Why the EU would be wrong to sanction Google

The European Commission believes that Google’s conduct infringes on EU antitrust rules because it stifles competition and harms consumers. This is the core of a Statement of Objections filed by the EU competition commissioner that steps up a very serious confrontation between EU officials and the high-tech giant. If the EU wins its case, Google could be fined up to $6 billion. It would also lead to a dramatic transformation of Google’s search product.

Waging a war against innovation

This is just the latest episode of a war started several years ago by European authorities against US high-tech companies. In addition to Google, Amazon, Apple and Facebook have been subject to investigations and restrictions imposed by European national countries and the EU as a whole. At stake are such issues as unpaid taxes to local governments, copyright and privacy infringements, and most importantly unfair competition practices.

Online publishers also tried repeatedly to attack Google News, but an attempt by around 200 German media publishers to prevent it from providing a preview of their online content failed, when direct traffic to their own websites collapsed. The same thing happened in Spain, where online news outlets were quick to embrace Google News again.

The formal step now taken by EU competition commissioner Margrethe Vestager did not surprise anyone. Several MEPs have been pushing for this for a long time, and last November the European Parliament passed a resolution allowing its antitrust commission to examine a possible separation of the search engine’s business from other commercial services provided by Google and similar companies. Even the president of the European Parliament, Martin Schulz, seemed relieved, tweeting: “Glad Commission continues to take #Google case by the horns. Yes to a thriving company but also yes to transparency & no dominance abuse”.

Günther Oettinger, the EU commissioner for digital economy and society, has repeatedly underscored the dangers of US high-tech superpowers, while German representatives have insisted that the EU must stop using online services not based in Europe and announced €3 billion of funding to help European digital companies strengthen their positions.

Even in Italy, this latest news was enthusiastically received by both government and opposition leaders. “It has long been clear that Google has an overwhelming power and uses algorithms and other tools to impose its products on EU users,” said Maurizio Gasparri, Senate vice-president and Berlusconi’s ally.

Information and opportunities for all

In the meantime, Google has already published two different blogposts explaining its viewpoint, which can be summarized as follows: “We have never done anything wrong, in fact we provided more information and opportunities for all users.” This refers in particular to its single page of results introduced in 2007 that blends results from different types of specialized search engines. In the same direction, Danny Sullivan, an expert who has tracked the search engine industry for nearly 20 years, proposes a series of specific solutions addressing each of the EU concerns.

More importantly, this ongoing war between EU authorities and Google should be seen within the context of broader events currently under way in the Old World – where inequality is quickly spreading everywhere. As Ben Bernanke, former chairman of the Federal Reserve, wrote a few days ago on his blog: “Persistent imbalances within the Eurozone are also unhealthy, as they lead to financial imbalances as well as to unbalanced growth.” The founding fathers of the European Union dreamt of an open-to-all and united continent, based on a common vision with shared wealth and fair opportunities for all European citizens. Instead, today European leaders appear disorganized and divided, with “rich” northern EU countries investing largely in R&D (even more that their US counterparts) and “poor” countries such as Spain and Greece left struggling for their survival in the EU market. National budgets for education are also very varied: according to OECD data countries like Italy and Spain invest half the amount of Denmark or Norway (in proportion to their GDP).

To be fair, it is true that the Digital Agenda for Europe has some very important goals: rapidly concluding negotiations on common EU data protection rules; getting more ambitious with the ongoing reform of telecoms rules; modifying copyright rules to reflect new technologies and to make them simpler and clearer; simplifying consumer rules for online purchases; making it easier for innovators to start their own company; boosting digital skills and learning; and ensuring the citizens can access the same online content and services regardless of the EU country they’re in.

A fragmented union

But despite these ambitious goals, current EU policies actually seem to be doing very little towards the establishment of a single digital market. Even at the recent Global Conference on Cyberspace in the Netherlands, which had participants from across the world, including the US, European leaders appeared divided. In the end, countries like Italy, Greece and Spain decided not to join the new Global Forum on Cyber Expertise. They couldn’t even agree on removing roaming charges across the different EU countries before 2018, as both mobile users and providers were expecting. And now it seems that €2.7 billion will be removed from the Horizon2020 budget, a very promising research programme to foster EU public and private innovation projects.

The same divided attitude led to the rejection by EU authorities of a proposal by Italian politicians to reduce the VAT on e-books from 22% to 4%. Under heavy pressure from France and Luxembourg, the European Court recently declared that e-books cannot be considered printed book, and therefore they do not deserve an exception to VAT regulations for electronic devices.

These examples highlight the very fragmented nature of the situation, and it is not at all surprising that even on the Google antitrust case, European institutions seems unable to do anything other than investigate US tech companies.

Giving the people what they want

The only way of dealing with this confusion, as I see it, is to push for innovation and competition at any level. The overwhelming power acquired by Google and other US tech companies could be dented by EU policies aimed at protecting and promoting innovation worldwide. Indeed, competition has always been a key factor in rapidly changing our economic landscape and user habits and patterns. Examples of innovative companies include Xiaomi (in the smartphone manufacturer market), Wework (in the co-working and real estate field) and MongoDB (whose new database technology can easily compete with Google and Microsoft).

Current European policies on market regulation, innovation, R&D investment and much more seem to ignore what people actually need and do not present a unified vision for Europe. To reach a more organic and unified policy, it’s crucial to start or revive a serious internal dialogue between EU institutions and the various European member countries. And European leaders should also realize that steps such as this Statement of Objections against Google will only exacerbate an already tense situation. A more considered and holistic course of action seems necessary to support Altiero Spinelli’s dream of a “United States of Europe” – a goal that unfortunately seems to be fading away.

Author: Andrea Stroppa (@andst7) is an internet security researcher and blogger for Huffington Post Italia

Image: Google and European Union logos are seen in Sarajevo, in this April 15, 2015 photo illustration. REUTERS/Dado Ruvic