Troubles always come in 3’s. After its new parent company, Alphabet briefly became the most valuable listed company in the world at the beginning of February, the problems for Google, in Europe at least, have mounted.
The company is now looking at 3 charge sheets from the European Commission.
The EC believes that Google is in breach of EU anti-trust rules, and is abusing its dominant market position to the detriment of Android device manufacturers and mobile network operators.
Firstly, Google has implemented a strategy that forces manufacturers to pre-install its Google Search function and Google Chrome browser, and set Google search as the default search service on every device they build; if they do not do so, Google refuses them access to certain proprietary apps such as the Google Play store. “This is not good”, says the EC, bluntly.
Furthermore, Google refuses to allow manufacturers to sell smart mobile devices that run on competing operating systems based on the Android code, so-called “forks”.
And thirdly, the company stands accused of providing financial incentives to manufacturers and mobile network providers to pre-install Google Search on their devices.
Oh, and now there’s a fourth; Getty Images, the licensed photo agency has also joined the fray, accusing Google of strangling traffic to its website by reproducing Getty images in all their high resolution, large format, full colour glory in its search results; until early 2013, Google only showed low resolution thumbnail pictures but the shift in strategy has prompted Getty to file a formal anti-trust complaint to the EC on Wednesday.
It seems they are reaching out to the right people. Here is charge number five; this one is more than a year old but remains unresolved.
In April 2015 EU Competition Commissioner Margrethe Vestager issued a “statement of objections” declaring that Google’s promotion of its own shopping links represented an abuse of its dominant market position. This one has been a slow burner – firms including Trip Advisor, StreetMap, and even Microsoft complained about Google’s practices as far back as 2010.
Vestager has backed the company’s claims, commenting that she was concerned that “Google has artificially boosted its presence in the comparison shopping market” reducing the effectiveness of its rivals and denying consumers access to alternative, innovative service providers. How should I book my holidays, Google? “Try Google holidays”. You can have any search result or service, so long as its Google.
Vestager gave Google 10 weeks to respond to this accusation, and respond they did, but not through official channels; “Any economist would say that you typically do not see a ton of innovation, new entrants or investment in sectors where competition is stagnating – or dominated by one player. Yet that is exactly what’s happening in our world”, wrote search engine chief Amit Singhal in a blog post. The investigation goes on.
Why is this happening? Is Google a victim of its own success? They built a brilliant search engine, and paid for it by selling ads – then they added their own goods and services, and people used them, because they worked and were effective. If they had not been, consumers would have used an alternative provider.
But this is the world of business, and business isn’t always a meritocracy. Let’s not kid ourselves into thinking Google did not do everything in its power, by fair means or possibly foul, to win these battles. Its noticeable that, for all their driverless cars and innocent sounding names, the reputations of mega consumer facing platforms have taken a battering of late. Working conditions at Amazon have been revealed to be some of the worst in the developed world. Apple and YouTube rip off performing artists. Facebook, modern day missionaries, gives you free internet access – so long as you only look at Facebook. None of them feel the need to pay much tax in Europe. And now this.
But it takes two to Tango – Vestager and the EC have form for taking on (and beating) big corporations. This week Vestager took the opportunity to remind her audience at a speech she gave in Brussels that she fought the good fight against Microsoft for 12 years, and forced them to cough up 1.6 billion euros in fines. There is a lot of money to be clawed back by exposing the so-called malpractices of big corporations. The corporations would probably argue they simply did what any sensible company would do under the circumstances. It’s called free market capitalism and it was invented by Margaret Thatcher and Ronald Reagan, 2 politicians.
How much can the EU fine Google? The Guardian claims Google could be fined up to $7.4bn, 10% of the company’s global revenue. That is not pocket change even for a behemoth like Google.
Will that happen? Why not?
What may also be worrying Sergey Brin et al is that India, Russia, Brazil, Argentina, Taiwan and Canada are all investigating Google too, but tellingly, what might give the company more than a crumb of comfort is that the US Federal Trade Commission dropped its own investigation into Google back in 2013 after Google made some non-binding commitments.
So, again, what is happening here? Vestager and the European Commission want to change the way Google does business – it’s unclear what they want to replace it with and asking one of the most innovative and intelligent companies of all time to change the way they do business is a big call.
The reality is what is happening is a game of political chess. Does the EC really think it will get $7.4bn back off Google? Probably not. Does Google think it will be carry on promoting its own services over others ad infinitum – no because they will know very well that monopolies do not tend to last because human beings.
Being a part of a connected world is like watching a time-lapse video of the way people behave. But political change in the developed world moves at a snail’s pace because of red tape and bureaucracy, argument and counter argument, accusation and counter accusation, trial and appeal. Crime and punishment hardly get a look in.
This is a game that neither side will ever win. But that does not make it any less worth fighting. If Google ends up with 8 billion users and no rivals, then we will call it the connected world – if the EC wins out and Google disappears we will call it beautiful destruction. But neither will happen any time soon. If you had to pick a winner? Politics has been around a lot longer than capitalism. Google just changed its name, but the stink is not going away.