The Economist

The EconomistJuly 21 st 2018 47

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1

“T

HE making of a big tech reckoning”

blared one typical headline earlier

this year. “The case for breaking up Ama-

zon Apple Facebook and Google” touted

another. Based on media coverage alone it

might seem as if the tech titans are in trou-

ble. Add in the news on July 18 th of a re-

cord € 4. 3 bn fine for Google by the Euro-

pean Commission and that impression is

strengthened. Butifyoulookhard at where

the regulatory rubberisactuallyhitting the

road the techlash seems much less brutal.

Notwithstanding this week’s fine—which

amounts to just over $5bn and is the big-

gest antitrust penalty ever—the online

giants are nowhere near beingreined in.

To be sure the mood has changed. In

America a survey for Axios a news web-

site found that between October and

March the favourability ratings of Face-

book Amazon and Google had fallen by

28% 1 3% and 1 2% respectively. Republicans

such as Ted Cruz a senator now employ

anti-tech rhetoric. Last month the Federal

Trade Commission ( FTC) announced that

it will startingin September hold hearings

on “competition and consumer protection

in the 21 st century”.

The shift in sentiment started earlier

and has gone further in Europe both be-

cause none of the companies have head-

quarters there and because of the region’s

sensitivities in regard to privacy and data

protection. Google had already battled the

commission and lost in “the shopping

In essence Google gives smartphone-

makers and telecoms operators an all-or-

nothing choice: if they want to install any

of these programs on their devices they

have to install them all and show the icons

in prominent positions. Since firms need at

least the app store to make their products

commercially viable they have no choice

but to comply. Nor does Google allow

them to install competing versions of An-

droid on any of their models. These prac-

tices deny “rivals the chance to innovate

and compete on the merits” and “consum-

ers the benefits of effective competition”

said Margrethe Vestager the competition

commissioner (pictured above).

Closing arguments

Google hascleverripostes. In the shopping

case it argued that it wants to give consum-

ers quick access to relevant information

ratherthan forcingthem to clickthrough to

another search engine. Indeed the com-

mission was widely criticised in that case

forfailingto showthatconsumers were de-

nied a superior service as a consequence

ofGoogle’s actions.

In the Android case the search firm in-

sists that the restrictions are needed to

make open-source platforms a success.

The needs of everyone who uses them—

not just consumers but developers de-

vice-makers and Google itself—have to be

“painstakingly” balanced in the words of

SundarPichai Google’s boss in a blog post

published after the commission’s ruling.

The decision he said risks tearing apart

this healthy open-source ecosystem by

causing Android to fragment into incom-

patible versions and by makingit less prof-

itable for Google to invest in the software.

But the commission is on firmer

ground. Beingthe providerofboth internet

search and of related services with sub-

stantial marketsharesacrossthe board (see

case” so called because it involves sites

that involve comparison-shopping ser-

vices. The firm was accused of having dis-

criminated against rivals by downgrading

their search results and putting its own on

top; last year the commission levied a

€ 2. 4 bn fine and told Google to treat all

comparison-shoppingresults equally.

The case that led to this week’s fine car-

ries even more weight in part because it

echoes another famous battle. The com-

mission says that Google is doing pretty

much what Microsoft did in the late 1 990s:

tyingtogether pieces ofsoftware to cement

its dominance. This case involves Android

Google’s mobile operating system and all

sorts of related software and services in-

cluding Google Play its app store internet

search and a suite of otherapps.

Taming tech titans

Antitrust theatre

Despite a global techlash and high fines in Europe America’s online giants have not

much to fearfrom regulators

Business

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49 Netflix stumbles

50 The beauty of vanadium

51 Universities rush online

52 Schumpeter: Companies and time

One-stop shop

Sources: Litmus; StatCounter; Statista

Google worldwide market share 20 17  %

0 20 40 60 80 100

Search

Mobile operating

system (Android)

Web browser

(Chrome)

Online

advertising

E-mail client

(Gmail)