Let’s start by laying one falsehood to rest. In fining Google €2.42bn (£2.14bn), the European commission is not engaged in a form of underhand trade warfare against US technology companies. Instead, Margrethe Vestager, the EU competition commissioner, is addressing a central commercial question of the digital age: to what extent should companies like Google be able to exploit their dominance in one area to gain advantage in another?
Accusations of anti-American bias don’t hold water if one views the commission’s pro-competition patrols in aggregate. In other industries with different competition complaints, Brussels has been strong in dishing out fines against European firms. Just ask the truck makers – all European – who copped a collective €2.93bn fine last year for colluding on prices.
The fact that most of the technology titans are American is just tribute to the fact that Silicon Valley has been extremely successful in producing companies that grow to dominate their markets. One wishes the commission had more European tech innovators to investigate. Note, too, that many of the onlookers cheering Vestager’s efforts are themselves American – the likes of Oracle and Yelp. There is no evidence of anti-American bias at the commission.
As for the ruling itself, Vestager is treading on new regulatory ground but her argument seems entirely fair. It Google was over-hyping its Google Shopping facility in search results while artificially relegating rivals’ price comparison websites, there is bound to be an effect on competition. The consumer harm may be difficult to measure, but it surely exists. Upstarts, whose shopping services might be preferred by consumers, will struggle to get off the ground.
It is also true, as Google has argued, that many online shopping rivals have still managed to prosper – just look at Amazon. But that objection is hardly a clincher. This investigation had to establish when dominance in one area (search) can be used to seek advantage in an adjacent field (shopping). The finding that Google was seeking an “illegal advantage” chimes with common sense. Google wasn’t merely giving its in-house service home advantage; it was massively distorting search results, says the commission.
This finding will have far-reaching consequences if Google or others have also been privileging their products in areas such as travel and hotels. If so, consumer-friendly action by regulators should be applauded: the commission is saying dominance in new fields should be earned on merit, not by seeking to choke rivals.
Such a strict pro-competition view of the world would benefit consumers everywhere, including the US. The wonder is that US regulators, who once upon a time had an honourable record of acting against powerful monopolists, have been so supine with the technology giants.