Google, Yandex and Wildberries: how the FAS fights against IT giants

Competition Protection Act it is necessary to ensure healthy competition in the economic sphere. This improves the lives of consumers. The Federal Antimonopoly Service (FAS) ensures that entrepreneurs comply with the law and that violators are held accountable.

If a company makes a great product that competitors can't copy, it can become dominant in the market. In this case, it has the opportunity to influence the conditions for the circulation of goods, eliminate competitors and make it difficult for other companies to access the market.

Dominance alone is not a violation. But this status imposes obligations (Article 10 of Federal Law No. 135 of July 26, 2006). For example, a dominant cannot:

• set and maintain a product price that is too high or too low;
• impose unfavorable conditions on the counterparty that are not related to the subject of the contract;
• create discriminatory conditions, for example, to refuse to sell goods to a buyer for any reason.

To determine whether a company is dominant, the FAS is guided by special criteria: it looks at the total share of transactions in the commodity market and the amount of revenue (Article 5 of Federal Law No. 135 of July 26, 2006).

What is antitrust immunity and who is entitled to it

Antitrust law and intellectual property law achieve opposite goals.

Competition law seeks to expand the range of products or solutions on the market by increasing the number of sellers.

Intellectual property rights provide the copyright holder with a legal monopoly and allow them to prohibit others from using their property.

Both laws were adopted to make the world a better place: the first by curbing monopolists' appetite for the public, and the second by stimulating innovation and culture.

Currently, the Russian legislator is on the intellectual property side. Even if the copyright holder of an intellectual property, be it pharmaceutical technology or a computer program, sets an unreasonably high price for a product or negotiates a market division with a competitor, antitrust law does not apply to him.

Such a ban on the application of the Competition Act to copyright holders is called “intellectual property antitrust immunity”.

For a long time, but so far, it has been unsuccessfully trying to convince the legislator to exclude or at least limit immunities. At the same time, there are many arguments against the FAS initiative, including the following:

• there are peculiarities in the models for disseminating intellectual property results, in contrast to traditional goods;
• The law has other tools for combating unscrupulous copyright holders: compulsory licenses and the inadmissibility of abuse of rights.

There is also an opinion that if the Federal Antimonopoly Service is given a tool for “negotiations” with copyright holders, this will prevent natural market self-regulation without government intervention.

The Federal Antimonopoly Service against IT companies

The last antimonopoly package of legislative amendments adopted was the fifth and included changes that enabled the Federal Antimonopoly Service to respond to the activities of marketplaces and information aggregators. Thanks to this, the FAS issued Wildberries prescription and became interested Yandex.Taxi.

How did the FAS manage to promote such an initiative, because WB and Yandex are IT companies and should be immune? Apparently, public discontent has reached the point that the service needs to persuade legislators. Maybe this is also helped the recently lifted moratorium on inspections of IT companies.

It's important! The immunities themselves have not disappeared, and the introduced norms regulate only the activities of marketplaces and information aggregators.

But the cases against Wildberries and Yandex.Taxi are not the first in the practice of the Federal Antimonopoly Service.

How it all started: the case against Google

The FAS's first serious “attack” against IT companies is considered to be the first serious “attack” res against Google over a complaint filed by Yandex in 2015.

Let's start from afar. So, usually after buying a smartphone, people do not change the factory settings and applications, but use the ones that are already installed. Therefore, Yandex was interested in Android smartphone manufacturers pre-installing its applications on new devices, and setting Yandex's search engine “by default”.

Now Google Play is considered the uncontested application for finding and installing other applications on Android. Google distributed Google Play as part of a single “bundle” with its other applications and did not allow manufacturers to purchase software rights selectively. If the manufacturer wanted the popular Google Play app store, it had to pre-install the rest of Google's apps, give them space on the home screen, and set Google search “by default”.

Google is the only owner of an Android app store in Russia, so the FAS has recognized its dominant position. Taking advantage of the demand for one of its products, the company promoted its other services and prohibited pre-installing competitors' products. Manufacturers refused to cooperate with Yandex and other organizations, which made it difficult to access the application market.

The FAS ordered Google not to abuse its dominant position. company tried declare the decision illegal, but lost the courts. Thus, Google tried to defend itself by referring to antitrust immunity. But the FAS has decided that Google's actions go beyond exercising exclusive rights. The court also agreed with this.

The fact is that Google used the practice of “binding agreements”, which is unacceptable for dominants in traditional trade relations, but is quite acceptable for copyright holders due to antitrust immunities.

But the court pointed out that the agreement between Google and smartphone manufacturers is mixed and contains both licensing conditions, which are subject to antitrust immunities, and conditions from the supply agreement. And in this part, there are no immunities.

The reasoning is ambiguous, since the condition of pre-installing Google Play and distributing the application to consumers is a way to use the work from Article 1270 of the Civil Code. So immunities must work. But this did not happen, and the law on protection of competition was applied in a general manner.

It's important! Google appealed the decision, but the case file contains the company's trade secrets, so the court documents were classified at the company's request. Nevertheless, we know that all courts sided with the Federal Antimonopoly Service.

The conclusion is this: if the license agreement contains the terms of other agreements that do not relate to the exercise of an exclusive right, then antitrust immunity cannot be used.

It's interesting! In 2015, Yahoo and Bing Google asked A US court finds that Google is competing in bad faith, using the same strategies of tying agreements. But the court dismissed the claim because the plaintiffs did not prove that Google had a negative impact on competition, although there are no antitrust immunities in the US.

What's next

Wildberries is an IT company that provides access to its platform under licensing relations. The organization also provides its sales partners with other services: agency, logistics and storage services. Antitrust immunities do not apply to these services.

Therefore, the FAS could warn Wildberries even before adopting the fifth antimonopoly package. Moreover, sellers' claims are based on unilateral fines, daily changes in the offer and an increase in the cost of logistics and storage services.

What is the connection between the related services and the platform itself? The terms of different legal relations are “embedded” into one document, which, according to the FAS, makes it possible to issue a warning under the new rule of law.

It turns out that the FAS managed to convince the legislative authorities of the need to regulate marketplaces. But what about other IT companies whose product has different features?

In April 2024, the Federal Antimonopoly Service reportedthat the sixth antimonopoly package may include provisions on the abolition of antitrust immunities for intellectual property. It is not yet clear what the fate of this initiative will be.

‍