European regulators have slapped a $5 billion fine on Google for restrictive practices — essentially, contracting with hardware manufacturers to put its search engine and services like Gmail and YouTube in the face of users, and thus reducing the chances that they would exercise choice and give competitors a chance. While Google will appeal, its chances are small since the case is structurally similar to earlier anti-trust moves against Microsoft in the US and the EU, where it was penalised for integrating Internet Explorer in the Windows operating system, and for reducing interoperability, respectively. Few remember the browser, but the case was a landmark.
Google is one of the five American tech companies, along with Facebook, Amazon, Apple and Microsoft, which have a combined market capitalisation of $4 trillion. They account for 55 per cent of the Nasdaq 100, and 12 per cent of the entire US stock market of $30 trillion. Information technology has attracted far less regulation than traditional industries, on the plea that they accelerate creativity and generate value very rapidly. Together, the five companies have unprecedented control over how the world computes, creates and communicates. And they leverage extraordinary volumes of user data. Unfortunately, they have also sought to extend monopolies with restrictive practices. While Facebook and Google positioned themselves as platforms, they have also turned editors and manipulated data structures when they saw fit. Last year, the EU fined Google 2.4 billion euros for misusing its dominance in search to skew the shopping market in its favour. The price comparison site Foundem complained that it had vanished from the Google rankings for no good reason.
The EU fine is unprecedented in volume but it hasn’t hurt Google stock price any. Despite that, president Donald Trump has tweeted, “I told you so!” And he is threatening retaliatory action against auto imports from Europe. That could have been a commensurate response if the overwhelming majority of Americans drove BMW or Mercedes, but this is simply a knee-jerk reaction, part of the destructive trade war which began when Trump set tariffs on steel and aluminium imports. But the action against Google is not part of that war; it’s only that Europeans have traditionally been sensitive about parity on the internet. And they would not have had to be so touchy if the US regulated Silicon Valley better, instead of talking it up on the basis of frequently hollow valuations.