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E.U. Hits Google With $5 Billion Ginned-Up Protectionist Fines

5 of the 6 largest European antitrust decisions have been slapped on U.S. tech companies

Viorel Dudau/Dreamstime.comViorel Dudau/Dreamstime.comThe European Union's antitrust bureaucracy today levied a $5 billion fine on Google, a new European record.

In a statement, the European Commission alleged that Google violated the law in three ways: unlawfully tying its search and browser apps to the Android operating system, paying manufacturers to pre-install Google Search on devices, and making it difficult for device manufacturers to sell "forked" versions of Android, such as versions running Amazon's Fire OS.

It's a restatement of the Commission's preliminary conclusions from 2016, meaning Google's arguments over the last two years have proven entirely unsuccessful.

Google has offered an impassioned defense and says it will appeal, which will take a few more years.

It's a remarkable decision in a few ways, including that the Commission's lengthy statement barely mentions Apple—except to insist that Cupertino's iOS operating system is somehow "not part of the same market." In this contrafactual view of the world, iOS never competes with Android, which may come as a surprise to the millions of Europeans cross-shopping the latest iPhone and Samsung phones. Also absent is any acknowledgement that Apple leads the worldwide tablet market, with Amazon.com's de-Googlefied version of Android coming in second.

This rhetorical sleight of hand allowed the E.U. to ignore competitive threats posed by Apple and Amazon and conclude that Android enjoys a "market share of more than 95 percent" of "licensable smart mobile operating systems." By this logic, Apple should fear becoming the E.U. bureaucracy's next target: It commands a market share of approximately 100 percent of non-licensable "smart mobile operating systems." And it's far more controlled than Android; good luck trying to delete Safari, replace Siri with Google's assistant, or even distribute your own app without Apple's explicit permission.

By comparison, the Federal Trade Commission (FTC) has been investigating the same allegations about Android since 2015, and has yet to take any action. The FTC closed a previous investigation in 2012 without bringing a case. In 2016, Canada's Competition Bureau formally abandoned its three-year probe into Android after, according to the Wall Street Journal, "finding little evidence that the technology giant engaged in anticompetitive behavior."

If this were the first time the E.U. engaged in this kind of outcome-based chicanery on antitrust, it might reasonably be dismissed as an expensive mistake. But it's not. Instead, today's announcement escalates a kind of transatlantic Cold War on trade, which has accumulated a price tag in the tens of billions of dollars.

It's true that some honest differences in philosophies exist between the E.U. and the United States. Since the 1970s, U.S. antitrust law has been more focused on protecting competition, which includes looking at whether consumers have actually been harmed. The E.U. approach has been more concerned more with protecting competitors, with officials likely to step in to help struggling smaller rivals.

But what may have began as a reasonable difference in emphasis now appears to have morphed into naked European protectionism. The economics are simple: European firms have fallen behind their American counterparts to the point that not one European firm appears in the list of top 20 Internet companies ranked by market capitalization. Any aggressive approach toward antitrust enforcement of mobile or online business practices will, not-so-coincidentally, handicap Silicon Valley companies to the advantage of smaller European rivals. (Finland-based Nokia, once the world's biggest phone maker, sold its shrinking handset business to Microsoft for $7 billion in 2014; two years later, Microsoft dumped it for the firesale price of $350 million.)

It should come as no surprise that five of the largest six antitrust fines in E.U. history, according to Reuters, have been slapped on U.S. tech companies. The unwilling recipients include Google (twice, including today's fine), Intel, Microsoft, and Qualcomm. The only European company to make the top six was Daimler LG, parent company of Mercedes, which was fined for the grave crime of "passing on the costs of compliance with stricter emission rules." Quelle horreur!

The E.U.'s antitrust officials demanded that Ireland seize $14.5 billion in taxes from Apple (the Irish government, which says all taxes owed had been paid, was not amused by this diktat). They levied a $110 million fine on Facebook for allegedly not disclosing enough information about its WhatsApp acquisition. They've already expressed interest in moving against home assistant devices such as Amazon Echo or Apple's HomePod, plus, separately, Qualcomm and Amazon. The General Data Protection Regulation (GDPR) may represent the pinnacle of this protectionist mentality.

Both President Obama and President Trump have recognized this problem. In a 2015 interview with Recode, Obama said: "Their service providers who, you know, can't compete with ours—are essentially trying to set up some roadblocks for our companies to operate effectively there." This week, Trump said: "I think the European Union is a foe, what they do to us in trade. Now you wouldn't think of the European Union but they're a foe."

A wiser approach for the European Union would be to reform its own laws on taxes, privacy, and employment flexibility to encourage the next wave of tech companies to open in Berlin, Madrid, Rome, Paris, Amsterdam, Vienna, or Prague. Unfortunately, that would require Europe to admit its mistakes first.

Photo Credit: Viorel Dudau/Dreamstime.com

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  • Mithrandir||

    This is an embarrassment of a decision. Oh no! Google's Operating Systems come stock with Google services!

    Seriously, why are European regulators so fucking stupid? I wouldn't be surprised to see Silicon Valley companies pull their products from the EU eventually. I would. Let them enjoy their third rate technology products.

  • BestUsedCarSales||

    Reminds me of the odd antitrust against MS back in the day.

  • Curt2004||

    Except MS used to pull some pretty shady crap to lock itself in...

  • marshaul||

    The MS antitrust case was the legal equivalent of a drug dealing charge on a known murderer they just can't catch red-handed.

  • rocks||

    Google is one of the most evil unliberterian tech firms out there.

    And they do illegally tie together separate lines of business to leverage monopoly power in one area to keep locks on other areas. Monopolies should not (and are not) allowed to do this as it is anti competitive and against a free market.

    I would love to buy a vanilla android phone with zero Google tie in, but you can't because Google manipulates access to android apps to force phone companies to put all of the other Google spy ware crap in. This is a great ruling.

    BTW, could you imagine if MS forced all applications to pay them a 20% fee just to have the right to sell applications to consumers. That would be absurd, and yet Google gets away with it.

    I don't think you guys really understand what is going on.

  • Brett Bellmore||

    Well, no question that they did, but the antitrust case was still more about their policy of not paying the mobparties protection moneydonations.

  • ||

    Reminds me of that line from Downton Abbey where the communist chauffeur who marries into the family and then goes off to the US for a year comes back and says he thinks capitalism is the way of the future, "but American capitalism. Not the way we do it here."

  • DiegoF||

    Reason should do a comprehensive longform piece on the philosophical, historical, and practical differences between the "consumer-centered," price-driven (across a broad left-right spectrum) U.S. antitrust tradition versus the European "competition law" approach.

  • Echo Chamber||

    That would be more interesting than yet another TDS article

  • RoyMo||

    But he was completely correct on this. Old school 1920s-30s English Capitalism was based on Imperia Preference, the Royal Navy, and keeping everything in the club, almost no one in the US would object to his class origins and previously servile position, in the UK they would never get past it.

  • Fist of Etiquette||

    Reminds me of that time Europe sucks balls.

  • Sam Grove||

    "Seriously, why are European regulators so fucking stupid?"

    They're not stupid. This is a shakedown, governments need money and they know where to get it.

  • ||

    ^^ This guy gets it.

  • Brett Bellmore||

    They're not stupid, this is the sort of thing they've been doing for years to wage a trade war against the US while pretending they're not. Like the GMO bans were meant to exclude US agricultural products.

  • Giant Realistic Flying Tiger||

    Every internet company based in America should just pull the fuck out of Europe. You try to log in with an ISP from Europe? Fuck you, we don't do business in Europe. Then when the E.U. bitches, tell them to suck some chocolate salty balls.

  • Leo Kovalensky II||

    Gargle, you mean.

  • Giant Realistic Flying Tiger||

    Please. That's Just Say'n's beat, and I don't want to infringe upon his copyrights.

  • Yellow Tony||

    REAL libertarians don't believe in copyright, you lefty puke.

  • DiegoF||

    Is there no IP in your dimension? I wonder what OS is the most popular there.

  • Longtobefree||

    MS-DOS, still.

  • macsnafu||

    No, FreeDOS.

  • Giant Realistic Flying Tiger||

    Isn't copyright more of a right-wing position, since it enriches corporations?

  • DiegoF||

    Wait, I'm confused. Aren't you future, reformed Tony? Have I missed some developments?

  • Giant Realistic Flying Tiger||

    I am future (just as annoying but in a different political direction) Tony who was sent back to the past after pissing off too many people on the internet. Yellow Tony is Tony but from an alternate universe where the Libertarian Moment™ actually happened. I (Red Tony/Future Tony Sent Back To The Past) believe in copyright law; he (Yellow Tony/Alternate Universe Where the Libertarian Moment™ Happened Tony) apparently does not.

  • Echo Chamber||

    See everyone, here's proof that if you feed the trolls, they multiply.

  • Giant Realistic Flying Tiger||

    I am future (just as annoying but in a different political direction) Tony who was sent back to the past after pissing off too many people on the internet. Yellow Tony is Tony but from an alternate universe where the Libertarian Moment™ actually happened. I (Red Tony/Future Tony Sent Back To The Past) believe in copyright law; he (Yellow Tony/Alternate Universe Where the Libertarian Moment™ Happened Tony) apparently does not.

  • Giant Realistic Flying Tiger||

    I am future (just as annoying but in a different political direction) Tony who was sent back to the past after pissing off too many people on the internet. Yellow Tony is Tony but from an alternate universe where the Libertarian Moment™ actually happened. I (Red Tony/Future Tony Sent Back To The Past) believe in copyright law; he (Yellow Tony/Alternate Universe Where the Libertarian Moment™ Happened Tony) apparently does not.

  • Giant Realistic Flying Tiger||

    OH GODDAMN IT SQUIRRELS! FUCK YOU! FUCK YOU! FUCK YOU IN THE ASS AND IN THE MOUTH! I'M A MOTHERFUCKING TIGER IN THIS BITCH, I DON'T CARE HOW MANY OF YOUR ASSHOLES I HAVE TO SHRED BECAUSE BITCH I CAN FLY!

  • SQRLSY One||

    As THE SQRLSY One, I do hereby and alwaysby resemble your biased anti-SQRLSY and species-istic remarks...

  • Giant Realistic Flying Tiger||

    SQRLSY, I thought we were bros, bro. I thought we were bros! And then your friends and family do me like this? Either you've got some traitors, or we aren't the bros I thought we were, bro!

  • Chipper Morning Baculum||

    Holy shit, is SQRLSY One some kind of speaker for the squirrels? I honor you, good sir. Would you care for a beverage?

  • SQRLSY One||

    I speak for the squirrels, as well as the trees; the Lorax got NUTHIN on MEEE!!!

    (Squirrel-hugger as well as tree-hugger, am I, and the fleas don't bother me).

    Yes Sir Dude Sir, Thank You Dude Sir, my FAVE beverage is TIGER BLOOD!!!!

    (I wanna be like Charlie Sheen!)

  • Chipper Morning Baculum||

    You are gonna regret being mean to the squirrels.

  • Mark22||

    Every internet company based in America should just pull the fuck out of Europe.

    Then you are giving the EU what they and their corporate masters want. The EU even tried to spend a few hundred million dollars subsidizing competition with Google and other US tech companies... and failed.

  • Leo Kovalensky II||

    This is extortion. Plain and simple.

  • perlchpr||

    It is. I presume that if Google just told the EU to go fuck itself, they could arrest Google execs if they came to Europe, but other than that, what could they actually do?

  • BestUsedCarSales||

    Probably start taking assets they have in the UK. Which they probably have many billions of dollars in hardware there.

  • Mark22||

    Welcome to progressive government in action.

  • Yellow Tony||

  • Homple||

    I wouldn't mind them loading phones with their bloatware if it was removeable without having to dick with the operating system.

  • DaveSs||

    Straight up Android as Google releases it on their own branded devices lets you remove (or disable) almost everything Google installs, including the Play Store and Search with just a handful of taps and no need to root or alter the device.

    You can also install 3rd party app stores w/o needing to root or alter the device.

    Its 3rd party manufacturers (Samsung, HTC, etc) that include bloatware that cannot always be removed.

  • Rev. Arthur L. Kirkland||

    This week, Trump said: "I think the European Union is a foe, what they do to us in trade. Now you wouldn't think of the European Union but they're a foe."

    Yes, Trump said that (shortly before his obsequious submission to Mr. Putin).

    And right-wing goobers like this McCullagh either believe it, or at least claim to believe it. (After McCullagh's performance at Carnegie Mellon, it's difficult to know how to gauge his assertions.)

    I suspect McCullagh also is a big fan of Sarah Sanders "clarifications."

  • Sevo||

    "Yes, Trump said that (shortly before his obsequious submission to Mr. Putin)."

    So, asshole, are you jealous of Putin or Trump?

  • Giant Realistic Flying Tiger||

    He's not jealous, Sevo. You see, jealousy is the fear that somebody will take something you have away. Since Kirkland obviously doesn't have anything worth coveting, he's obviously not jealous.

    Envious, on the other hand...he's envious in SPADES.

  • Sevo||

    That is a nuance I hadn't considered, and I cannot offer evidence otherwise.
    In fact, he is probably envious of many he denigrates in his self-righteous posts; the sort of compensation you get from those somewhat 'lacking', shall we say.
    Hey, asshole? Stuff it.

  • Mark22||

    And right-wing goobers like this McCullagh either believe it, or at least claim to believe it

    Anti-Americanism has been rampant in Europe for more than a century, in particular among European intellectuals and political leaders. Left-wing idiots like you don't notice because you share their anti-Americanism.

  • Diane Reynolds (Paul.)||

    Microsoft must be sitting back quietly and smiling.

  • Chipper Morning Baculum||

    And now the smile is frozen.

  • Conchfritters||

    Although that little investment in Nokia didn't quite pan out the way that they had hoped.

  • Longtobefree||

    Really? How much of a competitor is Nokia now?

  • Diane Reynolds (Paul.)||

    unlawfully tying its search and browser apps to the Android operating system

    LOL.

  • Conchfritters||

    No shit - they gave their fucking operating system away slavers!!! Phones that would run on some monkey ass operating system use Android because it's fucking free and it works!

  • Diane Reynolds (Paul.)||

    They're just pissed off 'cause MiniTel finally waved the white flag.

  • DiegoF||

    good luck trying to delete Safari, replace Siri with Google's assistant, or even distribute your own app without Apple's explicit permission

    Ugh. I've only ever used Apple products as an occasional guest user but that sounds awful. I understand they're much better than average in their commitment to security so at least that's something--but still none too appealing with their whole closed design philosophy. Hopefully the competition starts blossoming in years to come. Especially a blossoming in the development of free phones; I remember someone here or on Glibs telling me about the encouraging progress on that front.

  • Fairbanks||

    Who gives a rat's ass that Safari can't be deleted? Just stick it in a corner, don't use it and download a different browser.

  • Rockabilly||

    Man, the EU is a big fucking bully.

    This is a protection racket that is 'legal' cause the asshats at EU say so.

    If this was a mob, they'd come in a big car, with big dudes, staring you down until you pissed your pants and promised to give them anything so you won't be harmed.

    And the EU is hurting cause trumps gave them a big fuck you and said pay up to protect your own fucking countries, you asshat freeloading socialist asshat assholes.

  • Diane Reynolds (Paul.)||

    Almost like they're a trading foe.

  • DiegoF||

    I suspect that the European Commission is a puppet of Moscow, since they obviously timed this to completely humiliate everyone who decided to freak out about that comment.

  • ||

    You know what, as a libertarian, I find refreshing? The President declares an entire geopolitical region to be a foe and has zero plans for drone strikes, boots on the ground, or other military intervention. I'm just going to take a moment to enjoy it. Because, while I haven't checked the schedule recently, I think we're due for another intervention in the M.E.

    Seriously, another two years of this and I might vote for the guy. OK, probably not vote for the guy, maybe I'll just hope to God that they find a cure for TDS. Maybe start an orange bracelet campaign or something.

  • Mark22||

    Man, the EU is a big fucking bully.

    Yes, but it's the kind of system Google has spent vast amounts of money trying to institute in the US.

    Google is hoping to become to the US what the massive, sclerotic European corporations are to Europe; and everybody else can just eat shit. It's the Google way.

  • Rich||

    unlawfully tying its search and browser apps to the Android operating system

    "Unlawfully"? To *its* own OS?

  • DiegoF||

    Violates God's law! Downright unnatural, amen amen.

  • DiegoF||

    And now, a reading from the book of Jobs...

  • Leo Kovalensky II||

    Noice....

  • perlchpr||

    *polite applause*

    Not bad, sir. :D

  • loveconstitution1789||

    EU trade restrictions that have been going on for years.

  • ||

    Clearly, the only option is to acquiesce, comply with their demands, and fork over the cash. If we just engineer hard enough, eventually they'll see the light on trade restrictions. As the story indicates: Ireland, Microsoft, and Apple have all bowed and look where it's gotten them! It's what John Galt would've done.

  • loveconstitution1789||

    Freedom isnt free.

    Sometimes, you gotta fight for your right...to partay!

  • Conchfritters||

    Exhibit A why the fucking European economies grow at 1% a year. Who the fuck would want to open up shop there?

  • Mark22||

    Yet, Google has engaged in massive lobbying and spending to turn the US into Europe. Google is run by idiots who think that Europe is something we should emulate. Let them discover first hand what that actually means.

  • David Emami||

    In tech security, there's a concept called "attack surface" -- the sum of the ports you have open through the firewall, services running that can be logged in to and the options for doing so, etc. They're all ways an attacker can get into your system, and you weigh whatever benefit each one gives vs. the increased attack surface you expose.

    Tech companies should treat doing business in a country as exposing attack surface to that country's government. Maybe it's worth the risk, maybe not, but weigh the risks. Basically, politicians and bureaucrats are black-hat hackers, and regulations are malware.

  • Sevo||

    "Basically, politicians and bureaucrats are black-hat hackers, and regulations are malware."
    My business has little to do with IT, other than using it for 'enterprise' applications (and I am VERY careful of suppliers).
    Regardless, every government 'assistance' is recognized as the equivalent of malware and dealt with appropriately.
    It could be hiring someone who will submit an invoice stating the regulation has been mitigated; it's on paper, bureaucrats are happy.
    Never has a government rep been there to 'help you'. Not once.

  • David Emami||

    And apparently my analogy caught the eye of a roving spambot below. My apologies.

  • nortoncomnorton||

    Norton.com/setup provide complete seurity for internet and device.Every business always needed to send the document and details material and everyone wants to sure that the documents that are sending the proper and original format. For it, you can use norton because it provides a special format for business and industry.
    http://nortoncomnorton.com

  • Brandybuck||

    What if Google just pulled out of Europe? Completely? A few firewall settings in Mountain View and suddenly no one in Europe can get to www.google.com?

  • Mark22||

    That's the objective of the politicians and corporations behind this: they want to take over Google's market share.

    I used to care, but given Google's massive support for leftist and progressive politicians, I think this is a good thing: let them get a taste of their own medicine.

  • David Emami||

    Does shielding themselves from EU interference require that, though? If Google closed its offices in the EU and didn't host servers there, in what way would they be subject to EU law? Asking seriously, not being facetious.

  • Mark22||

    Google isn't a charity; they provide services in return for advertising. In order to finance European operations, they need ad revenue, and that usually comes from companies operating in Europe and paying from Europe. Those are subject to EU jurisdiction and enforcement. Much of Google's content comes from accessing other people's servers and physical presence; that is also subject to EU law, can be blocked, and might be enforceable under US-European treaties.

  • BYODB||

    Wow, an article that accidentally noted that Trump might have a point in terms of European trade.


    Of course, just because he got lucky this time isn't a reason to go and slap tariffs on basic economic inputs but this ruling is absurd. It makes me think that Apple has truly greased all the right palms.

  • mashed potatoes||

    They should just start trolling Europe and only sell phones with no preloaded applications to download or connect to the internet. Make everyone get there first applications by wired downloads.

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  • Mark22||

    E.U. Hits Google With $5 Billion Ginned-Up Protectionist Fines. 5 of the 6 largest European antitrust decisions have been slapped on U.S. tech companies

    Given that Google is a huge supporter of statist, authoritarian politicians who want to micromanage our lives, I say let them have a taste of their own medicine. Good going, Europe! Fine them harder!

  • dexter||

    Remember that US justice put some billion dollars fine to european companies because of the imperial concept of "extra-territoriality" of your justice. Payback is a bitch !

  • Mark22||

    Remember that US justice put some billion dollars fine to european companies because of the imperial concept of "extra-territoriality" of your justice.

    If the US can impose billions of dollars of fines on a company, it can only do so because the company is subject to US jurisdiction because it operates in the US, or because treaties give the US the right to do so.

    Payback is a bitch !

    This isn't "payback", this is Europeans being utterly foolish and hurting themselves. It's the kind of ignorant nationalistic fervor European masses are prone to.

    You go girl! Hurt yourself harder! May you get the European phone you so richly deserve!

  • Longtobefree||

    Sow the wind, reap the whirlwind.

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