International Business / Organizational Strategy / Technology

Europe’s Google Grudge

Google

Samson Cassel Nucci

Google’s initial settlement with the European Union (EU) over the breaking of anti-trust laws is back on the table as more European leaders, particularly from France and Germany, have reopened negotiations.  Google has been battling the allegations of favoring its own selected services, companies who either pay to be top search results or are just more popular, versus those of other European companies for 4 years now, and the tech giant seemed to be gaining the upper hand.  Now, as European commissioners reopen the fight, Google prepares for more of the same politicking and squabbling that have been disrupting its operations since 2010.

Google has long been near and dear to the hearts of European web users, and with a market share of over 90% of all web searches, more than its 75% share in the U.S., it is clear that European consumers love Google.  This doesn’t negate the fact that there is a growing “anti-tech” movement in Europe where consumers are increasingly worried about data collection and privacy issues revolving around large technology and information-based firms.  Using this fear, and the accompanying strict anti-trust laws established by the EU, the Competition Commission has been launching repeated and intensifying probes into Google’s advertising and data collection practices since 2010.  Four years later, a settlement would be drafted and approved.  The settlement required a “Google search” to display not only the top results according to Google, but also 3 comparable sites right alongside Google’s top picks, similar to having multiple search engines like Bing or Yahoo display their results on a Google web page.  While saving the company up to $6 billion in fines, the settlement also proved a win for small businesses who could use the fairer web traffic rules to their advantage.  However, Europe’s grudge apparently cannot be resolved by simply changing the results page.

On Wednesday, September 10th, the Competition Commission, under the head commissioner Joaquin Almunia, presented its request for a fresh settlement from Google, throwing away months of deliberation and consensus.  “The decision to ask Google to improve its proposals further is exclusively based on the new argument and data submitted [to] the European Commission,” a spokesman said for Almunia that day.  Some of these “new arguments” are most likely in the form of political pressures from France and Germany, who have business and political concerns about Google.  German influence is particularly strong, with important politicians like Sigmar Gabriel, the economics minister and Vice Chancellor, claiming Google’s “brutal information capitalism” warrants a break-up of the technology giant.  In addition, the German publication Axel Springer and its CEO Matthias Doepfner have been outspoken on Google’s information collection operation, saying Google “knows more about every digitally active citizen than George Orwell dared to imagine in ‘1984.’”

Google’s “Big Brother” persona is still on the minds of many consumers, despite the company’s strong denial of any involvement in spying operations.  Furthermore, Google and other technology firms are constantly under attack from regulators and rivals in numerous countries over too many issues to count.  With all these business and political pressures, Google needs to stand its ground.  Europe is proving to be a particularly tough battle. However, with Google’s $2 million lobbying budget in Brussels, the tech corporation is definitely willing to put up a fight.

All these attacks by Europe on big corporations like Google are only discouraging further investment in the continent: if companies see the regulation nightmare Google has to climb through just to do its job, is investing in the Old World even worth it?  Maybe EU countries should be more focused on incentivizing technology start-ups, which are bogged down by the myriad of regulations, than trying to take down a Fortune 500 corporation.  The point remains that as long as Google holds a competitive market share, which will remain quite large for the foreseeable future, The EU won’t be able to shake off that Google grudge for some time.


Sources:

http://www.nytimes.com/2014/09/09/technology/google-is-target-of-european-backlash-on-us-tech-dominance.html?_r=0

http://online.wsj.com/articles/german-french-pressure-led-to-eus-about-face-on-google-1410382048

http://www.economist.com/news/leaders/21615602-germanys-opposition-american-technology-firms-short-sighted-and-self-defeating-googlephobia

http://www.economist.com/news/business/21615588-why-online-giant-has-become-countrys-bogeyman-and-why-matters-closing-circle

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s