Negotiating An End To The Last Century

Michael Hedges May 24, 2012 - Follow on Twitter

The pace of change within internet and mobile technologies and the commerce created therein heightens the conflicts faced by regulators. Abuse of dominant market position is more difficult to adjudicate when penalties negatively impact innovation and investment. There’s no point in killing the golden goose.

Search giant Google has “a matter of weeks” to avoid “adversarial proceedings” from the European Commission (EC) warned Competition Commissioner Joaquin Almunia in a press briefing (May 21). Eighteen months ago DG Competition started investigating various complaints against Google, which owing to its scope come from everywhere. The big and successful are – and always will be - lightening rods for the grousing of mere mortals.

The main complaints against Google outlined by Commissioner Almunia have long been part of the grouse-o-sphere: Google gives “preferential treatment” in search results to its own portals, Google winks and blinks at the copyrights of others and Google is too tightly controls its revenue stream – advertising. “We are concerned that Google imposes contractual restrictions on software developers which prevent them from offering tools that allow the seamless transfer of search advertising campaigns across AdWords and other platforms for search advertising,” he explained.

And Commissioner Almunia sent a letter to Google executive chairman Eric Schmidt with the not-so-veiled threat of protracted proceedings and those huge EC fines if the company didn’t fix something or say something. Another American tech giant – Microsoft – felt the wrath of Commissioner Almunia’s predecessor in the EC Competition office, Neelie Kroes, who first fined the company €497 million (2006) then added on €899 million (2008). The American chipmaker Intel was fined €1.06 billion by the EC in 2009. Those folks in Brussels sure know a thing or two about making money. They’ll probably wait awhile before trying to collect from Facebook, not to kick somebody when their IPO is down.

Newspaper publishers have long railed against Google for indexing website content without asking permission or, quintessentially, not paying. “Publishers in a number of EU Member States have raised concerns that Google abuses its dominant market position through its practices in the search and advertising market, which significantly affects competition and the sustainability of newspaper titles in the Member States,” said European Newspaper Publishers Association (ENPA) president Ivar Rusdal in a statement (May 22). “It is essential that the European Commission ensures effective and sustainable solutions to the concerns expressed by publishers across Europe as regards Google's activities as a news aggregator, as well as its role in the online search and advertising markets.”

Other publisher groups chimed in. “Pleased” with Commissioner Almunia’s plea for reconciliation, the Spanish Association of Newspaper Editors (AEDE) said it expects ”truly ambitious commitments” from Google or it will push for those big fines, reported El Mundo (May 23). “What is crucial now is that the Commission ensures an effective and sustainable elimination of all concerns,” said the Association of German Newspaper Publishers (BDZV) in a statement (May 21).

Some observers see Commissioner Almunia taking a slightly more conciliatory strategy with this set of Google complaints. There are more. EC Justice Commissioner Viviane Reding complained (March 1) that Google’s recently amended privacy policy violates the EU Data Protection Directive.  “We’re not playing games here,” she said.

Approving Google’s acquisition of Motorola Mobility Commissioner Alumina said his decision “should not and will not mean that we are not concerned by the possibility that, once Google is the owner of this portfolio, Google can abuse these patents, linking some patents with its Android devices. This is our worry.” Google’s Android smartphone and tablet operating system dominates the worldwide market with 700,000 daily activations at the end of 2011.

So far Google disagrees with the assessment and is “happy to discuss any concerns,” said a company spokesperson. “Competition on the Web has increased dramatically in the last two years since the commission started looking at this, and the competitive pressures Google faces are tremendous. Innovation online has never been greater.”

Google, of course, has near unlimited legal resources for this fight, if there is one. In suggesting a response “within weeks” from Google’s lawyers, Commissioner Alumina certainly must see a protracted battle - largely left over from the last century and pursued by last century industries – as an exercise in futility as internet technology and all that goes with it changes by the nano-second. The fall from grace – and market share - of Europe’s former darling of mobile technology Nokia should have been a wake-up call.

Another was the popular rejection – to the chagrin of newspaper publishers – of the Anti-Counterfeiting Trade Agreement (ACTA) treaty.  When ENPA president Rusdal called for “open and transparent” discussion of its favorite Google issues “involving all parties concerned” he must have forgotten that ACTA, which ENPA strongly supports, was largely negotiated in secret. That EC’s Digital Agenda becomes a difficult path when debris from the past gets in the way.

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