Below are excerpts from two opinion pieces on the anti-trust fines leveled against Google in Europe:
Europe, U.S. treat search engine ‘monopoly’ differently
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In the fall of 2012 the staff at the Federal Trade Commission had concluded that Google had engaged in unfair competition by favoring its own services over those of its competitors. As the Wall Street Journal reported, the staff had recommended a major fine: “The 160-page critique, which was supposed to remain private but was inadvertently disclosed in an open-records request, concluded that Google’s ‘conduct has resulted — and will result — in real harm to consumers.’ ”
But Google was never penalized because the political appointees overrode the staff recommendation, an action rarely taken by the FTC. The Journal pointed out that Google, whose executives donated more money to the Obama campaign than any company, had held scores of meetings at the White House between the time the staff filed its report and the ultimate decision to drop the enforcement action.
This week, the European Union’s antitrust authorities fined Google a record $2.7 billion for the exact same sort of infractions that the FTC staff had been reviewing. Why were Europeans more willing to combat Big Tech monopolies than Americans? The answer lies in both the way libertarian economic thinking has changed American views of antitrust and in the problem of regulatory capture. Has Google gotten so big that both politicians and regulators are scared of the tech giant?
Google has 88 percent market share in search and search-related advertising. It is clearly a monopoly, and it acts like one: As one of the complainants in both the FTC and EU cases, Yelp Chief Executive Jeremy Stoppelman testified in September of 2011 before the Senate antitrust subcommittee: “Google first began taking our content without permission a year ago. Despite public and private protests, Google gave the ultimatum that only a monopolist can give: In order to appear in web search you must allow us to use your content to compete against you.”
… Clearly, the Europeans are not quite as in thrall to the tech moguls as the Americans. Ever since Bill Gates and Steve Jobs dominated the covers of business magazines, both politicians and journalists have lived in what Apple employees described as a “reality distortion field.” Men like Larry Page and Mark Zuckerberg are among the richest people on the planet because they understood that in an unregulated business like the internet it was going to be a winner-takes-all game. Scale economics and the network effect (I want to be on a social network where all of my friends are) create single dominant firms in search, social networks and e-commerce. Clearly there is no market solution to Google’s monopoly. No venture capitalist is going to finance a Google killer.
Taplin is director emeritus of the Annenberg Innovation Lab at the University of Southern California.
Europe’s regulators wrong to go after Google
Europe’s latest move against Google — a record $2.7 billion (2.4 billion euro) fine for anti-competitive behavior — is understandable but ill-advised. For the sake of a questionable theory, it risks causing an escalating quarrel.
The European Commission accused Google of putting sites that compare prices for goods and services at an unfair disadvantage on its search pages. Years of wrangling preceded the finding, and they aren’t over: The company is likely to appeal, and this is only one in a series of pending disputes between Google and the EU.
On the face of it, there’s something strange about the EU’s charge that Google is “anti-competitive.” Its search technology has empowered consumers, raising competition among suppliers of goods and services to new levels of efficiency. As a marketplace in its own right, the firm has plenty of rivals and is a small player next to Amazon. One might ask, what’s the problem?
It’s this: Google’s success in search has plainly given it forms of monopoly power. The same goes for other mega-companies in the new digital economy. Driving competitors out of business doesn’t necessarily hurt consumers; in the first instance, it may do the opposite. But later, once a monopolist is secure, efforts to gouge consumers can follow. …
If kept within bounds, divergent styles of competition policy needn’t be a bad thing: Europe is entitled to set its own rules, and time will tell whether U.S. or European consumers gain more from the digital revolution. In the meantime, though, it’s vital to stop disagreements in this area infecting other aspects of U.S.-EU trade policy. …