So the announcement that the new EU competition Commissioner Margrethe Vestager is to open a formal investigation into Google’s business in Europe can hardly be a surprise.
Google’s own substantial and impressive legal team should take a lot of credit for managing to talk and promise a lot – and do nothing in the previous five years of negotiations. They literally talked the previous commissioner Joaquín Almunia out of his term of office. One of the greatest corporate filibusters in history.
That has all come to an end today.
Microsoft and others who have lobbied relentlessly in Europe must be quite pleased. Microsoft more than any other company knows the debilitating nature of ongoing EU anti-trust investigations – and all they really did was to bundle Internet Explorer with Windows.
President Obama also saw this coming a few months ago with his hoo-ha remarks about EU tech companies not being able to compete, so they go running to their EU mummy. I guess he has to wave the flag and go all local hero. But, he does realise that Google (and many other US tech companies) are not good US corporate citizens anyway? When it comes to paying their tax they conveniently have a love of Caribbean islands.
The case against Google is that it favours its own services over rival services in search results. This specifically relates to the Google shopping services – however Google is also using its dominance in other areas, such as flight information – which has ties neatly and lucratively back to ecommerce and shopping.
The second part of the attack on Google relates to its free Android phone software and the allegation that it forces phone manufacturers to bundle its services if they wish to use Android. This is much closer to the bother Microsoft got into with the EU.
There are also elements in the French parliament that are seeking to pass legislation compelling Google to reveal details of its might and secretive search algorithm. This is a very likely to fail, simply because Google would probably prefer to leave the French market (or service from the safety of the US) than reveal the exact ingredients to its secret sauce.
However, as wiser and more astute commentators have already stated Google’s power is in the data it has collected on us. This is routinely described as “anonymised” – which is rubbish. When two sets of separate data are cross-referenced you can achieve incredible accuracy – that accuracy can be easily used to identify you and everything about you. The argument runs that your data is anonymised, because your name is not known – your name is actually the least important thing about you. Your job, spending habits, health records, travels, political views, hobbies etc. – are much more interesting. Besides your name can be gleaned from the electoral roll. For a brilliant article on this see – My Identity For Sale, by Madhumita Venkataramanan, Associate Editor at Wired UK.
So basically, the EU attacking specific parts of Google’s business is a bit like trying to fell a giant by bending one of its fingers – annoying and painful, but it will not stop it.
Possibly the only way to take on Google is commercially – a search engine where your data is given a clear monetary value and you get 50% of the proceeds for agreeing to share it. Your data is being used anyway; you may as well get some money for it. If not this model then another, something that is transparent about the data collected and the very real value of it.
We don’t hold out much chance of “privacy-shock”, basically when people wake up to how much of their personal data is collected and how it is used. The beautiful lure of free search and free apps will continue. Just look at what anyone under 30 shares publicly; the dividing line between public and private no longer exists for them.
Finally, we can’t help thinking that if Google had taken a longer-term view they would have seen that avoiding tax in the EU makes them a political target. You don’t win many friends when you keep avoiding paying for your round at the bar.
A more enlightened (less corporate) Google would have said years ago – this is what we earn in a particularly country, and here is the corporation tax payable on it. Had that happened Google might not be facing multiple attacks in the EU, and soon elsewhere in the world.