamt can prohibit companies which are of paramount significance for competition across markets from engaging in anti-competitive practices.

Today, the Bundeskartellamt has initiated a proceeding to determine whether the company is of paramount significance across markets.

Andreas Mundt, President of the Bundeskartellamt: “An ecosystem which extends across various markets may be an indication that a company holds such a market position. It is often very difficult for other companies to challenge this position of power. Due to the large number of digital services offered by Google, such as the Google search engine, YouTube, Google Maps, the Android operating system or the Chrome browser, the company could be considered to be of paramount significance for competition across markets.”

In a second proceeding based on this general classification also initiated today, the Bundeskartellamt will undertake an in-depth analysis of Google’s data processing terms.

Andreas Mundt: “Google’s business model relies to a very large extent on processing data relating to its users. Due to its established access to data relevant for competition, Google enjoys a strategic advantage. We will therefore take a close look at the company’s data processing terms. A key question in this context is whether consumers wishing to use Google’s services have sufficient choice as to how Google will use their data.”

The new legal provision includes some specific examples of practices that can be prohibited if they are used by a company with paramount significance for competition across markets. The Bundeskartellamt will examine whether Google/Alphabet makes the use of services conditional on the users agreeing to the processing of their data without giving them sufficient choice as to whether, how and for what purpose such data are processed (Section 19a(2) no 4a GWB).

Using Google’s services always requires users to consent to specific terms governing Google’s data processing. Google introduces these terms in different ways, depending on whether the user has set up a Google account or whether the individual services are used without such an account. Users can also adjust Google’s so-called personalisation settings. The Bundeskartellamt will examine the extent to which the terms provide Google with an opportunity to process data on an extensive cross-service basis . The authority will also have to clarify how the company’s data processing policy applies to the processing of user data obtained from third-party websites and apps, for example through Google’s advertising services. Furthermore, it is crucial for the assessment under competition law to establish what choice users actually have with regard to Google’s processing of their data. Protecting consumer choice is a primary aim of competition law the importance of which was underscored by the new GWB Digitalisation Act.

Facebook’s data processing policy

In early 2019, the Bundeskartellamt imposed extensive restrictions on Facebook regarding the processing of user data (see press release of 7 February 2019). The Bundeskartellamt’s proceeding as well as the subsequent court proceedings were, however, based on the competition law provisions governing abuse control already in place before the recent amendment to the German Competition Act. The facts that are to be assessed in the present case are also different.

The Facebook case is still pending before the court. In March 2021, the Düsseldorf Higher Regional Court decided to refer certain issues relating to the application of the General Data Protection Regulation to the European Court of Justice since, in the court’s view, a decision on the merits of the case can only be rendered after these issues have been clarified