CJEU upholds record antitrust fine over pre-installed browser and search requirements

Google’s parent company Alphabet had appealed to the Court of Justice of the EU (CJEU) against a judgment of the EU General Court that largely upheld findings by the European Commission in 2018 over Google’s use of its Android mobile operating system to ‌block rivals.

The CJEU’s landmark ruling is likely to have significant implications for other technology firms over pre-installed app and software agreements.

The Commission had originally fined Google more than €4.3 billion after finding in 2018 that the company had abused its dominant position by requiring, through specific app licencing and pre-installation agreements, that its own Google search and Chrome browser had to be promoted on Android devices.

In 2022, the General Court had reduced that fine to approximately €4.125 billion, with Google’s parent company, Alphabet, jointly and severally liable as to €1.5 billion – reduced from the original €1.9 billion amount after annulling part of the original Commission decision about revenue share agreements.

Google had appealed against the General Court ruling to the CJEU, but now the CJEU has dismissed that appeal, confirming the General Court’s findings and antitrust fines.

The top EU court ruled that the General Court had not erred in assessing the effects of the pre-installation conditions and clarified that counterfactual analysis is not a mandatory requirement in every case involving abuse of dominance if the effects of the allegedly anticompetitive conduct can be sufficiently established through market conduct and evidence.

It also confirmed the original ruling was right in finding the status quo bias for pre-installed apps was not accounted for by user preferences, and that the General Court was right in upholding the Commission’s original view that demonstrating abuse of dominance is not dependent on demonstrating the capability to foreclose only on competitors as efficient as Google, with that behaviour likely to restrict competition and prevent entrants to the market.

In doing so, the CJEU confirmed that there is no systematic obligation to apply the so-called ‘as efficient competitor’ (AEC) test in exclusionary abuse of dominance cases, noting that there are situations where it may not be possible or make sense to apply that test.

According to the CJEU, the AEC test may be particularly unsuitable “where the structure of the market, involving, for example, an ecosystem characterised by significant barriers and network effects, and the conduct at issue make the entry, maintenance or even emergence of an as-efficient competitor practically impossible”.

The CJEU added that “it is for the competition authority to demonstrate, on the basis of specific, tangible points of analysis and evidence, that the conduct concerned is capable of having exclusionary effects” and this “may entail the use of different analytical templates depending on the type of conduct at issue in a given case” and must “always be made in the light of all the relevant factual circumstances, irrespective of whether they concern the conduct itself, the market(s) in question or the functioning of competition on that or those market(s)”.

The CJEU also upheld the General Court’s earlier finding that the software agreements were liable to strengthen Google’s market dominance by limiting commercial markets for non-compatible versions, without the need for counterfactual evidence. It also confirmed that the practices constituted a “single and continuous infringement” despite the General Court partially annulling the Commission’s original infringement decision, as the CJEU considered the remaining abuses formed part of a broader strategy of anticompetitive behaviour.

Insights from the CJEU judgment in this case are expected to be captured in the Commission’s forthcoming guidelines on exclusionary abuses of dominance under EU competition law.