Alberto Mingardi  

Google vs the EU

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Google has been targeted by the European Commission, for abusing its dominant position. Philip Booth and I wrote on the subject (here) a few months ago. The EU is concerned that "the company has given an unfair advantage to its own comparison shopping service, in breach of EU antitrust rules".
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This is actually a longer story: the investigation has been going on for quite a while, and started in 2010 with the preceding Antitrust Commissioner, Joaquin Almunia. Margrethe Vestager, his successor, appears interested in pushing a bigger effort in competition policy. She is a career politician who comes from the Danish left, with a marked anti-big business attitude.

The core of the Commission's complaint is that "Google gives systematic favourable treatment to its comparison shopping product (currently called 'Google Shopping') in its general search results pages, e.g. by showing Google Shopping more prominently on the screen." It is a matter of "fairness", so to say.

Google has now replied to the Commission's Statement of Objections in a way that is rather surprising coming from a multinational corporation. Google's reply (here) is tongue-in-cheek and considers the Commission's "preliminary conclusions" "wrong as a matter of fact, law, and economics".

Read Google's statement. It is succinct and clear, and personally I find it difficult to argue with. Leonid Bershidsky admires Google taking a stand, too, but fears it will be useless:

Older tech companies know it's useless to tell the EU -- and, inevitably for such a strategy, European courts -- that they don't understand what they're doing. The bureaucrats and judges may be unable to produce another Google, but they are good at listening to experts and far from dumb. And they often hate what they see as American arrogance.

Microsoft can tell Google exactly what happens next; indeed, Google's lawyers realize there will be other antitrust investigations. One, concerning the Android operating system and its links to Google services, is already in the works, although no official charges have been brought. Another may soon hit Google where it really hurts, challenging its dominance in online advertising. Google will fight and probably lose, because Europe doesn't like big U.S. companies to dominate its markets.

...It's admirable that Google now wants to fight for its principles and against the dilution of its superior offering. It makes me cringe, however, to think of the time and money that will be burned in this hopeless battle.


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COMMENTS (6 to date)
Nathan W writes:

It is entirely predictable that an advertising company will give more visibility to its own products. But when you carry 90% of a given market, it is right for the regulators to give a careful look.

Google should focus on being the best and forget about any systematic favouritism that will undermine its credibility as the best search engine out there.

(I primarily use Google to find different uses of terminology, as a part of understanding underlying meaning when I do translations. When forced to use alternative search engines because all Google products are blocked in China (I now have a vpn) it takes me much, much longer to find relevant results. Google is hands down miles ahead of the competition, and it amazes me that it the company is prepared to shoot itself in the foot, preferring a quick buck to consolidating and upholding their massively better service.)

The resolution which I would like to see would be for Google to buy the EU.

brian h. writes:

It is interesting that they are going after Google for Android's dominance rather than Apple--since Apple utterly monopolizes smartphone profits. Last I heard Apple earned over 90% of total profits in the smartphone market.

It is also strange to me that US companies seem so dominant in these spaces. It seems all the major players are in the US (and all the products manufactured in Asia, of course).

Soren writes:

Most Danes would be rather surprised to see Margrethe Vestager described as coming from the Danish left and certainly as having a marked anti-big business attitude.

She was formerly the leader a party called Det Radikale Venstre (a name that betrays their actual position in the political spectrum - "venstre" literally means left, but in this context has nothing to do with political views. The name comes from a time when they broke links with a center-right party called Venstre, so named after where they were sitting in the parliament).

Margrethe Vestager might be to the left on certain issues such as gay rights, environmental policy, immigration, etc., but she has very consistently advocated lower taxes and policies to increase the labor supply (e.g. shortening the period in which the unemployed can receive benefits). On economics, she is a right-wing politician (by European standards). I also think that few would think of her as a "career politician" - at least, she has not been afraid of taking unpopular decisions that have been politically costly.

So whatever the merits or lack thereof of the Google-case, I am very skeptical that it can in any way be attributed to an anti-business stance on the part of Vestager.

Henri Hein writes:

Soren,

Det Radikale Venstre may be a center-left party by Danish standards, but that makes it a decidedly leftist party for a US context. I still remember Niels Helveg explaining repeatedly to a reporter that he would describe his party's stance to an American as "as far left as you can get without being Socialist."

Henri Hein writes:

The link to the Google reply goes to a general blog. I would love to see the actual reply in its succintness.

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