EDITORIAL – European Union: ‘Googling for Dollars’

The European Union, an assemblage of increasingly fractious and rebellious states, does not appear in the least humbled, or even aware of, its failing model where the identities and interests of nation-states are subsumed to its ever more-intrusive central government. Is it any wonder that the good people of the United Kingdom, through the referendum which became known as Brexit, voted en masse to say bye-bye to Brussels?

The latest overreach by the EU bureaucrats is the levying last week of a US$5 billion fine on the American business Google (owned by Alphabet Inc.) which was deemed by the EU’s radical regulator, Margrethe Vestager, to have committed antitrust violations. Ms. Vestager holds the Orwellian title of “Competition Commissioner” of the European Union.

In an astonishing combination of hubris and ignorance, Ms. Vestager accused Google of “unfair business practices” which she said had given the company an unfair market advantage and stifled healthy competition. Her concern?: That Google, which freely allows phone manufacturers to install the Google Play app store, does so only on the condition that the manufacturers also install Google’s popular search and web browsing software as default options on the device.

EU regulators, who also object to Alphabet paying phone makers to exclusively pre-install Google search capabilities on their devices, say this exchange amounts to an “unfair business practice” yielding an unfair market advantage and stifling competition. Of course, it is the exact opposite. It is a win-win exchange that allows consumers access to more than 3.3 million apps offered by Google and hundreds of thousands of third-party developers – many of them for free.

To be clear, there is nothing unusual or unfair about Google’s licensing agreements.

No company is compelled to use Google’s Android operating system or Google Play; no consumer is prevented from installing competitors’ search and browsing software on their phone. No developer or company is barred from attempting to create software that is superior to Google’s products.

Arguing that Google’s market dominance, itself, represents an unfair advantage makes about as much sense as arguing that today’s music streaming services are unfairly stifling the market for vinyl records or the 8-track tape. Using a heavy hand and curiously distorted notions of what a free marketplace should look like, EU regulators are endangering a symbiotic system that enhances competition and magnifies consumer choice.

Alphabet is expected to appeal the regulators’ edict. In the meantime, it has just 90 days to cease its “illegal conduct.” One easy way to do that would be to begin charging mobile phone companies (and, thereby, consumers) for the use of Google Play.

Just wait for the howl from consumers if Google goes that route!

Under the guise of “regulation,” governments the world over, including here in Cayman, are too eager to fill their coffers by levying super-sized fines on everyone from the largest corporations to the “smallest” citizens.

Think, for example, of the proposed $10,000 fine for Caymanians failing to display an electronic license plate and tags. Penalties and fines should never be thought of as “revenue measures,” imposed to pay the exorbitant expenses of government on the struggling backs of the people they purport to represent. (We used to see this practice in full flower in small towns in Texas. They were called “speed traps.”)

If Google were ever to pay the $5 billion fine (which it will not), the funds should go directly back to the European people, not to the Brussels bureaucrats – autocrats – who will spend it, what, in a matter of minutes?

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  1. Actually no.
    While Sony, Blackberry and Microsoft have attempted to introduce phone operating systems that compete with Android there are only two systems that are widely used:

    Apple, that is exclusive to the Apple corporation
    Android, which therefore has a monopoly on everyone else

    Android’s success at eliminating everyone else by giving away their product HAS created a monopoly that kills other search engines.
    On this occasion the EU is correct.
    By the way, I am a Google shareholder. Still trying to be fair.