Competition in the Digital Age - Google Should “Do the Right Thing”
OpinionGoogle’s parent company Alphabet is an impressive corporation. With a current market value of around 837 billion dollars, it is among the top three most valuable companies in the world. With the exemption of Amazon, Alphabet spends more money on research and development than any other company. In 2017 this amounted to 14 billion dollars. By comparison, in that same year Volkswagen spent 12 billion dollars on R&D. And while ten years ago top Ivy League graduates would flock to Wall Street to find work, now firms in Silicon Valley – and Google in particular – are at the top of their list of potential employers. Consumers have benefited greatly from the way Google has revolutionised how we search for information online and created a far-reaching, high-performance ecosystem for mobile applications in the form of Android.
In mid-July, the European Commission has once again punished Google with a multi-billion euro fine (4.3 billion euros, to be precise) for abusive conduct. Just last year Google had to pay around 2.4 billion euros for promoting its own comparison shopping service in its search results at the detriment of its competitors. Google is challenging the decision.
This latest fine is related to Google’s mobile ecosystem. The European Commission sees the fact that Google requires manufacturers to pre-install the Google Search app and browser app as a condition for licensing Google’s app store as an abuse of market power. In addition, manufacturers wishing to pre-install Google apps on some mobile devices were prevented from selling mobile devices running on alternative versions of Android without these apps.
It is important to consider measures against further violations
While these fines dominate the headlines, it is more important from a competition point of view to consider what measures will be taken to prevent further violations in the future. Google might be required to allow smartphone manufacturers to install important individual apps such as Google Play or YouTube onto smartphones without having to use the entire bundle of Google apps.
Customers might also be automatically asked which of a number of competing apps they prefer. Microsoft had to accept a similar customer’s right to choose back in 2009 after it was accused of abuse for connecting its own browser Internet Explorer to the Windows operating system. In a further step, Google might make its apps available through other app stores rather than only through its own Google Play Store.
Google’s motto has long been “Don’t be evil”. The motto of its new parent company is “Do the right thing”. Neither of these easily coincide with the company’s multiple sanctions for abusive conduct. Its competitors, and ultimately consumers, have been harmed. Rather than just leaping into defence mode once more, the corporation would be well advised to take an active role in the discussion of what the rules of fair treatment should look like in the digital age and to adapt its own behaviour accordingly.
