Streetmap fails in private abuse of dominance action against Google

In brief

Streetmap (and its successor entity in liquidation) accused Google of abusing its dominant position in the search engine market by introducing into its “Maps OneBox”, a new thumbnail image of the resulting map at the top of the search engine results page. It argued that this new method favoured Google Maps over other links to other online mapping products and that the effect was a precipitous decline in the number of Streetmap’s users.

However, the court held that Google Maps was successful in its own right because of a number of technological innovations which provided a better product than Streetmap. These developments were pro-competitive and demonstrated competition on the merits. In the court’s view, Streetmap had failed to demonstrate that Google’s conduct in the search engine market had had an appreciable effect on the online mapping market, and even if Google’s conduct could be considered an abuse, it was objectively justified.

The case was also significant because of the court’s use of so-called “hot-tubbing” for the first time in a competition case. This is a process in which expert evidence is jointly presented and scrutinised to narrow the arguments.

In detail

In the recent High Court case of Streetmap.EU v Google Inc., Google Ireland Limited and Google UK Limited [2016] EWHC 253 (Ch), Mr Justice Roth considered the interaction of two related, multi-sided markets. These were: i) the market for general internet search engines; and ii) the market for online maps. For both markets, revenue is predominantly derived through online advertising. A feature of this model is that websites which generate the highest numbers of users tend to generate the greatest revenues.

Google’s market-leading general search engine was assumed to be dominant in this market for the purpose of the court’s assessment. A general search engine canvasses the whole of the World Wide Web for relevant results and displays them in a “SERP” (search engine results page or pages). The separate market for online maps largely took off in the mid 1990s. Streetmap began its online service in 1997. In 2005, Google launched “Google Maps”, which delivered both free and premium (paid for) mapping content to users, and in 2007, introduced a new OneBox which displayed a clickable map extracted from Google Maps, initially small in size, but subsequently spreading across the page.

Was displaying a clickable Google Maps image at the top of the SERP an abuse of dominance?

The effect of Google displaying an image linking to its own mapping service (and to no other) on the SERP resulting from its general search had the effect of shifting the link to Streetmap’s service further down the page. The question of whether the bundling together of Google Search with Google Maps and the exclusive display of the clickable map linking the two constituted an abuse was taken as a preliminary issue in the case. By the time of the trial, Streetmap accepted that the provision of a map was beneficial to users - but challenged the practice of exclusively displaying maps derived from Google Maps.

In principle, Mr Justice Roth saw no reason why the preferential promotion by a dominant company, through its power on the market where it is dominant, of its separate product on a distinct market where it is not dominant, may not constitute an abuse if that has the effect of strengthening its position on that other market and is not otherwise objectively justified. However, to do so requires an assessment of all the relevant circumstances of the case (Case C-549/10P Tomra Systems v Commission).

Mr Justice Roth pointed out that the unusual and challenging feature of the case was that pro-competitive conduct in the market in which the undertaking is dominant was alleged to be abusive on the grounds of an alleged anti-competitive effect in a distinct market in which it was not dominant.

The outcome

The issues boiled down to whether:

• Google intended to foreclose competition by introducing the Google Maps OneBox. The judge concluded that it had not: its main purposes was to improve its general search engine by remedying its perceived deficiencies in comparison with the offerings by its competitors.
• Streetmap needed to establish an actual effect (rather than merely a potential effect) on the market for online mapping services. Mr Justice Roth found that it did not - however, in establishing whether the impugned conduct was reasonably likely to harm the competitive structure of the market, a highly relevant factor would be whether it had in fact had an actual anti-competitive effect.
• The effect had to be appreciable, and if so was it sufficiently serious or appreciable in this case. Mr Justice Roth concluded that, unlike in a case where the conduct took place on the market where the company was dominant (where the market was already weakened by the presence of the dominant undertaking, following Post Danmark II), in a separate market, the effect must be appreciable. It would otherwise be “perverse” to find that a dominant company’s pro-competitive actions on the market where it was dominant should be found to be an abuse of dominance in a neighbouring market where it was not.
• Google could objectively justify any abuse found. There were two aspects to this issue - first, whether any exclusionary effect could be outweighed by advantages that also benefit consumers. Here, Streetmap had already accepted that the inclusion of the thumbnail map was a technical improvement that benefited consumers, which dispensed with the point. Second, was the conduct proportionate - namely could the same benefits be achieved with an approach that distorted competition less, without imposing an unreasonable and impractical burden on Google? The judge concluded that they could not: generating different thumbnail maps or taking complex technical steps to provide thumbnail maps from other sites with varying technical or functional capabilities would be both impractical and overly burdensome.

Conclusion

The key findings are the distinction which Mr Justice Roth drew between establishing an abuse in the market on which a company is dominant (which, applying Post Danmark II does not require a de minimis or appreciable effect to be established, since the market is already distorted) and establishing an abuse in a neighbouring market on the basis of pro-competitive behaviour in the market on which the company is dominant. The outcome narrows the scope of application of Chapter II and will be welcomed by dominant companies that operate across multiple but related markets with differing degrees of market power. Such companies would otherwise risk being penalised for - and hence discouraged from - behaving pro-competitively in the market in which they are dominant. The case is also a rare example of a finding in an abuse of dominance case that the behaviour in question was objectively justified.

The result of this case may also provide Google with a significant boost in relation to its ongoing probe by the European Commission.

It remains to be seen to what extent the innovative process of hot-tubbing expert evidence will be adopted in other competition cases. Mr Justice Roth stated that it led to a “constructive exchange which considerably shortened the time taken by expert evidence at trial”. However, he also noted that it requires considerable preparation by the court and effectively imposes an obligation for a transcript, as the judge is unable both to lead the questioning and to keep a proper note.