Google: An Oracle of Wisdom in its Fascinating Submission to the European Commission

On June 2, the European Commission launched a far-reaching consultation as part of its examination of a forthcoming Digital Services Act (DSA), aimed at identifying areas where new rules at the European level might advance the interests of European societies. Part of that examination was specifically aimed at considering the application of ex ante regulation of dominant platforms.

The European Commission framed its inquiry in part as follows:

“The overarching policy objective of this initiative is to ensure a fair-trading environment and increase the innovation potential and capacity across the online platform ecosystems in the EU’s single market.

To this end, the impact assessment will examine different policy options for the effective ex ante regulatory framework that ensures that online platform ecosystems controlled by large online platforms that benefit from significant network effects remain fair and contestable, in particular in situations where such platforms may act as gatekeepers. The initiative would aim to establish clear obligations and prohibited practices for these large online platforms with economic power, application of which may provide European consumers and business users more choice and access to innovative solutions. This also includes an objective of making online platform ecosystems and online activities more open, fair, predictable and accessible, increasing the social gain from innovation, and/or leveling the playing field between the platforms, on the one hand, as well as actual and/or potential competitors, on the other.”

I do not intend to address the framing of the consultation here, nor to discuss the potential relative merits and/or drawbacks of ex ante regulations in this area. Perhaps another day. For the moment, I just want to focus on Google’s fascinating response to this request for comments.

Examining Google’s Submission to the European Commission.

Google begins by observing that: “We believe it will be important to ensure that legislative changes preserve platforms’ ability and incentives to innovate and invest and are applied consistently and with clear standards.”

Responding specifically to questions related to data access, Google stresses — quite accurately in my view, that relevant consideration must include, inter alia, “whether the data — if shared — would enable recipients to free-ride on rivals’ innovations and proprietary algorithms, thereby undermining innovation; and whether the party holding a particular dataset has invested resources to gather it.”

Google forcefully argues against mandatory data access, saying that, “Taken too far, data access could also enable rivals to reverse-engineer platforms’ proprietary algorithms, thereby enabling free-riding and chilling incentives to innovate. It could also undermine incentives to invest in large-scale data collection in the first place, with a consequential loss of new, consumer-facing products that depend on that data.”

This testifies to Google’s awareness of the importance of preventing free riding on investment and ensuring incentives to invest in the creation of original materials, and to its recognition that protection of property fuels both competition and innovation. This is particularly fascinating in light of how it contrasts with the position that Google has taken in its high-profile U.S. litigation with Oracle.

The Copyright Case of the Decade

In case anyone has been sleeping through quarantine, the copyright case of the decade – Google v. Oracle – is headed for the Supreme Court and will be among the first cases argued when the Court resumes its schedule in October.

Oracle filed its initial complaint on August 13, 2010 for Google’s copying of over 11,000 lines of Oracle’s original code. Google and its defenders have offered various justifications for its appropriation: that the code in question wasn’t eligible for copyright protection; or failing that, that the original copyright-protected expression “lost” its protection under a novel post-hoc application of the merger doctrine; or failing that, that their use of the code was sufficiently transformative such that it was excused by the doctrine of fair use. Of course, the one thing they don’t contest is that they copied the code. As such, there are no material facts at issue—only the application of law to an agreed upon factual record. In construing the meaning of the statutory law, the Court will, in addition to examining its own precedents, necessarily reflect on the underlying purposes of the statute.

Google watchers will be familiar with the company’s tendency to offer rather pinched interpretations of the scope of copyright protection—generally anchored in a framing that pits copyright as the enemy of innovation. Consistent with that history, in this case Google advances a set of arguments that embrace the notion that protection of proprietary information stands in the way of innovation and restricts societally useful competition. In its supplemental brief to the Supreme Court, Google asserts that a holding that its copying was infringing would be “anti-competitive ‘hold up’,” would allow copyright owners “to hold their users hostage,” and require developers “to learn thousands of new calls to replace those they already know.”

Google: Meet Google

Perhaps we can introduce the Google that filed comments to the European Commission — the one that argues for protection of algorithms and data even beyond what copyright provides ­— to the one in litigation with Oracle. It is here where I hope the Supreme Court will pay attention to what Google has said—not in its briefs, in which it argues a very narrow view of Oracle’s copyright in order to defend its appropriation, but in Google’s filing to the European Commission in which a more reflective company examines the policy issues underlying decisions about competition and the preservation of property rights. One that understands the pro-competitive effects of avoiding short-term access in ways that undermine long term innovation and incentives to invest in original materials. That Google would agree with Oracle. So should the Supreme Court.