- Summary of the case
Enel X Italia has developed the JuicePass app, which offers various functions relating to the charging of electric vehicles (in particular, searching for recharging columns, navigation, booking of the recharging session, management of the same: start, monitoring, conclusion and payment). The JuicePass app is available from May 2018 on the Google app store (Google Play) and from November 2020 on Apple CarPlay, while it is not yet available on Android Auto. Android Auto is part of the Android operating system and allows to use some of the apps that the user has on the smartphone through the car infotainment units (as car displays).
Enel X Italia notified the Italian Competition Authority (ICA) that Google did not allow the publication of the JuicePass app on Android Auto.
Google justified the refusal on the grounds that it was only accepting apps belonging to the media or short form messaging categories. Therefore, a utility app used for charging stations was not eligible for Android Auto.
The ICA started an investigation. On 7 February 2020, the ICA notified the refusal of the commitments presented by Google, based on the public interest in going on with the investigation of the alleged violation.
At the end of the investigation, the Authority ruled that Google’s conduct amounted to an abuse of dominant position, “limiting production, markets or technical development to the prejudice of consumers” in violation of Article 102 TFEU.
Because of the characteristic of the market, affected by a strong innovation and a rapid evolution, the ICA fostered the need to evaluate the case and the competitive processes of this specific market under a prospective view.
According to the Authority, Google’s refusal to cooperate was grounded on the competitive relationship between Google Maps app and JuicePass app. Indeed, Google Maps’ app offers search and navigation services for various points of interest, including electric charging stations. The search function represents the user’s gateway to the services provided by electric recharging apps (like JuicePass). Therefore – reasoned the ICA – the two types of apps address the same end users and compete for the same data flow, that end users generate through the apps use (competition for users and data). Data related to the search for recharging stations – such as the location of the user at the time of search, the time of search itself, the proximity of the recharging station in respect to the place of search, search habits, routes followed – are all valuable sources for analyzing the demand for top-up services, to increase the level of the services provided and for the dissemination of advertising content targeted to the characteristics of the recipients.
As a consequence, according to the Authority, Google Maps had a conflicting interest in expanding its services related to electric charging stations by integration in Google Maps of a charging stations booking function in competition with JuicePass. Evidence that Google entered into several agreements for the acquisition of data on charging stations in Italy was provided.
Google has been found in a dominant position over two relevant markets:
a) the licensing market for operating systems for smart devices, where Google is present via Android;
b) the market for navigation apps for Android (Android app store), where Google is present through Google Play.
To this purpose, Apple’s iOS and Android have been identified as distinct ecosystems, where (i) end users cannot use apps developed for an operating system other than that of their device and (ii) developers must design their apps using the ad hoc programming tools provided by each operating system.
The same was valid for the corresponding automotive operating system (Android Auto and Apple CarPlay).
Due to these dominant positions, Google played “a central role in enabling digital interactions and transactions” and, in particular, in allowing app developers to reach app end users.
Since Android Auto represents the market standard for developing (compatible) apps on car infotainment units, Car manufacturers generally choose to make compatible systems, in order to meet the needs of potential car buyers. The attractiveness of Android Auto for app developers was evidenced by:
– the number of car manufacturers producing infotainment systems compatible with Android Auto (approximately 98% of the market players).
– the large number (in the order of thousands) of apps available on this platform now or in the near future.
When a single platform connects the vast majority of the market players, a so-called winner-takes-all phenomenon occurs, where the platform becomes an essential point of reference for a specific type of service (so called standard).
In this context, interoperability with the standard becomes a key element for creating and maintaining a wide and plural offer. The types and specific characteristics of the apps that can be published on Android Auto depend exclusively on Google. Google controls as well as the timing for providing developers with the necessary programming tools and templates. This involves a substantial weakening of the self-determination of any developers in relation to what can be done and what cannot be done on Android Auto. As a result, Enel X Italia was not able to develop a version of its app compatible with Android Auto, without a specific activity by Google. Google’s willingness to cooperate with third-party developers for sharing interoperability mechanisms was required. In other words, Google works as a gatekeeper, interposing itself between developers and end users (as a gatekeeper).
The dual role of gatekeeper and competitor mandates Google to respect a principle of equal competitive conditions (non-discrimination), the so-called level playing field, in exercising its prerogatives as rightholder over Android Auto.
The level playing field requires that Google:
– make programming tools available to third-party developers in order to allow them to create apps similar to those owned by Google;
– does not prevent third parties from offering new and different apps and functions on Android Auto, in addition to those offered by Google through its proprietary apps.
In this context, Google’s reiterate refusal to allow interoperability (refusal to contract) has been considered a violation of the level playing field principle, bringing an unfair advantage to Google’s proprietary app to the detriment of the competitor’s app (discrimination).
In line with its own corporate publication policy, Google would have been able to: (a) create a template that would allow the functions of booking the charging stations and starting the charging session or (b) collaborate with Enel X Italia to develop a custom app or (c) implement on the Actions-on-Google platform the actions necessary to enable the JuicePass app to work. These programming tools would have fully complied with the security requirements adopted by Google in order to reduce distraction while driving.
Therefore ICA acknowledged that all the requirements set forth by the Microsoft case law for applying art. 102 TFUE have been fulfilled:
- The foreclosing purpose of Google’s conduct;
- Essentiality of Google’s cooperation in developing programming tools for Android Auto;
- The capacity of the omissive conduct to hinder effective competition;
- The obstacle to the launch of a new product for which there is a potential demand;
- Lack of objective justifications for such conduct: Google’s refusal did not depend on technical issues but on a corporate policy that provides for a differentiated and more favorable treatment for the proprietary apps Google Maps and Waze compared to third parties’ apps. Such policy should be derogated. Justifications given by Google did not appear reasonable nor proportionate.
In accordance with the European case law (see C-457/10, C-549/10, C-52/09, C-52/07), the psychological element of willful misconduct or negligence was deemed irrelevant. Likely it was found immaterial that Android Auto is provided for free, since the lack of monetary compensation is common in digital services which makes revenues thanks to the acquisition of a big flow of data generated by app users.
2. Critical remarks
The ruling is worthy of consideration from multiple angles.
At first, it represents an application of the so called essential facility doctrine (known also as bottleneck doctrine), established by the U.S. law (back to the 1912 Supreme Court decision United States v. Terminal Railroad Association, 224 U.S. 383) and long integrated in our legal system, especially thanks to the European Commission decision on the well-known Magill case (21 December 1988 in EUOJ L 78/43 as of 21 March 1989, confirmed by the EU Court of Justice, C-241/91 e C-242/91, ECLI:EU:C:1995:98). This doctrine establishes that a company holding an essential infrastructure, whose access by third-party companies is necessary for the performance of an economic activity in the downstream market, can commit an abuse, if it denies or imposes its competitors on the downstream market unfair conditions of access.
While moving from the assumption that, in general, any market player (even Google) should have the right to choose its trading partners and freely dispose of its assets, it cannot use its monopolistic position on a market as a lever to create a monopoly on a downstream market, as the electric recharging services apps market.
The decision is in line with the test set forth by the EU Commission for assessing this kind of violations within the “Guidance on the Commission’s enforcement priorities in applying Article 82 of the EC Treaty to abusive exclusionary conduct by dominant undertakings” (2009/C 45/02). In our legal system, the duty to contract is governed by art. 2597 of the Italian Civil Code only in relation to the so-called legal monopolist. This rule, in fact, takes into consideration the conduct of the company enjoying a position of monopoly in the offer of goods or services established by the legislator or on the basis of an administrative concession. Coherently with the principle of social utility referred to in art. 41 of the Italian Constitution, art. 2597 establishes the monopolist’s duty to contract with anyone requesting the service, so applying the same treatment to all contractors. In the event of breach of such obligation, the judicial authority is empowered to establish iussu iudicis the missing legal relationship between the two parties, by means of a judicial ruling producing the same effects of the contract not concluded (cf. art. 2932 of the Italian Civil Code).
The essential facility doctrine has been introduced in our legal system by the case law. In particular, it deserves mention the SIGN-STET / SIP case, in which ICA considered as an abuse of dominant position the refusal to transfer phone contracts subscribers data to companies operating on downstream markets.
According to the Enel X v. Google decision, all internet service providers operating as a gatekeeper between other service providers and the end users (and as a gateway to a valuable data flow) may be held abusing their dominance position whether they impede the former to reach the latter through their platforms. In order to establish the dominant position, competing platforms (like in this case the iOS system) may not be considered as part of the same relevant market if they are not really an alternative. This happens when there is evidence that the vast majority of upstream and downstream market operators took the economic decision to shape their products or services so as to be compatible with the platform, in order to exploit its valuable intermediation with end users.
This was the case with Android system chosen by almost all the car manufacturers and the app developers, irrespective of the fact that the latter are also willing to be part of the iOS operating system.
This emphasizes the fact that iOS system is not really substitutive of the Android one and no effective competition exists between them, even if they actually operate on the same market.
In conclusion, the decision shows a trend to give antitrust relevance to the gatekeeping role of online service providers and to circumscribe the relevant market to their sole ecosystem. This should make it easier to sanction their practices and at the same time shows the very relevant role of the antitrust legal framework for granting access and pluralism on the market to the advantage of consumers.
Italian Competition Authority (AGCM), 27 April 2021, Case No. A529, Enel S.p.A. et al. v. Google LLC et al.