Fine is Only One Click Away

GAICIL Insights

In 2011, testifying before a US Senate hearing, Google's chief executive Eric Schmidt said that competition is only one click away.¹ Fine is Only One Click Away turns that line into a test of the European Commission's decision of 27 June 2017 to fine Google €2.42 billion for abusing its dominance as a search engine by giving an illegal advantage to its own comparison shopping service. The case note argues that the Commission's legal reasoning was unsubstantiated and that its intervention risked weakening the competitive process it claimed to protect.

The Commission's theory: through complex algorithms, Google placed its own comparison shopping service prominently and demoted rival services in search results. The case note answers with a trip to the supermarket. A distributor such as Tesco places its own products on end aisle displays. Google, distributing third-party information through search results, promoted its own end product. To what extent does that differ from traditional corporate strategy? To no extent, the note answers. Favoring products that emerged through a trial-and-error evolutionary process rewards the efficiency of the original service.

Three flaws follow. First, the Commission exaggerated entry barriers in shopping services, since customers can click to rival services on the first page of results. Second, it overlooked the absence of any dominance of Google Shopping in online shopping markets, where platforms such as Amazon and eBay had a much more established reputation. Google Shopping, the note argues, was the product of a long and expensive trial-and-error process aimed at taking share from powerful competitors. Third, and most important, Google's strategy might prove unattractive to consumers who prefer search results without promoted shopping content, opening room for alternative search engines.

That third point is the seed of a much bigger idea: the algorithm is the product, and users are its regulators. Artificial intelligence makes the idea urgent. AI systems increasingly mediate access to information, products and services, and their design involves endless choices about ranking, presentation and integration of the developer's own offerings. Regulators can treat each choice as a potential abuse, or let users discipline design through their choices. The note's conclusion is explicit: through an evolutionary process that would instill effective competition in the search engine market, the discipline on Google's algorithm should come from customers, with the Commission standing back. If manipulation gave Google a non-competitive position, real competition would presumably weaken its dominance.

Fast-forward to AI assistants and agents. An assistant that books travel, writes code and answers questions will naturally lean on its developer's own tools. Under the logic the note criticizes, every such integration could be read as self-preferencing. The note warns that the EU's actions created a cloud of uncertainty likely to make large technology companies overly cautious about changes to user experience and service offerings that would benefit consumers. For AI products, that caution could slow the very integrations that make them useful.

The note also takes apart the exclusion theory. Treating Google as having blocked downstream competitors is fallacious, it argues, because no refusal to deal can be argued by shopping services competitors. It cautions that regulating the downstream shopping market reinforces the status quo in the upstream search market through a quasi-essential facilities doctrine. The echo in AI is loud: calls to treat large models or platforms as essential facilities are already heard. Mandated access can entrench the structure it aims to open by dulling rivals' incentive to build alternatives.

The note even proposes a different frame altogether: if there is a regulatory issue at all in a parent company supporting a weak daughter company, it belongs to transfer pricing, outside antitrust.

Taken together, algorithmic design is a competitive variable. Users who dislike a ranking can move; rivals offering a better ranking can win them. Competition law serves innovation when it trusts that process and steps in only where the process is demonstrably blocked. In an era of AI intermediaries, the principle that competition is one click away deserves a second look. The cost of forgetting it would be invisible: innovations never attempted because every design change looked like a legal risk.