Google’s opening salvo, in response to Australia asking it to pay media firms, sets the tone for a new data-centric world
With Australia becoming the second country after France to ask Google to pay media firms for using their content, the battle has taken on an entirely new turn. In an “open letter to Australians”, Google’s MD for Australia and New Zealand talked of how “the way Aussies search every day on Google is at risk from new regulation” since this “could lead to your data being handed over to big news businesses” and, more ominously, this “would put the free services you use at risk in Australia” since the new law “is set up to give big media companies special treatment and to encourage them to make enormous and unreasonable demands” on firms like Google.
Not surprisingly, the chairman of the Australian Competition and Consumer Corporation has said this is “misinformation” and that Google will not be required to charge Australians for the use of its free services “unless it chooses to do so”.
It is early days, and it remains to be seen if Google makes good on its threats, but it does appear that the business model will change as, in several parts of the world, governments try and put restrictions on how tech firms like Google and Facebook operate; last year in March, the EU changed its copyright laws to ensure tech firms paid for the content they used, and France became the first country to ratify this in October. In the US, a sub-committee of the Congress began hearings last month on the anti-competitive practices of top tech firms and, in India, rules are being put in place on how data—including that gathered by private firms—can be made public after being suitably anonymised.
How the business model will change will depend upon what action various countries take, but it is clear the data dominance is at the heart of this. Unlike traditional anti-trust issues where the fear is that firms will jack up prices once they have established dominance, all services are free in the tech world. But, the data gathered from offering free email, music, videos, maps, etc, allows these firms to, for instance, offer superior advertisement services to their clients or, in the case of Amazon, the allegation goes, to even create competing products to the ones sold on its website by thousands of suppliers. If such data is to be shared with the competition, or the firms asked to pay for the data they collect, the flipside could well be, as Google is threatening in Australia, to start charging users for their email, etc.
Putting in place rules for sharing data, as India is planning, however, is not going to be easy either. Data collected by the government—say, from the GSTN, on how many washing machines were sold in Bangalore—is relatively easy to share. But you cannot ask Amazon to share data, even if anonymised, which can lead to the competition finding out what its top-10 best-selling items are. Nor is it clear that given a choice, users will not allow a Google to continue to use their data if they can continue to get its services free. For several years, Google offers ‘Takeout’ that allows users to download their data in a certain format; so, if a consumer wants to migrate to MyTube or MyMap, she can migrate all her data there. This is critical for encouraging competition as one of the reasons for users not migrating to the competition is the loss of their data or the burden of creating, for instance, new playlists. Given how few people use Takeout, it is not immediately clear users will move to the competition, but rules certainly need to be put in place to make it easier for MyTube, MyMap and MyBook, etc, to flourish.
And, given the chilling effect these tech giants have on stifling competition, it is clear governments need to find as many ways as possible to encourage new players, including breaking up some of these companies or forcing unbundling of some services like what happened in the case of Windows and Internet Explorer. How this plays out remains to be seen.