[A2k] FT View: Google and the art of monopoly maintenance

Thiru Balasubramaniam thiru at keionline.org
Wed Apr 20 03:57:51 PDT 2016


https://next.ft.com/content/3f290294-0627-11e6-9b51-0fb5e65703ce

Google and the art of monopoly maintenance

Brussels is right to draw parallels with the celebrated Microsoft case

FT View

European antitrust cases against Google seem to be like London buses. You
wait ages for one to arrive and then they all come along at once.

When Margrethe Vestager took over as antitrust chief at the European
Commission at the end of 2014, Brussels had spent the previous five years
locked in unavailing negotiations with the US search giant over a series of
competition disputes. It took her just a few months to open the first
formal case: into whether Google abuses its 90 per cent share of search
traffic to squeeze out rivals unfairly.

Now Ms Vestager is poised to widen the attack. She is expected to launch a
second case, possibly as early as today, this time looking at Google’s
mobile platform, Android. It will examine whether Google leverages its high
market share in mobile operating software to push its apps on to customers
whether they want them or not.

Ms Vestager’s concerns are understandable. Google has come under fire from
rivals for taking advantage of customers’ desire for pre-installed apps
ready for use as soon as the smartphone is taken out of the box. Its
tactics include ensuring a suite of its own apps placed on each
pre-installed phone, and excluding those it does not wish to distribute.

In a speech this week, Ms Vestager drew an explicit parallel between
Android and the commission’s marathon case against Microsoft. It is an apt
comparison. Just as the software giant threw in free internet browsers and
media players with its PC operating software, Google freely distributes
Android software to phonemakers and mobile operators. It then offers them
incentives to install its apps on their phones.

Google can argue that it gives space on its system for rival products such
as Amazon and Facebook, and that it provides a valuable free service to
millions of users around the world. There is however another parallel with
Microsoft, namely the dominant position Google enjoys in mobile operating
systems, which makes its self-promoting tactics questionable. Apple might
have a stronghold at the top end of the market but Android supplies its
software platform to more than 80 per cent of smartphones.

This latest shot in the battle between Google and the commission is likely
to stoke suspicions in the US that Europe and its institutions are
anti-American and anti-Silicon Valley. While Americans may have legitimate
complaints about issues such as “safe harbour”, the questions raised over
Google are much more valid.

A great deal rests on the commission’s investigation. The internet giant is
promoting its products to consumers in order to deepen its already dominant
control of online search: a process known in the US as “monopoly
maintenance”.

Given the digital world’s propensity to create winner-takes-all positions,
and the feedback loop that “big data” provides in sharpening search
results, this could leave Google with a vice-like grip on digital services.

It is better for Google that these questions are decided in the open.
Before Ms Vestager’s arrival, the commission’s probe into the company was
plagued by suggestions of political interference and lobbying by French and
German media companies. Due process will allow the US tech giant to make
its case.

Ms Vestager is right to pick this second fight with Google. Ducking another
bruising battle with the internet giant might seem the less stressful
course but anything short of a robust approach would only weaken
innovation. In the long run, that could leave consumers with a worse
service than would otherwise be the case.

This article has been amended since publication.



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