The EU’s $2.7 billion Google fine is thrilling Google’s haters

June 27, 2017, 9:55am

The EU on Tuesday handed Google a record antitrust fine of $2.7 billion for abusing its dominant position in the market and illegally favoring its own shopping services over rivals. Many in Washington and Silicon Valley will see this as another case of Europe clamping down on U.S. tech companies, but the reality is that American companies were at the front of the queue when it came to pushing for this result.

Google has consistently denied any wrongdoing and has in the past had strong support from fellow tech companies, but on Tuesday there was a decided lack of vocal criticism of Europe’s record-breaking fine. A letter criticizing Europe’s decision was circulated by the lobbyists in Washington hours ahead of the announcement, seeking support from members of Congress, but it has not been published, suggesting a lack of support.

The surprisingly large fine was announced by EU competition chief Margrethe Vestager in Brussels, who said that “what Google has done is illegal under EU antitrust rules.” In an interview with VICE News Tonight following the announcement, Vestager said, “No one should be so big that they’re above the law, or above being challenged. And that I think is very important because with power comes responsibility.”

The EU has given Google 90 days to change the way it operates and level the playing field for all comparison websites. The Commission has not expressly laid out how Google should change its shopping service, saying simply that “Google has to apply the same processes and methods to position and display rival comparison shopping services in Google’s search results pages as it gives to its own comparison shopping service.” The Commission adds that it is up to Google to ensure compliance and “it is for Google to explain how it intends to do so.”

The reason for this lack of explicit instruction is that Europe is limited in how much it can force companies like Google to change. “The current enforcement tools open to the Commission make it a bit tricky for the EU to absolutely force Google to change its business practices in a certain way if it really doesn’t want to,” Niamh Dunne, assistant professor of company law at the London School of Economics, told VICE News.

If the company doesn’t comply with the Commission’s request, the EU says it will levy around 5 percent of the average daily worldwide revenue of Alphabet, Google’s parent company — which equates to about $12 million a day.

In a blog post reacting to the ruling, Google’s general counsel Kent Walker said the company “respectfully disagrees with the conclusions announced today” and it “will review the Commission’s decision in detail as we consider an appeal, and we look forward to continuing to make our case.”

However the number of companies and groups jumping to criticize the EU decision is markedly fewer than it was in previous years. Ahead of the announcement on Tuesday, Google was reportedly circulating a letter criticizing Vestager’s announcement and seeking the signatures of members of Congress. The letter lists previous EU investigations into American companies and says: “We are concerned that in some instances American companies are being singled out in Europe.” Google however has not published the letter or it signatories, suggesting it was unable to obtain sufficient support for its stance.

Google’s haters cheer

“I don’t think the type of sympathy that was there a year or two ago [for Google], is still there,” Yelp’s head of public policy Luther Lowe told Vice News. “I think that it feels like a really different climate than a couple of years ago.”

Several trade groups did argue that Europe’s decision would make things worse for the consumer. “Today’s ruling is bad for consumers and bad for innovation,” Robert Atkinson, president of the Information Technology and Innovation Forum said in an emailed statement. “The EU has effectively decided that some companies have become too big to innovate.” The Computer and Communications Information Association said the ruling had “a chilling effect on innovation.” Google helps fund both groups.

Although European regulators have led the charge on issuing penalties to large U.S. tech companies, it has been U.S. experts and business leaders who have been lobbying them the hardest.

Yelp was among seven U.S. companies, Google competitors, and industry groups — which also included Oracle and News Corp — who sent a letter to the Commission hours before the decision was announced, which outlined support for the fine. “We believe that decisive action is necessary to restore competition and once again open the Internet to innovation and growth,” the letter, obtained by VICE News, said. “We hope that your counterparts in the United States will use this as an opportunity to address similar anticompetitive conduct by Google.”

Lowe tweeted Monday that “the lion’s share of work on the EU case was advanced by US companies who had to go to Europe, after a politically captured FTC failed them.” Lowe, who said he’s traveled to Brussels more than a dozen times over the last four years, said Yelp and other Google rivals in the U.S. played a big part lobbying the European Commission to take action because regulators in the U.S. weren’t as receptive to their arguments.

Vestager, who last made headlines when she levied a $14.5 billion fine on Apple for its tax practices in Ireland, is seen as the world’s most aggressive regulator of digital companies with many in the U.S. complaining about a perceived bias against tech companies like Facebook, Microsoft, Google, Apple and Amazon.

When asked about such a bias, Vestager said she had gone back to check the records on previous investigations and concluded: “I can find no facts to support any kind of bias.”

Will the FTC step up?

In 2012, the FTC leaders declined to pursue an antitrust case against Google, against the recommendations of agency staff. The largest fine the FTC has ever levied against Google the was $22.5 million — 120 times smaller than Monday’s European Commission fine — and it was related not to antitrust, but user privacy concerns.

Matt Stoller, a fellow at the New America Foundation’s Open Markets Program, said that for those who want to take action against Google in the U.S., European officials have “set a precedent and provided a bunch of evidence.”

“You can go to a judge now and say: ‘this is what the Europeans found and Google was found guilty,’ and that’s meaningful,” Stoller said. “That makes it a lot easier for anyone who wants to bring a case.”

Lowe says the fact citizens in the EU are now enjoying greater protection could spark action in the U.S. “I do think that we are now going to have a situation where European consumers enjoy better protection than U.S. consumers so that creates a lot of pressure on global antitrust enforcers who effectively crib each other’s homework,” Lowe said.

Peter Kaplan, the acting director of public affairs at the FTC, told VICE News it did not have a comment to make on the EU ruling.