Google’s shopping fix hits a snag in London damages trial

(CN) — Google walked into a London competition court Monday hoping to put its shopping search saga behind it, only to be hit with a brand new problem from European regulators.

Comparison-shopping companies Kelkoo, Ciao and Foundem are seeking damages in the U.K. Competition Appeal Tribunal, a specialist court that hears competition disputes, arguing Google filled the top of its search results with its own shopping box, complete with product photos, prices and links, while pushing rival comparison-shopping sites farther down the page, where users were far less likely to click.

Google says the remedy it introduced after the European Commission’s 2017 antitrust decision ended any unlawful favoritism. The claimants want the tribunal to calculate damages using a world without both the demotion of rivals and the privileged promotion of Google Shopping. Google says a lawful alternative would have looked much closer to the system it already uses.

The surprise opening to Kelkoo’s closing arguments was a 150-page European Commission decision issued last Thursday under the Digital Markets Act, the European Union’s rulebook for its largest online platforms. The commission fined Google 460 million euros (approximately $523 million) for favoring its own services, including Google Shopping, in search results. The tribunal had not yet read it, but the judges said the commission appeared to have concluded that Google’s current shopping box still violated the DMA’s ban on self-preferencing.

Before calculating damages, the tribunal must first decide what Google would have done had it competed lawfully. Although the DMA does not apply to this U.K. case, the judges questioned whether Google’s current shopping box could still serve as that answer after the commission found it unlawful.

Google urged the tribunal not to fold the commission’s decision into the case. Meredith Pickford, representing Google, argued the law applies a broader legal test than traditional competition rules and was not in force during most of the period covered by the claims.

“There is definitely a world in which the legality of our conduct under the DMA does not affect anything in these proceedings. Indeed, that is the world in our case,” Pickford said.

Kelkoo said the commission’s findings could not be ignored and may justify seeking documents describing changes Google has proposed to Brussels. Google has said it plans to appeal the EU tech law decision.

The damages claims predate the digital act by years. In 2017, the commission fined Google 2.42 billion euros (about $2.77 billion) after finding it abused its dominance in general search by giving Google Shopping an illegal advantage over rival comparison sites.

Google responded by opening its shopping box to competitors through an auction. The claimants argue the redesign changed little because rivals still had to pay for visibility while Google continued deciding which products appeared, how they were ranked and what user data the service generated.

Daniel Jowell, a lawyer for Kelkoo and Ciao, argued that today’s shopping box remained Google’s comparison-shopping service, even if rival comparison sites now appear inside it.

“From the front office, it looks and operates the same,” Jowell said.

Kelkoo and Ciao say rival shopping services should instead compete to provide the entire shopping box, selecting and ranking products themselves, or appear through enhanced ordinary search results. Google could still set neutral quality standards, they say, but its own shopping service should have to follow the same rules.

Jowell acknowledged the tribunal was not being asked to redesign Google’s future search product. Instead, it must decide what Google probably would have done from 2008 onward had it competed lawfully, then use that answer to calculate damages.

“This tribunal is not, you’re not the commissioner, you’re not the regulator deciding what will happen in the future,” Jowell said.

Google’s closing arguments continue through Wednesday. Before issuing a ruling, the tribunal directed the parties to exchange written submissions on the commission’s Digital Markets Act decision and indicated it may hear brief oral arguments on Sept. 11. The judges gave no indication when they expect to rule.

Separately, the tribunal on Monday dismissed Foundem’s parallel claim after the parties reached a confidential settlement, leaving Kelkoo and Ciao to continue pursuing damages.

Courthouse News reporter Eunseo Hong is based in the Netherlands.