Google is a very tall poppy and the rule in any field where farmers wield scythes is that the tallest poppies are cut down. The European Commission's decision to launch antitrust proceedings against Google may be as simple as that, but if you listen to the howls of anguish from investment analysts, this is all about "clueless" Europeans, wrecking a great American enterprise, purely out of spite.
You might also think that the most vocal objectors are likely to be those with very long positions in Google stock. It is not just French cultural nationalists and despised Eurocrats who have had cause to worry about the power and influence of the dominant search engine over consumer behaviour. America's Federal Trade Commission (FTC) conducted an extensive investigation into Google – an inquiry that looked at the same issues as the European Commission (EC), that is to say, the alleged bias by Google in ranking its own services ahead of rivals on its search pages, regardless of merit and relevance.
In the end, the FTC in 2013 decided not to pursue Google after the company made some concessions. However, an internal report, disclosed in a Freedom of Information request and reported last month by the Wall Street Journal, reveals that FTC staff firmly concluded that Google's behaviour was "harming consumers" and preventing innovation in the online search and advertising market.
It is interesting that the FTC commissioners decided to ignore their staff's views on this matter. It may be they were unconvinced or perhaps they felt that Google's assurances were sufficient to remedy the wrongs. Or, if you were of a more cynical frame of mind, you might wonder whether Google's power extended beyond the commercial sector – Sergey Brin, the co-founder, is a financial backer of the Democrats and was a donor to President Obama's re-election campaign. Apparently, Google executives have been frequent visitors to the Obama White House.
What we do know is that the world's top two competition watchdogs had a close look at Google and found its behaviour wanting. One decided the evidence was sufficient to prosecute and the other stayed its hand. The head of the former, Margrethe Vestager, has jetted off to Washington to brief her opposite numbers in Washington on how Brussels intends to proceed. For some years now, these two organizations have been in active co-operation on the biggest multinational cases. We would all love to be a fly on the wall in the meeting with Ms. Vestager.
It no more matters that Europeans decided to slap down a big U.S. success story than it matters that Americans decided to give one of their own a get-out-of-jail-free card. The question is how it affects the rest of us: those who are not dyed-in-the-wool French Gaullists or libertarian Republicans or owners of Google stock. If you are an ordinary Canadian, searching for a cheap holiday flight, what should you think?
This is a process and it will be long and tortuous. Google has 10 weeks to respond to the allegation that it abused its dominant position. It can appeal a decision by the EC to the European Court of Justice. The maximum fine is colossal, 10 per cent of Google's turnover, which would be more than $6-billion (U.S.), but there is very little likelihood of such a penalty being imposed. There will probably be a negotiated settlement, but if Google plays hardball and behaves arrogantly throughout, the commission will probably lob a grenade. In 2013 it fined Microsoft €561-million ($737-million) for reneging on commitments to offer its users a choice of Internet browser.
Instead of worrying about traces of political bias – that is unavoidable but not prejudicial – we should be pleased that there exists on the planet two authoritative regulatory bodies that compete in the proper enforcement of competition. One is not nearly enough.
Whatever the merits of the case against Google, one thing is clear. Whether it likes it or not, the world's biggest search engine is no longer a buccaneering upstart tech business, as it would like us to believe. Google is an institution; its market share is even bigger than analysts believed. According to the WSJ leak, the company reckons it is as high as 84 per cent. Even if this particular poppy looses its petals (an unlikely outcome) it will leave the field clear for other flowers to bloom.
Google's search engine doesn't have the power to make us think a certain way but it has the power to frame our opinions. It sets the boundaries and puts the world into hierarchies of relevance. Such an organization should be the subject of constant scrutiny and if the FTC, for whatever reason, balked at the task, then thank goodness the European Commission has decided to stumble on.
Carl Mortished is a Canadian financial journalist based in London.
Carl Mortished