Regulating the Digital Age: Antitrust Enforcement in the EU and US

Episode Summary

The antitrust landscape in both the EU and U.S. is rapidly evolving as legacy legal frameworks, including Article 102, are being adapted to address digital platform dominance and new forms of monopolistic behavior. With the arrival of Teresa Ribera to the European Commission and a new U.S. administration, enforcement priorities are shifting toward digital markets, with a particular emphasis on speedy investigations, compliance and innovative theories of harm that go beyond traditional price and output concerns. Host Bill Batchelor unpacks the latest developments with Skadden colleagues Michael Frese and Justine Haimi. The discussion highlights recent high-profile cases involving Google, Apple and Amazon, examining the use of commitment decisions and the growing influence of the Digital Markets Act.

Voiceover (00:00):
Welcome to Fierce Competition, a podcast from Skadden’s Global Antitrust and Competition Group that explores antitrust policy and enforcement around the world. Join our colleagues from across the continent as we discuss the latest developments and what they mean to you in an increasingly complex legal and regulatory landscape.

Bill Batchelor (00:21):
Hello, good morning, good afternoon, everyone, and welcome to our next episode of Fierce Competition. Today we are discussing what’s [00:00:30] new in 102, the EU’s article on abuse of dominance. But already that’s a misnomer because there’s not just news stuff happening. This side of the Atlantic, there’s a raft of monopolization cases, also in the US, as well as other developments. So to treat ourselves to a feast of 102 monopolization and abuse of dominance developments, I’m joined by my colleague Michael Frese in the Brussels office, and Justine Haimi, counsel in our New York office.

(01:00):
[00:01:00] Let’s kick off. Right, so Michael, the European Commission, we’ve seen a series of abuse of dominance cases over this side of the Atlantic. I’m particularly interested in the way in which the case law has developed to take 102, a provision developed in the 1950s to regulate old-fashioned monopolies in European legacy industries, that’s now being taken and developed by the case law for the next millennium. We’re now applying 102 to self-preferencing [00:01:30] cases, tying in the online world, cases about access to platforms that we’ve never seen before, and in the process of doing so, it seems at least to me, rewriting a number of the practices and precedents that we’ve seen in the prior decisional practice over here in the EU. But let’s talk a little bit about the personalities. We’ve just had a new commissioner in place, Teresa Ribera, who took office in December of last year. What are we seeing at a high level in terms of her [00:02:00] enforcement priorities?

Michael Frese (02:01):
Thanks, Bill. As you say, Commissioner Ribera took office last December and she has to split her time and energy across many areas. The Commission’s clean industrial deal, state aid, foreign subsidies, merger control, the Digital Market Act, and then traditional antitrust law including abuse of dominance investigations. So a lot of responsibilities. She has made clear that the focus areas include retail, energy, and digital markets, and she wants [00:02:30] speedy investigations. Speedy investigations are also in line with the Commission’s broader policy objectives that have been laid down in the so-called competitive compass. She has not opened any new abuse of dominance investigations yet. Public commentaries said she’s more focused on compliance and on fines, but this has not stopped her from imposing fines close to 1.5 billion euros in her first six months in office.

Bill Batchelor (02:56):
Commissioner Ribera has also indicated she’s looking forward to having good productive working [00:03:00] relationships with agencies across the world, including the US. Justine, what might we, and indeed she, expect from the US administration in monopolization?

Justine Haimi (03:09):
Thanks, Bill. As you may know, we have also had a change in administration in the United States with President Trump taking office in January. President Trump has appointed Andrew Ferguson as chairman of the FTC and Gail Slater is the assistant attorney general responsible for antitrust at the DOJ. Both agency heads have stated that they plan to continue investigating big tech and more vigorously [00:03:30] crack down on monopolies, but we may also expect to see some shifts in enforcement from the prior administration.

(03:37):
Looking at the FTC, Chairman Ferguson has outlined his view of MAGA antitrust, which focuses on an expansive interpretation of the consumer welfare standard, which governs the way enforcers look at antitrust in the United States. For example, he stated that monopoly power may be evidenced by effects beyond traditional price and output-related theories, such as censorship [00:04:00] by big tech platforms and the use of market power to achieve political outcomes.

(04:05):
In the same vein, AAG Slater flagged that the nature of monopoly is undergoing fundamental change beyond the ability to control prices and exclude competition, particularly for online platforms which control the flow of commerce and communication. So this already gives an indication of enforcement priorities and suggests potentially innovative theories of harm. AAG Slater also said in a recent speech at Notre Dame [00:04:30] that the rule of law, binding precedent, and the original meaning of statutory text form a key tenet of her America first antitrust policy. Other tenets include respecting the moral agency of individuals by protecting their individual liberties from the tyranny of monopoly. Another tenet outlined by AAG Slater involves deregulation by enabling free market competition, which includes the use of antitrust as a scalpel to make what she called targetive incisive cuts through enforcement [00:05:00] against collusion and monopoly abuse rather than through rulemaking, which was more prevalent during the Biden administration.

Bill Batchelor (05:06):
Thanks, Justine. Right, well, we’ve met the enforcers now let’s look at what they’ve been doing. Michael, first, what’s been happening in Europe?

Michael Frese (05:13):
There are quite some developments in Europe, but let me start with the general enforcement trend. If you look at the last five years, there have been 12 abuse of dominance cases by the European Commission, mainly in the digital and the pharmaceutical space. What’s interesting is that the majority [00:05:30] of these cases, eight, were closed with so-called commitments to decisions. These are voluntary remedies that are offered for a fixed but limited period of time in exchange for the Commission closing the case without finding an infringement and without... I don’t expect major changes under Ribera in this respect. She too will focus on digital markets and she will likely also rely on commitment decisions to avoid lengthy procedures.

Bill Batchelor (05:57):
Now, Michael, it’s often said of EU dominance cases that the Commission never loses, that courts are deferential. The track record of the Commission has always been pretty high when it goes on appeal, but I think it fair to say a little bit of the shine has been taken off their track record recently. Is that fair?

Michael Frese (06:16):
Well, quite. The Commission suffered some notable defeats in the last years. The clearest example is probably the Intel case concerning exclusivity rebates. This case went to the EU top court twice, and in last year’s ruling the Court of Justice concluded that the Commission had not adequately assessed the effects of the rebates. The presumptions that the Commission applied were not appropriate in this case. The Commission was required to analyze the rebates under the as-efficient competitor test. In other words, was it possible for Intel’s competitors to compete for the customer’s contestable demand? The court held that the Commission had not properly assessed the scope and the duration of the rebates, and so more than 24 years after Intel competitor AMD complained about these rebates to the European Commission, the Court of Justice concluded that no law violation was made out.

(07:10):
Now, Intel was not an outlier. There have been other high profile cases where the Commission suffered defeats. In the interest of time, let me just mention one other case, Google AdSense. In Google AdSense, a 1.5 billion euro fine was annulled. That case concerned intermediation services for online advertising. Again, the concern was customer foreclosure due to exclusivity agreements, and again, the Commission was found not to have properly assessed scope and duration of these contracts. The Commission is appealing this judgment, so that’s something to look out for.

Bill Batchelor (07:42):
A bit like London buses, then. You might need to wait a long time for one, for a Commission loss to come along under Article 102, indeed 24 years in the case of Intel, but sometimes two come along all at once. So Michael, if you’re not winning in the courts, might you do something to change your win-loss ratio, for example, change the rules?

Michael Frese (08:03):
I think that’s a fair way to put it. In August 2024, the Commission issued draft guidelines on exclusionary abuses. These guidelines were meant to help undertaking self-assess their practices, but also to provide guidance to courts. One is hard-pressed to find clear guidance in these draft guidelines other than the notion that the Commission should have wide discretion. The basic principle of these guidelines is that conduct should depart from competition on the merits and be capable of having exclusionary effects. In those cases, there is an abuse on the Article 102. But the draft guidelines clearly put the onus on the defending undertakings. Some conduct is simply presumed to have exclusionary effect and it’s then on the undertakings to disprove that, but the guidelines provides very limited guidance for companies. So for example, with respect to exclusive dealing, which was at play in Intel and Google AdSense, the guidelines note that conducts that affect a small share of the markets can still be capable of having exclusionary effects. No further guidance is provided and it’s also questionable whether this kind of presumption can still be applied post-Intel.

Bill Batchelor (09:12):
Gosh, so it looks like the case law is moving even faster than the drafters of the guidelines, there we are. Justine, we’ve talked a lot about Europe’s travails and trying to come up with an administrable framework for abusive dominance. What can you tell us about US developments in monopolization?

Justine Haimi (09:28):
In the US case laws developing just as quickly as in Europe. Several monopolization cases against big tech companies are actually ongoing as we speak. The FTC has sued both Facebook and Amazon, and the DOJ has sued Google and won twice and has also sued Apple. Interestingly, these cases involve firms that may have become alleged monopolists by virtue of offering better services and products, but are facing litigation because of actions they have allegedly taken to maintain or increase their alleged monopoly power.

(09:59):
I’ll go into detail regarding the two Google losses a bit later, but the FTC v Meta trial actually just wrapped up at the end of May five years after the case was filed and after six weeks of testimony, so a bit quicker than the Intel case, but still quite a big gap between when it started and when the trial wrapped. The FTC alleged that Meta violated antitrust laws by unlawfully maintaining a monopoly in the market for personal social networking services, including by acquiring two nascent competitors, Instagram and WhatsApp. The complaint also alleges that Meta harmed consumers by degrading their user experience on Facebook and Instagram, for example, through increased ads, decreased privacy protections, and the discontinuation of certain features like Facebook Camera.

(10:43):
Notably, these theories of harm are outside of the traditional price or output-focused consumer welfare standards. Judge Boasberg overseeing the trial said that he plans to rule on the case expeditiously and his opinion will have to wrestle with how to properly define and segment the social media networking market. The FTC argues that the market only includes apps that connect friends and family to one another, while Meta argues that other apps focused on short form video and entertainment content are competitors. The FTC’s market definition would essentially make Snapchat the only serious competitor to Meta’s portfolio, while Meta’s proposed definition would include apps like TikTok and YouTube. The FTC is also asking the court to order a divestiture of Instagram and WhatsApp. So it’s safe to say that case law regarding monopolization is literally being formed as we speak with new developments every day in the US.

Bill Batchelor (11:34):
There I think we can match the US toe-to-toe, right, Michael? We’ve seen a series of cases coming out of the EU courts where they’re very much trying to repurpose abuse of dominance standard for a digital age. Why don’t you talk us through the latest?

Michael Frese (11:50):

That’s right. The Facebook Marketplace case is a good example. It concerns anti-competitive tying. Facebook Marketplace is an online classified ad service. Since its launch, that surface has always been integrated into Facebook, to social network. The Commission investigated this and concluded that this was a form of tying and that it gives Marketplace a significant competitive advantage in terms of traffic without incurring any additional advertising or promotional cost. Meta argued in front of the Commission that Marketplace is not a separate product, but simply an enhancement of Facebook, but the Commission rejected this. It found that Marketplace and Facebook have distinct use cases. Meta will now have to implement one of two remedies. It needs to offer Marketplace solely as a separate standalone service outside of Facebook, or it needs to offer Facebook users a choice between several online classified ad services.

(12:46):
Google Android Auto is another interesting example of a new age abuse standard. This case is about the ability of a third-party app to run on Android Auto, this is a Google platform that allows you to connect your Android phone to the car’s display. Google offers templates for certain app categories to create compatible versions of their app with Android Auto, but not for all app categories. Now, in 2018, an Italian provider of an electric car charging asked Google for such a template. None existed yet. Google refused this and the Italian Competition Authority investigated the matter and found this refusal abusive. His decision was an appeal and the Italian court made a reference for a preliminary ruling to the European court, and what the court does in this case is far-reaching. It essentially required Google to create a template for the third-party app, and it did so in circumstances where compatibility with Android Auto might not have been strictly necessary because even without access to Android Auto, the app could be used and continue to grow.

(13:57):
Now, this was a preliminary ruling, it will be for the Italian court to adjudicate this case, but the key takeaway is that when a dominant platform is designed to be shared with third-parties and not reserved for the owner, access cannot be selective. But the court doesn’t stop there, it goes further and says that the dominant company may even be required invest time and resources to ensure effective access. Now, Google Android Auto concerned a situation where Google had already decided to open the platform to third parties, and this seems to leave important consideration, but a similar result was reached in the Commission’s commitment decision in Apple Pay, even though Apple had reserved the relevant NFC technology for its own mobile wallet.

Bill Batchelor (14:41):
Just reflecting on that for our audience, that’s fairly astonishing, right? I mean, we’ve seen the old offline case law. We have very old cases about access to offline newspaper delivery networks. The court saying that, “Oh, well, if you can sell the same newspaper in the shops, then you don’t need to have access to a privately owned delivery organization. That would clearly be taking things too far. We’ve got to think about investment incentives and the ability of proprietors to control the investments they make.” But here we see in the digital age, we have an extended competition, it’s the grand chamber of the Court of Justice. As they tend to say, they really mean it. They look back at the old case law, like Bronner, and they say, “Actually, we need to go further than Bronner described for offline access to platforms. We need to mandate potential access in these sorts of circumstances and not just if you happen to have the ability to let third parties use your platform. You should actually build out some sort of compatible interface under reasonable time limits and reasonable expense.”

(15:51):
That goes far, far further, I think, than prior case law, and we’ll have to see whether future iterations of the case law place limits [00:16:00] upon that. It was interesting to note that the court does say, “Okay, we accept there could be integrity issues, we accept there could be safety issues,” but it was a much debated precedent when it came out. But perhaps even more interestingly, Michael, is it fair to say it’s not just about requiring platforms to give up access? It also talks about, well, how should you treat participants on your platform? The kind of duties that a dominant undertaking might be under.

Michael Frese (16:29):
Correct, [00:16:30] and Google Shopping is the leading case in that respect. The Commission accused Alphabet there of favoring its own price comparison service over third-party services in Google Search. The fact that competitors were shown on the general search result page did not matter here, access alone was not considered enough. The Commission in the course concluded that the more favorable positioning of Google’s comparison shopping service gave rise to an abuse. Now, the circumstances under which the court and the Commission found self-preferencing problematic we’re very specific, and that’s also why it’s not the case that self-preferencing by a dominant firm is inherently problematic. This is also reflected in the Commission’s draft guidelines. But why was it then problematic here? Because there was evidence that users really tended to focus on the first search results, so having access to page three of the search results page just wasn’t considered enough.

Bill Batchelor (17:25):
That’s understood. I think also fair to say that while we do see this decisional practice saying, “Yes, the platform may have to get access under certain circumstances. Yes, we may have views about how you treat those participants on your platform,” what we don’t see is any analysis of, okay, well how does this affect innovation and investment incentives? We’re talking about the owner of a platform who’s created something new, expanded the market, created new opportunities. What rules of the game are necessary for that to be a cohesive platform service, something that’s high quality, something that users like, and how should that be taken into account? Maybe that’s for future cases to articulate. Justine, a lot of developments in the EU, but I think the US has got some pretty impressive cases on foot as well.

Justine Haimi (18:15):
That’s right. In addition to the Facebook case that I described earlier, Google has recently lost not one but two monopolization cases brought by the DOJ. In both of those cases, self-preferencing and access or duty to deal with competitors featured quite prominently. So taking the first of these, last summer, Judge Mehta of the district court for the District of Columbia found that Google illegally monopolized both general search, which is when you type a search into a search engine, and general search text advertising, which are paid ads displayed alongside or within search results, after a ten-week bench trial. The complaint, which was filed by the DOJ along with 11 states, alleged that Google monopolized these markets through exclusionary agreements that made Google the default search engine, pre-installing its search applications in prime locations and making them undeletable on mobile devices and browsers, and in some cases prohibiting pre-installation of a competitor.

(19:12):
While Judge Mehta noted that Google initially became a monopolist because it had a vastly superior product, the court found that Google’s exclusive agreements were unlawful in allowing Google to maintain that monopoly by reducing the ability of up-and-coming competitors to compete with Google through foreclosure of any meaningful search competitor from gaining [00:19:30] distribution or user data scale. Regarding duty to the deal, or access, the plaintiff states alleged that Google didn’t give Microsoft greater access to various features in Search Ads 360, Google’s proprietary search engine management tool, which amounted to maintenance of Google’s monopoly. The court rejected these claims and emphasized that the state’s claims would improperly, quote, “Require the court to act as a central planner that endeavors to identify the proper terms of dealing.” The court also explained that there is a narrow exception to the refusal to deal doctrine, which requires a voluntary pre-existing course of dealing and the sacrifice of short-term profits as part of a broader anti-competitive enterprise, factors which were not present in the Google Search case.

(20:14):
The remedies phase of the trial wrapped up in the same week as the Facebook trial at the end of May, a very exciting time for antitrust lawyers in the US. DOJ asked for behavioral remedies such as a ban on all search-related payments to distribution partners and government oversight over Google’s future investments in an acquisitions of online search and AI competitors, as well as structural remedies such as the divestiture of its Chrome browser, with the possible divestiture of additional assets such as Android if the initial set of remedies failed or Google undermined them. Notably, Google would be required to share portions of its search index, user, and ads data with competitors for a limited period of time.

(20:55):
Google argued that DOJ’s proposed remedies would prop up competitors and potentially [00:21:00] raise privacy and national security concerns and that divestiture of Chrome would harm Google’s other products. Google further argued that its AI products were not the subject of the antitrust case and that competition for AI products is nonetheless strong. Instead, Google has proposed allowing browsers to continue to offer Google Search to users and earn revenue, but would allow for multiple default agreements across platforms and the ability to change a default search provider at least every 12 months. Google also offered to give device makers additional flexibility [00:21:30] and to agree to oversight and compliance requirements.

(21:34):
During the remedies phase, Judge Mehta referred to DOJ’s proposed structural divestiture of Chrome as a little cleaner and a little bit more elegant and a little less speculative than the other remedies proposed by Google, which Google countered was not the case as a divestiture buyer would be willing to buy Chrome at a bargain-basement price and unlikely to invest sufficient capital to keep Chrome at the same quality and usage as under Google’s ownership, particularly given the other DOJ proposed remedies banning search-related payments. Judge Mehta’s ruling could come as early as August.

(22:07):
Shifting over to the other Google case, Google also recently lost in litigation brought by DOJ in eight states relating to Google’s ad tech stack. If you’ve ever opened up a website and seen an ad up top, that’s called a banner ad or display ad, and the ad tech stack is what determines which ads show up on which websites. A 15-day trial took place in September 2024 and on April 17th, Judge Brinkema of the Eastern District of Virginia ruled that Google violated section two of the Sherman Act, which relates to monopolization, by monopolizing separate markets for what are called publisher ad servers and ad exchanges for display ads, and that it violated section one of the Sherman Act by tying together its products in each market, those products being DoubleClick and Ad Ex.

(22:51):
The court found that Google illegally preserved its monopoly through technical and policy restrictions that prevented publishers from getting real-time bids from Ad Ex unless they also used DoubleClick, which helped each product become dominant. The court also found that the refusal to deal doctrine, which I mentioned earlier, didn’t apply to Google’s conduct at issue, and specifically tying of DoubleClick to Ad Ex. Judge Brinkema noted that courts have declined to extend the refusal to deal doctrine to anti-competitive restraints a monopolist places on customers as opposed to competitors. Here, the court found that Google’s tying limited its publisher customer’s choice of publisher ad server for reasons other than competition on the merits. It increased Google’s scale, decreased rival’s scale, caused some rivals to exit the publisher ad server market, and harmed competition customers and internet users. The judge did rule in favor of Google by dismissing separate counts from monopolizing tools used by advertisers buy ad space and counts that Google’s acquisitions of DoubleClick and AdMeld, an advertising optimization platform, were anti-competitive. Both of those acquisitions were over a decade ago.

(23:56):
Regarding remedies, which will be addressed at trial in September, DOJ has asked for remedies requiring Google to give competing ad exchangers and servers real-time access to Ad Ex bidding, followed by requiring Google to open source its auction logic, and finally, full divestiture of both DoubleClick and Ad Ex. After the divestiture, Google would be banned from running an ad exchange for a decade. Conversely, Google has proposed giving real-time access to Ad Ex data to competitors and to scrap certain pricing rules for ads and has proposed committing to never reintroducing certain advantages in open web auctions, which it had already given up. A similar case is currently pending in the Southern District of New York, which was brought by a coalition of 16 states led by Texas. That case was supposed to go to trial in March 2025, but will now begin in August, again, a month before the remedies trial for the Google Ad tech case begins in September.

Bill Batchelor (24:51):
Wow. Thanks very much, Justine. A lot happening. With all this going on I hardly dare ask, if we look ahead, is there more to come, Michael?

Michael Frese (25:00):
Well, there seems to be a risk that some of the DMA rules spill over into traditional abuse of dominance investigations. The Digital Market Act lays down detailed access, interoperability, and data restrictions for so-called digital gatekeepers. We talked about the many commitment decisions and the likelihood that the Commission will continue down this path to reach speedy decisions, and I think it’s fair to say that some of the recent commitment decisions have been adopted in the shadow of the DMA. For example, in Apple Pay, you see obligations that are actually quite similar to the interoperability requirements under the DMA, and same for Google Android Auto that we discussed, which of course was not a commitment decision. It will be interesting to see how the DMA will impact traditional abuse investigations, especially also outside the digital sector.

Bill Batchelor (25:51):
Super interesting. So query, if you’ve already got abuse dominance moving in the direction of the DMA, why did we need the DMA at all? Here we are. Indeed, we are going to have our own EU flavored ad tech decision likely to come out into the near future. Justine, go on, hit me with it. What’s happening? What are you predicting in the US?

Justine Haimi (26:10):

Well, the Google Search remedies trial and Facebook trial we discussed just wrapped, and those decisions are hotly anticipated. Notably, Google has said that it plans to appeal the underlying Google Search opinion, so TBD on that one. As I mentioned, the Google Ad tech remedies trial is set to begin in the fall. To round out the set, there are also the pending agency lawsuits against Amazon and Apple. The Amazon case brought by the FTC has trial set for October 2026, but FTC is seeking a delay to February 2027. The Apple case brought by DOJ is still ongoing. Of course, it’ll be interesting to see how the agencies apply MAGA and America first antitrust principles to enforcement actions in the monopolization context and whether novel theories of harm make an appearance as part of the administration’s antitrust agenda.

Bill Batchelor (26:59):
Justine, Michael, that’s been fantastic. I now fully understand how section two of the Sherman Act and Article 102 from 1890 and 1958 respectively have been brought into the next century and are looking at new digital abuses. Thank you so much, this has been Fierce Competition.

Voiceover (27:19):
Thank you for joining us for today’s episode of Fierce Competition. If you like what you’re hearing, be sure to subscribe in your favorite podcast app so you don’t miss any future conversations. Additional information about Skadden can be found at Skadden.com.