EU Asks `Is the Net Essential?' The Answer Could Hurt Google

(Bloomberg) -- The European Union’s antitrust chief is weighing whether internet services are “essential” to modern life in the same way as electricity grids and telecommunications suppliers -- a potentially game-changing question for technology giants such as Google and Facebook Inc.

EU officials are trying to understand “in depth” whether the internet is “approaching something that we would call an essential facility," EU Competition Commissioner Margrethe Vestager told reporters in The Hague, the Netherlands. She didn’t name any specific companies.

Declaring Google’s search engine or Facebook’s social network as essential facilities would expand the boundaries of antitrust enforcement in Europe, possibly allowing regulators to set strict curbs on online platforms to protect businesses and consumers that rely on the services.

“The signaling is clear, there’s a suggestion that Google could be treated as a utility,” said Pablo Ibanez Colomo, associate professor of law at the London School of Economics. “If Google is an essential facility then all of the other obligations will follow. Access is essential and Google could be regulated like a telecoms operator."

Alphabet Inc.’s Google and Facebook representatives didn’t immediately respond to requests for comment.

Prohibitively Costly

Vestager said she wants to start a debate and that the EU’s current investigations into Google’s mobile-phone software and advertising contracts don’t question whether Google is essential. The legal threshold for declaring a service essential must show that it is prohibitively costly to establish and necessary to other companies for them to compete, she said.

The debate comes at time when there’s public outcry about the “the dominating influence” of internet platforms on public opinion and how personal data is being used, said Yves Botteman, a lawyer at Steptoe & Johnson in Brussels. “In particular, should certain platforms be subject to public service requirements?”

An EU deep dive into the limits of antitrust in the technology industry comes as Germany’s cartel office examines whether Facebook abuses a monopoly position by imposing unfair privacy terms on users. The EU’s competition investigators have been more reluctant to look at privacy issues but are increasingly interested in looking at how companies plan to use data from a takeover target.

Vestager said regulators had "an open mind" on a probe of Apple Inc.’s takeover of music-recognition app Shazam. They want "to understand in detail if linking up those databases might make it harder for anyone to compete," she said in a speech in The Hague.

--With assistance from Jonathan Browning

To contact the reporter on this story: Aoife White in Brussels at awhite62@bloomberg.net.

To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net, Peter Chapman, Alistair Barr

©2018 Bloomberg L.P.