Given the possibility of the European Commission (EC) adding a penalty equal to 5% of its parent’s daily worldwide earnings if it does not take action in 90 days, chances are Google will pay the $2.7 billion fine and move to change the way it operates its shopping comparison services within this window—indeed, the EC has also suggested Google may be open to civil suits from companies affected by its practices. The larger question for Google, of course, is whether this is the thin end of the wedge. In the earlier days, Google searches resulted in a series of hyperlinks. Later, in order to give the customer more value, the search feature became more refined, resulting in, ultimately, the shopping tool that featured product pictures, prices and even some customer reviews. If this is to be circumscribed, what will it do to other refinements Google may be planning—if a user searches for, say, shoes, should Google be allowed to decide on whether this should be accompanied by recommendations on, say, jeans; or offering hotel deals alongside those on airline travel? While Google does not give out details of how much revenue it gets from various types of advertisement, it is obvious the greater refinements in search will be adding more to the bottomline.
Apart from questions on competition law, which Google will no doubt raise, the European action flags issues to which there are no binary answers. At one point, Microsoft bundling Internet Explorer was a red rag to competition activists, but was IE killed by the superior Mozilla and then Chrome, or was it anti-trust action that signalled its demise—in other words, how do competition authorities factor in the role of changing fashion and, more important, rapid evolution in technology?
Nor is it easy to shrug off Google’s point that, while the EC is looking at Google’s role in stifling smaller competitors by placing its shopping tool above the rest, with the growth of Amazon, it and not Google is becoming the first port of call for those doing comparison shopping—Google competes with Amazon, not with some of the companies that brought on the EC action.
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And with Google joining other US tech giants being fined in the EU, there is the view expressed by many, including then president Barack Obama, that this could be part of a larger fight—Microsoft, Intel, Qualcomm, Apple and Facebook have all been the subject of investigation by the EC. Obama may or may not have been right when he said, to Recode, Americans owned the internet, “created it, expanded it, perfected it … what is portrayed as high-minded positions on issues sometimes is just designed to carve out some of their commercial interests”.
But keep in mind that it is Google’s profits that are allowing it, and Alphabet, to work on new products and it is the fear of becoming redundant that is forcing Google to innovate to find newer ways to satisfy consumer wants. At the end of the day, since anti-competition law is about protecting consumer interests, it is important to keep the consumer at the centre of everything—if consumer interests are not being compromised, it is that much harder to justify the penalty on Google.