Europe’s Anti-Google Ruling Stifles Competition

Today the European Union gave Apple a great gift to celebrate iPhone’s 10th anniversary (on June 29th): The ridiculous, record $2.7 billion fine, and associated sanctions, against Google that once again demonstrates the EU’s small-minded oversight that wrongly regulates evolving technologies in a big world. The adverse antitrust ruling finds that the online titan favored its own online shopping services (and paying customers) over rivals.

In February 2010, with the EU Competition Commission’s preliminary investigation starting, I rightly called “Google a dangerous monopoly“. Seven years later, the competitive landscape has dramatically changed, and rapidly evolves. The Commission’s action is too much, too late, and in the short-term can only benefit rivals like Apple that will dominate online activities and commerce as what we knew as traditional web search becomes something else. 

Unintended Consequences
Earlier EU actions against Intel and Microsoft did little to change the companies’ structural dominances in their respect markets. Competition from smartphone operating systems, where Apple and Google came to dominate, and Microsoft missteps as mobiles displaced PCs, eradicated the Windows monopoly. Not fines against the company or forced release of separate, media-player-free Windows versions for the European market. Likewise, popularity of smartphones and other devices using low-powered chips, alongside the PC’s decline in popularity, put Intel in its place. Competition is the best regulator in dynamically moving markets. There is nothing stagnant about online search or shopping, as the masses use it in 2017 and will do so in the years ahead.

Stigma and uncertainty can harm Google, however, and consumers in the process. Advertisers and publishers may choose rival platforms, like Facebook, rather than risk their brands and businesses being collateral damage. Smartphone manufacturers may not be as quick to adopt the new Android Go, waiting to see how the EU drama unfolds. Similarly, some cellular carriers will favor non-Android handsets as safety net for their customers. Application developers might give iOS priority, or even exclusivity over Android, out of fear future EU actions will negatively impact Google’s platform and their businesses along with it. Likewise, Amazon Web Services could get a boost over Google’s. So on and so on. Looking back at antitrust rulings against Microsoft, fear and uncertainty affected more change than did actual antitrust actions.

Apple benefits more because of timing: The enormous amount of media publicity around the iPhone’s 10th anniversary, this week’s iOS 11 public beta, and rumors about the next smartphone. The fruit-logo company is the golden child of perceived innovation right now, as Google is called criminal. All the while, the Alphabet subsidiary rapidly innovates into new interactive categories, such as intelligent assistants and virtual reality, that will fundamentally change how consumers search and shop and pay for their goods in the years ahead. The Commission’s actions won’t so much break Google’s alleged anticompetitive monopolistic behavior as facilitate other overly-large and influential tech companies to exploit opportunity. Rather than restore competition, the EU risks hobbling one of its protectors.

Personal Context
The point cannot be understated. Web search as we knew it will be something vastly different within five years. Look at the changes already, as consumers comparatively shop at Amazon, or take purchase recommendations from Facebook or Instagram, among other social networks. All this is done without using Google. Looking ahead, to reiterate, artificially intelligent assistant, augmented reality, and virtual reality technologies will fundamentally change how everyone searches, shops, and pays for goods. The web marketplace is evolving well beyond Google’s search dominance, which, granted, across Europe, commands about 70 percent share, based on combined analyst measures.

Apple, Amazon, Facebook, Google, and to lesser degree Microsoft are the tech companies most likely to command presence in this brave new world—what I call the new PC era, not referring to personal computing but to “personal context”. Traditional search’s relevance declines as location-based apps and services give users what they want where they need it, regardless of device—and not necessarily one they own. To repeat: The European Commission’s adverse antitrust action risks hobbling Google when its own innovations could balance against developments from a small field of rivals. Stated differently: Taking out a major player among just a few will more likely hurt future competition than correct alleged past behavior which relevance decreases every day.

Long-term, during this crucial juncture, Apple is the elephant in the room, likeliest to benefit most among the Alphabet subsidiary’s other rivals. The fruit-logo company is largest and wealthiest. Apple Pay, forthcoming augmented and virtual reality platforms, Siri search improvements, and connected kit of “personal context” devices are sure to take vital roles in the changing shape of future search and shopping. Watch to see how the perceived over-dominance of one tech titan could lead to another’s, all because slow-acting antitrust enforcers couldn’t keep pace with fast-evolving competition during this century’s industrial revolution.

Photo Credit: Jon Russell

Editor’s Note: A version of this story appears on BetaNews.