Wednesday, June 28, 2017
The EU's Actual Problem is Not Google, but the EU Itself
Margrethe Vestager, an unelected bureaucrat, in her capacity as Commissioner for Competition of the European Union in Brussels, and formerly a career politician in Denmark, announced a €2.4b fine against Google for alleged antitrust violations in the EU. She said Google abused its power by providing its own companies’ companion services at the top of search results. She found Google “has denied other companies the chance to compete on their merits and to innovate, and most importantly, it has denied European consumers the benefits of competition, genuine choice, and innovation.” Its conduct distorted the market. Thus Google’s conduct was illegal under EU antitrust rules. As I understand it, Google is accused of abusing the market it pioneered. Consumers have choices. They choose Google out of their own free will. Significantly, Margrethe Vestager made no showing consumers were injured by Google’s conduct. Nothing prevents consumers from scrolling down the page and flipping pages. Nothing prevents consumers from using alternate sites, such as Bing or Safari. Nothing prevents consumers from going to Amazon. Nothing prevents consumers from checking out EBAY. Nothing prevents consumers from going directly to company sites. Google has 92% of the global search market and 90% of the European market. The complaint against Google was actually initiated by Microsoft, the arch-monopolist in U.S. computer software. Microsoft has failed and flailed against Google with Bing, eventhough it attached Bing to its operating system found on most personal computers. She’s not through with Google. She’s also looking at Google’s Android platform for cell phones, map app, flight pricing, and local business listings. Google is in a bad legal position with its search engine in Europe because of the choice Commissioner Vestager gave it: Change practices within 90 days or pay a daily fine of 5% of Alphabet Company’s (Google’s corporate parent) daily worldwide earnings. The real problem with Google from European eyes is that it’s an American company. She and her agency have animus against American success. A tentative settlement was reached with Google a few years ago, but the EU rejected it. The story is that France and Germany wanted strong sanctions imposed. Europe is scared of the GAFA companies: Google, Apple, Facebook and Amazon. She is seeking $14.5 billion from Apple in tax penalties for complying with Ireland’s tax laws. Investigations are also proceeding against Amazon and Qualcomm, not to mention McDonalds’s and Starbucks. Google is not the first United States technology company to feel the wrath of the EU. Now will it be the last. 2008 Microsoft €899m 2009 Intel €1.06b 2017 Facebook €110m The problem is the lack of innovation in Europe. About 7 decades of social democracy has rained most Western European countries of entrepreneurism. The disease is Eurosclerosis, a hardening of the economic arteries. France is a classic example. Squeezed by a monolithic bureaucracy, rigid work rules, and powerful labor unions, the economy has stagnated for decades. France’s GDP growth has averaged .79% from1949 to 2017. France’s population is growing an average .6% annually. The French people know it. They elected the conservative Nicolas Sarkozy President in May 2007. He failed. They elected the socialist Francois Hollande President in May 2012. He failed. They just elected Emmanuel Macron, a neophyte politician, President and gave his new party an overwhelming majority in Parliament. The European ethos and Brussels bureaucracy have deadened business initiative. The European countries have missed out on the high tech revolution, the greatest economic boom of recent decades, except for illegal drugs. Presence in mainframe computers 0 Presence in PC’s 0 Presence in software Minimal Presence in social me Essentially 0 Presence in smart phones Nokia was once big in cell phones, now 0 Europe has no Silicon Valley or Route 128 - not even a Research Triangle Square Europe has the brain power, but suffers a brain drain. Where are the European: Paul Allen Marc Andreessen Jeff Bezos Amar Bose Steve Case Michal Dell Larry Ellison Bill Gates Andy Grove William Hewlett Steve Jobs Alan Kay Gordon Moore Robert Noyes Adam Osborne David Packard An Wang Thomas Watson Sr. and Jr. Steve Wozniak Mark Zuckerberg, And a host of others? Margrethe Vestager and the EU bureaucracy are engaged in extortion and thuggery under the guise of law.