Google’s High Court victory against Streetmap on Friday will have a chilling effect on digital startups and British SMEs.
The verdict in the Streetmap.eu v Google Inc competition case set a new hurdle for proving that a dominant player had caused harm – one that’s now far higher than it is in the rest of the EU.
What happened on Friday, the defence team argues, is that Mr Justice Roth set a new hurdle for victims of competitive abuse.
"This is the first case where you have to show the harm is ‘appreciable' rather than just an effect. It’s new law,” says Tim Cowen, a barrister at Prieskel & Co, the law firm that argued Streetmap's case.
British digital tech businesses are touted as a key component of the government’s growth story. The government stoked the “Tech City” digital cluster, and has invested in Innovate UK and its growing series of national and regional Catapults.
However, given Google’s dominance of so many internet markets and platforms, for a startup to take its great idea to the Netherlands and Luxembourg, which are already successful at attracting tech talent, may suddenly have become more attractive.
“It’s going to have a chilling effect on small business. The High Court ruling doesn’t apply in other courts, in Ireland or the Netherlands... Google can now abuse its dominant position much more easily in the UK than it can in the rest of the EU,” Cowen told us.
While the new threshold is likely to be contested at appeal, it raises some intriguing issues. What is an “appreciable effect” and how can “appreciable” be measured? What if the dominant company holds a dominant position on information about the market, too, as Google does?
“You’re never going to know what’s going on in a monopolistic market,” Cowen explains. The defence team points out that in Streetmap vs Google, the effect on Google’s traffic was only revealed through a discovery process. Yet the new threshold makes competition cases – which are expensive anyway – even less likely. The fear is, it’s only likely to “lock in” the dominance of any dominant player.
Which is good news for Google. The prosecution team also argues the verdict is flawed because Google showed no evidence that it undertook any of the legal obligations that a dominant player must perform, under UK and EU law. Last year EU Competition Commissioner Margrethe Vestager decreed that Google was in a dominant position in Search.
In June 2007, Google added a Maps "OneBox" to its main search page, including a graphic image from Google Maps. No other links to any other mapping providers, and as a result of the box, the organic search results for third party mapping providers were pushed down. Streetmap, a mapping service that had started in 1994 – and which includes OS maps that show data that Google Maps doesn’t, like footpaths – argued that the effect on its traffic was catastrophic. StreetMap was also hit because it relied on B2B income from providing an API to business, while Google provided API access for free. The Court heard the evidence last November.
Yet when it came to his verdict, issued on Friday, Mr Justice Roth concluded that Google’s mapping OneBox was "pro-competitive”. How did he arrive at this conclusion?
Roth didn’t dispute Google’s dominance, or that there had been some harm to the competitor. He simply didn’t find the harm “appreciable”, which he acknowledged introduces a new legal standard into UK law.
The prosecution received a blow at pre-trial in September, when Roth said the full hearing must exclude evidence based on indirect traffic. A significant amount of Streetmap’s traffic came from Google indirectly. Indirect traffic is generated when a user looks for geographical information by a place or business name, rather than an address. An example is looking for Costa Coffee: the search engine guesses that you want to search for a Costa near you. Google pops up a OneBox with a map, populated only by Google’s map product.
Streetmap argued that the OneBox had destroyed traffic overnight, and that its map included features Google still can’t offer. Google argued that traffic to rivals including Streetmap was on the wane anyway, prior to the introduction of the June 2007 OneBox, and that Streetmap and others had fallen behind in offering consumer features like “slippy maps”, where the map is easily draggable with a mouse or gesture. Judge Roth wasn’t convinced that direct Google traffic was that important. Google was "not the route by which the large majority of visitors reached either MultiMap or (at least until 2011) Streetmap.”
These analyses, he noted, “appear to have come as a surprise to Streetmap and to Mr Lonie, its economic expert”. Traffic came from bookmarks, or third-party sites that accessed the Streetmap API. He was more sympathetic to Streetmap’s evidence that “search interest” - people actually looking for Streetmap - had declined significantly after the OneBox update.
Roth found Google’s argument that users trusted it and therefore they trusted the OneBox was the best map to be “self-serving”. But overall, he said, the OneBox was “pro-competitive” because it made search more attractive. It was a clear statement that big companies must be allowed to experiment, even if they cause smaller companies harm.
The prosecution argued that Google could (and legally should) have done several things in order to prevent harm to competitors. Under EU and UK law there’s a prohibition on abusing dominance, and Google's market dominance was never disputed. So a dominant player needs to consider the consequences before introducing a change. Google never offered any evidence that it had made these considerations.
Dr Emmerich, an expert for the prosecution, suggested it could have offered a thumbnail map, allowed a browser-ballot style choice for the user to allow them to set their preferred mapping provider, or shown multiple maps. With Streetmap offering geographical information, when Google couldn’t, it’s easy to understand why Google might have been reluctant to take this route. Google argued all would have slowed down search queries and imposed “a substantial additional burden” and cost on Google.
The last competitor to invest heavily in web and mobile maps for the consumer was HERE, then owned by Nokia. HERE intended to do a “better than Google Maps” product using a fleet of Lidar-equipped cars. It has since been sold to an automative consortium owned by Audi, Daimler and BMW, and has refocused on automative B2B products, such as providing real time data to other cars. Not so much about Maps at all, then. ®