The Economist

The EconomistJuly 21 st 2018 Leaders 11

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H

OW high can they go? On

July 18 th the European

Commission hit Google with a

record fine of € 4. 3 bn ($ 5 bn) for

entrenchingits dominance in in-

ternet search by illegally tying

together this service and other

mobile apps with Android the

firm’s mobile operating system. A year ago the commission

levied a fine of€ 2. 4 bn on Google forusingits clout in search to

steer users away from rival offerings and towards its own com-

parison-shopping service. At this rate of inflation the next

fine—there is one other case against Google pending in Brus-

sels with more expected—could reach the maximum allowed:

10 % ofthe firm’s global revenues or about € 9 bn.

The size of the fines hides an inconvenient truth however.

The commission deserves creditfor scrutinisingthe behaviour

of dominant online firms—its activism stands in pointed con-

trast to supine American authorities. However none of its

antitrust actions in recent years has done much to strengthen

competition. Depressingly this outcome may suit everyone.

High fines win the commission glowing headlines (and boost

the chances of Margrethe Vestager the competition chief be-

coming the commission’s next president). Google for its part

protests loudly but treats the penalty as a cost of doing busi-

ness. This week’s fine amounts to only 5 % of Google’s current

net cash balance. Nothing reallychanges.

Not that paranoid about Android

If that sounds cynical look at the Android case more closely.

Google requires smartphone-makers and mobile operators to

sign strict agreementsiftheywant to use anyofits apps. Forin-

stance if device-makers want to install Google’s app store—

which in most markets they must in order to make their gad-

gets attractive to users—they also have to install all ofGoogle’s

apps including the one for its search service. They must give

these apps top billing on users’ screens too. And if they use

Google’s apps and its version of Android on any of their mod-

els they have to do so on all ofthem (see Business section).

Unsurprisingly Google argues that these restrictions are for

the good of consumers. They ensure for instance that people

always have a familiar set of apps on their home screen and

that Android does not splinter into incompatible versions. Yet

what Google calls “fragmentation” is actually competition as

Europe v Google

High fines meagre results

EU fines on US tech firms

Selected €bn

0 1 2 3 4

Google(20 1 8)

Google(20 1 7)

Intel (2009)

Microsoft(2008)

The European Commission is rightto tackle the tech titans but its remedies are wanting

(Downing Street says not) it was a trial of strength and Mrs

May lost. Alarmed Remainers then put up another amend-

ment as a trial of strength of their own which Mrs May won.

Meanwhile as those who think the Chequers plan is worse

than what Britain has today call for a second referendum

members ofthe government are fallingas fast as summer flies.

Chequers mate

Parliament will soon breakfor the holidays. Ifswimming san-

gria and siestas fail to soothe MPs’ nerves Mrs May will face

defeat in the autumn as EUnegotiators wring out concessions

that make the deal even less palatable to its critics. Without

enough Tory support to get her plan through she cannot pick

up votes on the hard Brexit side without losing them from Re-

main and vice versa. Labourcontains plenty of MPs who sup-

port a soft Brexit and a minority who favour a hard one. But

the criticism heaped on the handful who backed Mrs May in

votes this weekshows how as she totters they will be pressed

to withhold their support in order to trigger an election.

What if Mrs May tried to corral MPs by threatening them

with a disastrous “no deal” exit? The prospect is ominous.

New border checks would swamp customs. Trade would be

hitwith tariffs and non-tariffbarriers. That would harm bigex-

port industries like drugs and chemicals as well as carmakers

which send four of their every ten cars to the EU. Aeroplanes

might be grounded for lack of a safety regime. The City could

notdo business. Securityco-operation with the EUwould halt.

This is a dangerous strategy. For the threat to be effective

Mrs May must be able to convince voters that it really would

inflict harm. Yet a poll this weekfound that 39 % ofthem backa

no-deal exit twice as many as are for Chequers.

Ifthe no-deal threat is reckless whataboutan election? Go-

ing to the country is the time-honoured way to refresh govern-

ments. It is straightforward and relatively fast. Mrs May beat

the Remainers this weekbythreateninga vote ofconfidence.

But an election might not settle the matter. When Mrs May

called one last year she was left with a minority government

fatally damaging her authority. That outcome could easily be

repeated. An election would offervoters a choice between Mrs

May’s warts-and-all compromise and a fantasy Labour Brexit

thatavoided all the hard choices the EUinsists on. Pollsgive La-

bour a five-point lead. An election would mix up Brexit with

everything else—health the economy defence and fear of the

divisive leader ofthe opposition Jeremy Corbyn.

Thatleaves a referendum. In its favour a new referendum is

the purestwayofoverturningthe old one orforcingRemainers

to accept Brexit. But it would be hard to pull off. Unlike an elec-

tion a referendum requires legislation and could take months

(see Britain section). A simple binary choice would be clearer

than one MP’s suggestion ofa three-way one. The alternatives

should be between stayingin the EUand the plan thatemerges

from negotiations with the European Commission. For this to

be credible the EUwould have to agree that Brexit could be re-

versed. Unlike the chimeras of the first referendum campaign

the choice facing voters could at least be costed and debated.

Be in no doubt a referendum isa desperate remedy. No mat-

terthatBrexiteers deserve mostofthe blame forfailing to come

up with a plan thatcould win the assentofthe EUand the trust

of the country. They will inevitably see a referendum as a be-

trayal depicting it as a stitch-up in which Mrs May first neu-

tered Brexit and then schemed to give Remainers a second

chance. Even as a last resort a referendum would thus leave

Britain divided and unhappy. How much better if Parliament

were to spare the people and make up its mind. 7