In a landmark ruling on Tuesday, the European Union fined Alphabet Inc's Google, a record $2.7 billion dollars, for favoring its own search entity over those of its rivals. The case could have far-reaching implications for Google and how technology companies operate in the future, particularly in a Europe where regulators seem determined on reining in these companies.
According to Competitive Enterprise Institute experts, it's all too common for European regulators to view American companies as nothing more than an ATM or a punching bag. Competition policy is rife with competitors seeking the power of the state to accomplish what innovation should do in the marketplace.
CEI's Vice President for Strategy, Iain Murray said:
“The reason why we should not be worried about Google is the same reason we shouldn’t be worried about Amazon taking over Whole Foods. Dominant market actors normally don’t remain dominant for very long. The European Commission, which took seven years to reach this decision, also whacked Microsoft with a huge fine for being too successful a decade ago, but Microsoft is no longer the dominant provider of computing software – and not because of EU regulation.
Google has created immense amount of value for both shoppers looking to make a purchase and for merchants looking for customers by lowering the costs to both parties. If this decision leads to increased costs for all parties, as seems likely, this will hurt wealth creation and economic growth. As 1 in 4 clicks through Google Adwords on small American merchants’ sites come from outside the country, this decision presents a real threat to the American economy."
Wayne Crews, CEI's Vice President for Policy, also weighed in on the EU's decision:
“Antitrust is one of the gravest threats to the technology sector, international competition, and consumer welfare. The premise of this decision and fine from the European Commission is flawed. According to an EU antitrust official, Google denied other companies the chance to compete and innovate, while denying European consumers a genuine choice of services. But, the opposite is true. Consumers have always had choice of course, and it's the Internet that has widened such choice like no other recent man-made creation. It's actually restrictions in competition, like this EU decision, that will mean higher prices and reduced quality.
Google's competitors help keep “bad” behavior in check, and that is the proper way markets work. There have been many changes over the years since this interminable case began, such as the meteoric rise of Amazon in the shopping category, greater internationalization of shopping on sites such as eBay, and the rise of apps. Bureaucratese such as the "equal treatment" called for by the EU in this ruling is unfair, impossible, and inappropriate. Most worrisome of all is the assertion that this decision could be used to determine the "legality" of whatever else Google does.
The worst aspect of antitrust is that it allows other companies to sit still and not innovate while a target sits in the crosshairs. That is the real source of consumer harm; antitrust itself derails the innovation process. One might even conclude that such is the real purpose of antitrust: to protect rivals from the trouble of having to deal with the innovator. Although the U.S. largely created antitrust, it has been one of our worst exports to the rest of the world.”