Search Neutrality

Google suddenly grew up at midday June 27 — and the way it conducts business in Europe and probably further afield will have to catch up fast.

Likely more important in the immediate future for Google, which rejects the findings and says it may appeal, the decision will serve as a model for regulators across the globe closely scrutinizing Google, from Seoul to Brasilia, and it will bolster those in the U.S. trying to prod domestic regulators into action. “As matters now stand, the Commission is the primary regulator of internet services in the Western world,” said David Cantor, a Brussels-based technology lawyer. In addition, the decision hurts Google’s otherwise stellar brand and reputation. Its “search franchise is built upon the notion that it is an honest broker of the world’s information,” said Scott Cleland, a founder of consultancy Precursor, an adviser to Google rivals and a trenchant critic of Google. That damage can work in significant and long-lasting ways. For example, Microsoft’s aggressive tactics and antitrust problems made it less attractive to some of the best engineers and university talent, who opted to join nicer companies — like Google.

The European Commission has hit Google with a €2.42 billion (approximately $2.73 billion) antitrust fine for abusing its dominance in search, a decision with potentially far-reaching implications for both the tech sector and already strained transatlantic relations.

The European Commission ended its seven-year competition investigation, concluding that the search group had abused its near-monopoly in online search to “give illegal advantage” to its own shopping service. Margrethe Vestager, the EU’s competition commissioner, said Google “denied other companies the chance to compete” and left consumers without “genuine choice”. “Google’s strategy for its comparison shopping service wasn’t just about attracting customers by making its product better than those of its rivals. Instead, Google abused its market dominance as a search engine by promoting its own comparison shopping service in its search results and demoting those of competitors. What Google has done is illegal under EU antitrust rules.” The company has 90 days to make changes and must “refrain from any measure that has the same or an equivalent object or effect”, the commission said.

Brussels plans to hit Google with a fine of more than $1.2 billion for abusing its dominance in search, a decision that is likely to inflame already strained transatlantic relations. European Union antitrust officials have formally recommended that the search giant be found in breach of competition regulations for using its near-monopoly in online search to steer customers unfairly to its own Google Shopping service. The final decision is expected to be made on June 28 by the EU college of commissioners, the collective decision-making body, apparently. The decision relates to one of three competition claims against the company being investigated by EU authorities and would be the first sanction by a leading competition regulator on the way Google operates.

Twenty years ago, on June 26, 1996, the US Supreme Court unanimously decided Reno v. American Civil Liberties Union, which found the communications decency provisions of the Telecommunications Act of 1996 to be unconstitutional. Applying strict scrutiny under the First Amendment, the Supreme Court concluded that unlike broadcasting – where the Federal Communications Commission’s indecency regulation has been upheld due to the unique characteristics of that medium – no content regulation with a justification of online child protection would be allowed. This means that there continues to be no content restrictions on what American internet users can send or receive.

Viewed in contemporary context, two lessons from Reno v. ACLU endure. First, as a constitutional law matter, there is a firewall for US government restrictions on any non-obscene online content. In turn, this virtually unfettered freedom has fueled the pervasiveness of the internet in our lives. Remember, Facebook and the world of online apps – which now exceed websites as the go-to sources online – did not even exist then. Mark Zuckerberg was only 13 years old when the court decision was released, and other app content pioneers such as Snapchat’s Evan Spiegel were still in elementary school.

This leads to the case’s second legacy, which is more implicit but also of great importance. Given the continuing inability to predict the speed and scale of internet development or changing consumer preferences, there seems to be a subtext in that government may find it difficult to develop broad prescriptive long-lasting approaches to internet regulation. The FCC favored this ex ante approach when crafting the Open Internet order under the Obama Administration. Under new FCC Chairman Ajit Pai, the agency seems to favor a revision that limits government oversight to the Federal Trade Commission’s traditional enforcement authority. As the FCC compiles its rulemaking record to justify this significant change in approach, it would not be surprising to see the Reno v. ACLU decision used to support a return of this light-touch regulatory framework.