Preview of “Google and EU”
Published on: Mar 4, 2016
Transcripts - Preview of “Google and EU”
NOTHING TO STAND ON
Europe is right to worry that it lacks big digital platforms.
But reining in Google is no solution.
-The Economist 4-15-2015
The article: http://www.economist.com/news/business-and-ﬁnance/21648606-google?fsrc=scn/
Thank you to The Economist for bringing us another worthy topic for discussion.
The business world is once again faced with having to defend against accusations of monopoly and
Government’s reaction to it. Today it is Google in the EU that is creating a case of monopoly in the
online digital industry. In the history of the business world going back over 100 years, when
Standard Oil controlled the petroleum and petroleum products industry to the point of creating a
monopoly, Government has showed up to challenge the prevention of competition by monopolies.
Over the years others like AT&T, Bell, and Windows, who dominated their industry and market
were also forced to concede to Government intervention for the same reason.
In the case of Google in the EU however, control of the market by preventing competition plays out
somewhat differently, but it still should be a concern for the EU. In the cases of the other goliath
companies, the latest of which to be tamed by anti-monopoly actions was Windows, these
companies directly controlled the majority of their industry’s markets, either through the economies
of scale they enjoyed by serving a large portion of the market, and having a lead on anyone thinking
of starting up to compete with them; or less directly, albeit directly still, controlling the ability of
others to compete in the market they dominate, like in the case of Windows. Now with Google, their
platform dominance in the Internet search market creates a monopoly through its ability to
inﬂuence consumers by advertising.
Whether The EU or the US or Canadian Governments in past cases have been true to the
principles of capitalism in an open market is another matter. But if the EU does not act they will be
permitting the creation of a company that will control the Internet search market and prevent
competition in it. This is not as much a case of the EU playing catch up to Google’s size and reach
into the industry, nor is it as much about the EU not having a big digital platform. This is more
about Google being ‘too big’. They already dominate the US market where other big digital
Whether Google “has harmed consumers by using its dominant platform to steer them away from
rival services and towards its own”, which is at the heart of the EU case, this practice is common to
all businesses, large and small, in the US and any country including the EU. Then also when Google
is accused of “purposely demoting rival sites”, this too is a practice that is just as common to all
businesses. However, if we accept that the EU must take action to ensure competition we see that
their approach in doing so is 2-pronged.
The EUs foresight of economic impact in industries that are their forte, like fashion and luxury
vehicles, is insightful. While Google will not be directly controlling competitiveness in these
industries, they will be controlling 90% of web searches by 15% of EU consumes. That equates to
13.5% of the EU consumer base. The ﬁgures indicate the Internet search platform market in the
EU is a smaller market by comparison.
This smaller scale of the market inhibits the development of larger and efﬁcient Internet search
platforms. And the EUs 2-prong approach seems to consider this: recognize that a common digital
EU market is needed, and that scale in it is needed; however, also recognize that for Google’s size
and ability they may be the one to unify the smaller market in spite of its scale. Ergo, they will be at
the doorstep of the common digital market they just created to serve it ﬁrst.
By keeping their focus on Google in this, the EU can help prevent the monopolization of a market
that has yet to become developed. Google on the other hand, with is ability to indirectly control the
consumer base of a market, seems to have pushed the limits of the notion ‘buyer beware’, which has
always been based on an adequately informed consumer.