That case eventually took 16 years and resulted in what was at the time the largest fine imposed by Brussels, in the end costing Microsoft €1.64bn.
At the outset, Microsoft underestimated the power and effectiveness of the EU. And back then it was a company at the peak of its corporate power, staffed by sleek, smart and seemingly invincible executives – of the type that now walk the corridors of Google.
Where Microsoft was picked up over the dominance of its operating system and browser, Google is facing investigations on multiple fronts. Last week its tussle with Brussels began in earnest when it was formally accused of distorting search results to favour its own services – specifically shopping.
The battle already has a history: it is eight years ago that the commission began asking questions about Google’s holding of data. Five years ago it started interrogating its dominance of search – Google controls more than 90% of the search market in Europe. Then last year the EU ruled against Google in the so-called “right to be forgotten” case, finding the internet company has responsibility for the information it indexes and presents.
Earlier this year, Google reorganised its corporate structure in Europe and recruited a battery of lobbyists, a move to brace itself for a slew of other cases, including a proposal by the French senate that would force it to disclose its search algorithms to Arcep, France’s telecoms regulator.
Were Google a manufacturer, say, a monopoly such as it has over internet search would never be allowed. But three factors conspire to Google’s advantage. Firstly, digital services, however ubiquitous, seem less tangible and therefore do not appear so obvious a threat to commercial pluralism, innovation and to consumer interests.
Secondly, Google’s dominance is self-reinforcing, but also makes it more useful. Larger audiences improve Google’s data and make its products more accurate – as well as ever more impossible to avoid. As European competition commissioner Margrethe Vestager acknowledged last week, we live in the Google age.
Thirdly, and perhaps most significantly, regulators simply cannot keep up with the pace of technological change and seem to be stuck fighting ethical, cultural and economic disruption issue by issue.
Dominance itself, in competition law, is not a problem. It becomes one when that position is abused, and that is the charge the EC has now made – that Google is using its search monopoly to make a move on shopping, maps and flight information.
Google’s refrain has been that competition is “just a click away”. But that misses the fundamental point that its overwhelming strength comes from its ownership of vast datasets – and that data has often been acquired under exclusive deals or with ill-informed consent. Its monopoly on data is unmatched by any other entity.
It could be that we need to radically reconsider how we treat data, which has become the fundamental constituent of our economy. What might a more competitive landscape look like? Civic data on public services, infrastructure, roads and resources could be opened up to startups and public organisations; the personal information gathered by search engines could be made available to researchers under strict ethical standards. Cultural products – books, music, film, news – could be mediated by digital public libraries.
Regulators need to move beyond the caricature of agile US technology insurgents and lumbering European protectionists, shifting the argument away from the language of property towards considering more fundamentally what is in the public interest.
The wider problem is that Google has become the ultimate monopolist of the information age. Information is a source of power, and nothing in the EU’s case does anything significant to touch that power.
Austerity is no use to Greece
The US can barely hide its frustration at the way the European Union is mismanaging the crisis in Greece. With the global economy stuck in second gear and America’s own recovery looking a bit shaky, Washington sees the standoff between Athens and its creditors as potentially disastrous. The Obama administration simply cannot understand why the Europeans are unwilling or unable to sort out the mess.
America knows what it is like to suffer a Great Depression. In the 1930s, the US economy contracted by 25%, on a par with the collapse in Greece over the past six years. From bitter experience, they know what you do and don’t do when the economy is in a hole. You don’t do what Herbert Hoover did and try to balance the budget when private demand is collapsing. You get growth going first, then worry about the deficit. You stop banks from going bust, because the economy ceases to function when credit dries up. You try public works programmes to put people back to work.
America’s experience helped Europe recover after the second world war. There was debt forgiveness, there was Marshall aid, and there was the pressure to make Europe think and act collectively that eventually resulted in the creation of pan-European institutions in the 1950s.
For the first time in six decades, there is a risk that closer European co-operation and integration will be put into reverse. Greece is struggling to find the money to repay loans next month, and its banks are suffering from capital flight. Should Greece not meet its debt payments, the pressure on the banks would intensify and Athens would have little alternative but to introduce capital controls. The door to euro exit would swing wide open. And, make no mistake, Grexit would lead to pressure on banks in other euro countries.
All this can be avoided, but only if Europe starts to think like Americans. That means writing off a big chunk of Greek debt. It means ensuring that doubts over the financial viability of Greek banks are removed. It means less austerity, more growth.
New concerns at energy AGMs
BP’s annual general meeting on Thursday was a groundbreaking affair – for the industry and its shareholders, but also potentially for the planet. For the first time, an oil company AGM was dominated by one subject that is usually pitifully ignored: climate change.
A resolution was passed by 98% of investors that commits BP to much more disclosure on how it plans to deal with climate change and how the tightening of carbon emissions threatens its business model.
The chairman, Carl-Henric Svanberg, was quick to point out that the resolution – drawn up by a host of shareholders including the Church of England – was about carbon transparency, not carbon targets. The move will therefore will do nothing in itself to actually reduce global warming. But it shows fossil fuel companies are beginning to realise they must act or be completely sidelined in the growing debate over stranded assets and divestment.
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