Does Google Hold a Dominant Market Position? – Addressing the (Minor) Significance of High Online User Shares

Posted by Social Science Research Network

Does Google Hold a Dominant Market Position? – Addressing the (Minor) Significance of High Online User Shares – Christian Kersting (Heinrich Heine University Düsseldorf – Faculty of Law) and Sebastian Dworschak (Heinrich-Heine University Düsseldorf – Faculty of Law)

ABSTRACT: In Germany many observers argue that Google is a dominant undertaking under the competition laws and is therefore potentially able to hinder, discriminate or exploit other market participants. This assumption is mainly based on Google’s high share of users in online searches. Closer examination, however, casts doubt on this assumption. It grossly overestimates the significance of Google’s user share and ignores many additional factors that are relevant to the assessment of Google’s market position: as users may use Google’s service free of charge, it is already questionable if there is a market for online searches for competition law purposes. Even presuming the existence of such a free market, regulatory precedent to-date has held that high shares of users in “markets” for free products or services only have little significance in the assessment of an undertaking’s market position. Furthermore, Google’s high user share in general search is only ephemeral and subject to constant change. As users can switch to a wide range of competitors in the market, such as Microsoft Bing, Yahoo! or specialized search engines like Amazon or eBay, with ease, Google is forced to re-invent itself on a daily basis in order to maintain its user share. Taking also into account the absence of direct network effects and the enormous pressure to innovate in this market, the authors finally conclude that Google is not dominant under the competition laws.