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The European Commission, Google and Anti-Competition

“Google’s practices have deprived millions of European consumers of the full benefits of competition, genuine choice and innovation.”
Margrethe Vestager, June 28, 2017

Google, for some time, has been the leviathan of the tech world. A KQED radio discussion on a Tuesday morning treats the company as a creator and dispenser: creator of transport infrastructure, funnelling employees from the city of San Francisco via is shuttle service; dispenser of largesse to the people of California, if not the globe. It can provide affordable housing, suggest the discussants. It can supply services that would otherwise be the domain of government.

This troubling supremacy has been depicted as not merely the logical consequence of the innovative American spirit, but one inherent in the genius of the Internet itself. As President Barack Obama said without blush or shudder in an interview with Re/code (February 2015):

“We have owned the Internet. Our companies created it, expanded it, perfected it, in ways they can’t compete. And oftentimes what is portrayed as high-minded positions on issues sometimes is designed to carve out commercial interests.”

The none too subtle suggestion from the former US president is that competition entails war, and the Europeans are losing it. The other side of this particular coin is also clear: that the US is losing the regulation war when it comes to the conduct of such tech giants.

Indeed, such critics as Douglas Rushkoff, whose Throwing Stones at the Google Bus became a hefty book projectile directed at the company, see in Google an all too representative example of unregulated, rampant behaviour that enriches the few at the expense of the many.

This is the disease of the platform monopoly, something that can only be combated, argues Rushkoff, by altering the means of ownership that is rendered more democratic and inclusive to workers in a co-op model.

In Europe, Google occupies a fascinating cultural and political terrain of benefit and exploitation. Google, after all, nets about 90 percent of web searches in the EU. But that hardly makes the affair with the company in Europe a warm one. European institutions have been irate at the cumulative tendencies of US tech companies to data. Privacy concerns have been repeatedly voiced.

The European Commission has periodically directed its ire against the company’s anti-competition tendencies, arguing at stages that it abused its search position on third-party websites while also favouring its own shopping service.

Under Joaquin Alumnia, the investigations seemed to lack bite. Material was gathered, but slowly. With the arrival of competition commissioner Margrethe Vestager, intensity and enthusiasm for finding something to pin on Google arrived.

While Google remained anti-competition’s primary aristocrat Vestager wished to target, she had other rich entities, all with deep pockets, and all American. Apple received a stinging order requiring it to repay $14.5 billion in back taxes to the Irish state. Facebook became the subject of an investigation on its gathering and handling of data. And, just to make up a neat triumvirate, Amazon’s tax practices also under commission scrutiny.

Vestager felt that enough was found to show Google misusing its position of market might, imposing contractual terms that made third parties using the company’s search facility in a way that crowded out rival companies in the running of advertisements. The comparison shopping charge similarly passed muster:

“Google has given its own comparison shopping service an illegal advantage by abusing its dominance in general internet search. It has promoted its own service, and demoted rival services. It has harmed competition and consumers. That’s illegal under EU antitrust rules.”

The Commission, since 2010, has been trying to pin on the company the claim that its own shopping service is favoured. This has prompted such observations as that of Robert Cyran, writing in the New York Times (Jul 14, 2016): “Regulators need to be thorough, but they must also hit companies fast and hard with strong charges aimed at the heart of abusive business practices.”

On Tuesday, Google got a taste and lashing of Vestager’s wrath in hard and fast fashion. It took the form of a fine totalling $2.7 billion. “In Europe, companies must compete on the merits regardless if they are European or not. What Google has done is illegal under EU antitrust rules.”

Google’s latest pickle is bound to be portrayed as another skirmish between the battalions of open innovation and the stuffy yahoos of bureaucratic restraint. But that would also ignore such concerns as that of the Federal Trade Commission, whose staff members wished to see a noose thrown around the company in 2012.

Such views were ultimately overridden, largely due to perceived lack of harm to consumers. Prosecutors might have looked at section 5 of the FTC Act covering “unfair methods of competition” that do not require proof of harm. But the tech beast went by unscathed.

Vestager has made sure that is far from the case, even if $2.7 billion seems small when faced with annual revenue returns of $90 billion. What Google has is 90 days to adjust. In the digital economy, even a week can seem long and drawn.

More articles by:

Binoy Kampmark was a Commonwealth Scholar at Selwyn College, Cambridge. He lectures at RMIT University, Melbourne. Email: bkampmark@gmail.com

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