The €4.3 billion (approximately $5.1 billion) fine that the European Commission imposed on Google last week seems like an enormous sum of money. The penalty relates to Google’s alleged abuse of power in the mobile phone market. Some 85 percent of mobile devices function on the Android operating system, and the majority on Google’s own version of it. Based on this dominant position, the company would consistently favor its own applications and services. Google was previously fined for favoring its own comparison shopping services in internet search results.
The European Commission has traditionally been most vigorous in its enforcement of antitrust policies, and with the crackdown on Google, it wants to demonstrate just how valuable “Europe” is for its citizens. The American administration, however, considers the record fine to be surreptitious retaliation in the quickly escalating trade conflict between the United States and the European Union. Last week, President Donald Trump immediately tweeted that the European Commission “truly [has] taken advantage of the U.S., but not for long!”
The previous statement reveals a glimpse of the new transactional reality in international economic relations. Google is considered, above all, an American interest by the White House, and action against the company is thus an action against the U.S. But billion dollar fines for violations of financial regulations, environmental standards, international sanctions or antitrust laws are certainly common in the U.S. Energy giant, BP, paid a hefty sum for the oil spill in the Gulf of Mexico. Volkswagen is paying considerably for cheating on emissions tests. And many European banks, including Rabobank, had to pay billions with respect to financial scandals, mainly in the U.S. Conversely, Facebook, Intel and Microsoft have been fined in Europe.
The list is long. The U.S. certainly does not spare its own corporate sector, though the same is true of the EU. Truck manufacturers were collectively fined a massive sum of almost €3 billion (approximately $3.2 billion) for cartel practices in 2016, and auto glass manufacturers were fined €1.4 billion (approximately $1.77 billion) in 2008.
America’s reaction to the current fine against Google suggests that the era in which both blocs accepted the penalties for one another’s companies, albeit sometimes begrudgingly, is past. That is alarming. Sound and effective antitrust regulations are vital for the economy. Free competition is not possible without monitoring abusive practices, and that oversight cannot be carried out without strong sanctions.
What makes the Google case especially significant here is that it concerns a market in which the formation of effective monopolies appears to be the “natural” ultimate goal of the participating enterprises. The tech sector now has a limited number of behemoths that are either dominant in their own sector, or threaten to become so: Facebook, Amazon, Apple, Netflix and Google.
All of these titans are American. That has already begun to feel increasingly unsettling in Europe. The emergence of local competition has already become difficult to impossible, and the lion’s share of the profits from internet activities is disappearing to the U.S.
The situation is coming to a head now that it appears that these tech giants are being considered representative of America’s national interest. By acting as an advocate for the internet giants, the White House threatens to bring about something it should not want: a call on Europe to embark on an active program to develop its own alternatives.
The NRC weighs in on important news in its Commentary section. The commentators write these articles in cooperation with the editorial board.