EU’s Failure to Hit Google Where It Hurts Is a Lesson for U.S.
(Bloomberg) -- Google barely took a scratch from three European Union antitrust probes that lasted nearly a decade and cost it more than $9 billion euros. Regulators are still struggling with how to tackle anti-competitive behavior, a lesson the U.S. needs to learn.
Three years ago, the EU blasted out a then-record-breaking fine together with an order for Google to stop favoring its own shopping ads. A year later Google got an even bigger penalty and a demand to stop pushing its search and web-browser apps onto Android mobile phones. The company was fined a third time last year and continues to face EU scrutiny.
Margrethe Vestager, the EU’s antitrust chief, has said she regrets not being even bolder because tech firms like Google are increasingly able to squeeze into new markets and expand rapidly. Her newest plan is to draft rules to curb a big company’s ability to favor its own products and to arm regulators with new powers to move more swiftly to try to safeguard competition before it’s overwhelmed.
The EU’s turn to new laws to tie down Silicon Valley giants acknowledges that antitrust can’t easily tackle big firms in fast-moving markets that gain huge advantages from the data they collect, the reputation they build among users and prominent prompts that have helped them keep ahead of competitors and sweep into new areas.
A former antitrust enforcer said last month that he and his colleagues thought they were “going to the extreme of what we could do” with the EU’s shopping case. He conceded that it was now “obvious” that Google had already swamped the competition.
Officials had deliberately opted for vaguely worded orders for Google to give equal treatment to rivals to avoid mistakes from an earlier probe into Microsoft Corp. A rigid prescription for the company to strip out media software from its Windows operating system was a failure with no computer maker choosing to install it.
Google was left free to decide how it would implement the EU’s instructions. It chose to auction off shopping ads, angering companies critical of having to pay Google to gain search traffic and of Google’s initial prominence in the product ad slots.
The company has also set up a choice screen for new Android phones that so far hasn’t yet generated many downloads for rivals. Smaller search rivals such as DuckDuckGo have begged the U.S. not to copy a “fundamentally flawed” EU model that’s failed so far to inject much competition to Google’s 97% market share for mobile search in Europe, according to StatCounter.
Google didn’t immediately respond to a request for comment on its EU cases.
But the Alphabet Inc. unit has insisted that its shopping search services serves up relevant information to web users. Regulators failed to take account of the emergence of Amazon.com Inc. and eBay Inc. in the online retail space and Google’s role in helping smaller retailers gain attention, it has argued.
After the Android fine in 2018, the company claimed that the EU’s probe entirely ignored its rivalry with Apple Inc., the business model that allows the software to be distributed for free and the wide choice of Android devices that remain compatible with each other due to the company’s rules.
Vestager has so far said little about how well Google is obeying her orders. She has the power to fine the company again if it is found not to be complying.
The ultimate arbiter might be the EU courts, where one judge was skeptical about Google’s defense at a February hearing. It was “perfectly apparent” that the company had promoted its own services and demoted others, Judge Colm Mac Eochaidh told the courtroom before raising the prospect of increasing a fine he called “a small amount of cash” for the company.
Listening to the EU judge were officials from the U.S. Justice Department, which on Oct. 20 filed an antitrust lawsuit against Google -- accusing it of abusing its monopoly in search in the most significant antitrust action against an American company in more than two decades.
©2020 Bloomberg L.P.