EU’s Google ruling cranks up tension with big US firms

Europe Letter: Many in US see Google case as part of clampdown on US multinationals

The commission accuses Google of abusing its market dominance by preinstalling apps on the Android devices it sells in Europe, while also preloading Google Search as the default search engine in some cases. Photograph: Geert Vanden Wijngaert/AP

The commission accuses Google of abusing its market dominance by preinstalling apps on the Android devices it sells in Europe, while also preloading Google Search as the default search engine in some cases. Photograph: Geert Vanden Wijngaert/AP

 

Wednesday’s decision by the European Commission to charge Google with abusing the dominance of its Android operating system marks the latest attempt by EU regulators to clamp down on multinationals.

In a world in which the EU is often accused of being too wrapped up in empty bureaucracy, the commission’s competition arm is one area where the EU has real teeth.

As companies such as Ryanair know too well in the wake of three failed attempts to buy Aer Lingus, the competition division is immensely powerful. Its binding anti-trust decisions can make or break multimillion euro mergers if it perceives that the interests of companies or EU consumers are being undermined by unfair market practices.

It is the power of EU competition law that so worries authorities in Dublin as the Government awaits the outcome of the EU investigation into Apple’s tax dealings with Ireland: by treating the US company’s dealings with the Irish tax authorities as a state aid matter rather than a taxation issue per se, the EU is deploying one of its most powerful tools.

Adverse ruling

Wednesday’s announcement by competition commissioner Margrethe Vestager follows a year-long investigation. In its statement of objections sent to Google, the commission accuses it of abusing its market dominance by preinstalling apps on the Android devices it sells in Europe, while also preloading Google Search as the default search engine in some cases. This prohibits other companies, particularly those designing apps, to access the market, the commission argues, while also giving less choice to consumers.

The Danish commissioner put it succinctly in a speech on Monday: “By requiring phone makers and operators to preload a set of Google apps, rather than letting them decide for themselves which apps to load, Google might have cut off one of the main ways that new apps can reach customers.”

Google hit back, saying its model helps to keep the costs low for phone manufacturers using the Android system, as it allows smartphone manufacturers to use its system for free. Google also points out that rival apps such as Facebook and Amazon can operate on the Android system.

This week’s charge is the second competition case launched by the commission against Google in recent years. Its investigation into whether the company is favouring its own shopping services through the dominance of its search engine is still continuing.

The EU’s actions against Google are far from its only incursion into the realm of US tech multinationals. It’s more than a decade since the commission took a landmark competition case against Microsoft, accusing it of abusing its dominance of PC operating systems by forcing consumers to use Window Media Player.

The case led to more than €2 billion in fines for Microsoft and was seen as an early indication the EU was ready to take on competition issues presented by the rapidly-changing technology sphere. Just as the EU was ready to protect consumers and small companies from the dominance of companies in other sectors, so too was it ready to stand up to digital monopolies.

Clampdown

StarbucksAppleJack Lew

President Barack Obama has openly accused the EU of protectionism in its treatment of US tech companies.

Bound up with this are recent tensions between the EU and US on data protection. The striking-down by the European Court of Justice of the “Safe Harbour” agreement that governs transatlantic data transfers was a major victory for EU privacy campaigners.

For Ireland, none of this is good news, as the European headquarters for many US tech multinationals Ireland are treading a fine line between maintaining allegiance to US companies and acknowledging the data privacy and tax justice concerns of EU members.

As long as US companies continue to dominate the technology world, it is a balancing act that is likely to continue in the years to come.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
GO BACK
Error Image
The account details entered are not currently associated with an Irish Times subscription. Please subscribe to sign in to comment.
Comment Sign In

Forgot password?
The Irish Times Logo
Thank you
You should receive instructions for resetting your password. When you have reset your password, you can Sign In.
The Irish Times Logo
Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.
Screen Name Selection

Hello

Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
Forgot Password
Please enter your email address so we can send you a link to reset your password.

Sign In

Your Comments
We reserve the right to remove any content at any time from this Community, including without limitation if it violates the Community Standards. We ask that you report content that you in good faith believe violates the above rules by clicking the Flag link next to the offending comment or by filling out this form. New comments are only accepted for 3 days from the date of publication.