Wednesday, June 28, 2017

The E.U. Goes After Google: Where Was the U.S.?

In fining Google a record 2.4 billion euros (2.7 billion dollars) in June, 2017, for unfairly favoring its advertisers in its online shopping service, E.U. officials went “significantly further than their American counterparts.”[1] At the time, Google held more than 90 percent of the online search market in the E.U. Why would the E.U. go further than the U.S. in pressing anti-trust violations against a technology company that could be expected to gain monopoly profits? Presumably Google was favoring its advertisers on searches in the U.S. as well. Americans would mind too when an advertiser’s higher-price product comes up rather than a comparable product at a better deal. Was the E.U. more interested in protecting consumers and less concerned about pleasing a large company? The company’s sordid, self-serving practice nullifies any contending claim that the government’s motive was to go after a foreign company. I submit that the E.U. government’s action unwittingly points to a pro-business bias in the corresponding American government.

With the demand that Apple repay $14.5 billion in back taxes in the E.U. state of Ireland, an investigation into Amazon’s tax practices in the E.U., and “concerns about Facebook’s gathering and handling of data,” the E.U.’s anti-trust division was “laying down a marker for more hands-on control of how the digital world operates.”[2] Why no such marker in the U.S.’s anti-trust division? Clearly, concerns about Facebook were not uncommon there. The E.U. “is setting the agenda,” Nicolas Petit said at a European university.[3] Suddenly America looks like the Old World.

Especially after the Citizens United decision by the U.S. Supreme Court in 2010 allowing unlimited spending by companies on political campaigns, the question of the power of large companies in the halls of Congress as well as in the White House at the expense of consumers became more important even if the media kept the issue largely off the public’s radar screen. Is what is good for GM good for America? The fallacy that what is good for a part is necessarily good for the whole is enough to settle that question. The problem, therefore, lies in certain parts having inordinate influence over the whole—more specifically, on the rules by which the whole operates. Insufficient regard for the public good by public officials who don’t want to risk offending corporate chieftains is like the captain of a ship steering according to the desires of certain wealthy passengers instead of looking out ahead.

So it is telling, I submit, that the E.U.’s anti-trust division essentially shamed its American counterpart in being willing to stand up to very powerful private interests. The “proof in the pudding” lies, I suppose, in the dearth of cases in which the U.S.’s government (and those of the member states) has spoken truth to the powers behind the throne and gone on to act on that truth in enacting laws and regulations that protect the public. All too often, American regulatory agencies are captured by the very companies that are to be regulated. Beyond the agencies’ reliance on their respective regulatees for market information and the regulatees’ ability to hire former regulators for lucrative jobs, a company’s monetary influence in electoral campaigns gives elected representatives a powerful incentive to pressure the regulatory agencies to go easy on even an entire industry. From a company’s standpoint, unwanted regulations can be softened or averted outright, or new regulations can be used strategically at the expense of typically smaller competitors that are less able monetarily to comply with stiffer mandates. So it is not simply more regulations that attest to a willingness to “speak truth to power.” Government officials with the courage (and fortitude) to protect the public cannot simply enact laws and regulations that are in a dominant company’s interest. Clearly, the E.U. passed this test in being willing to stand up to Google.

[i] Mark Scott, “Google Fined Record $2.7 Billion in E.U. Antitrust Ruling,” The New York Times, June 27, 2017.
[ii] Ibid.
[iii] Ibid.