Opinion
European Union Competition Commissioner Joaquin Almunia speaks during a news conference at the EU Commission headquarters in Brussels January 15, 2014. The European Union wants Google to come up with more concessions within weeks if it is to avoid formal charges in an investigation into alleged anti-competitive behaviour, a top official said on Wednesday. REUTERS/Francois Lenoir (BELGIUM - Tags: POLITICS BUSINESS) - RTX17F1M European Union Competition Commissioner Joaquin Almunia speaks during a news conference at the EU Commission headquarters in Brussels January 15, 2014. The European Union wants Google to come up with more concessions within weeks if it is to avoid formal charges in an investigation into alleged anti-competitive behaviour, a top official said on Wednesday. REUTERS/Francois Lenoir (BELGIUM - Tags: POLITICS BUSINESS) - RTX17F1M  

How the Google-EC Competition Deal Harms Europe

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Scott Cleland
Chairman, NetCompetition
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      Scott Cleland

      Scott Cleland is Chairman of NetCompetition® a pro-competition e-forum supported by broadband interests and President of Precursor LLC, a research consultancy for Fortune 500 companies. He is author of the book: Search & Destroy Why You Can’t Trust Google Inc.

Europe is the big loser in the Google-EC competition settlement.

Rather than enforcing European competition law against systemic abuses of dominance by the single most dominant company in Europe, this political deal surrenders inexplicable concessions, including defining Google’s 90 percent share as not dominant, claiming its multiple abuses of dominance are legal and implying Google did nothing wrong.

Simply put, this expedient settlement imagines Europeans are better off captive to an unfettered dominant Google than holding Europe’s leading corporate scofflaw to account.

This deal’s tagline should be, “Europe Online Powered by Google.”

Rather than prohibiting abuses of dominance under EU law, this settlement ensures that Google will become much more dominant over the next five years. No company, including Google, really thinks this deal’s labeling of search results will result in any material difference in marketplace outcomes.

The worst part of this deal is it throws Europeans under the bus.

The fountainhead of all of Google’s market and political power in Europe flows from its 90 percent dominance of Internet search and search advertising, and its unfettered ability to discriminate and self-deal to dominate more and more online markets like mobile, mapping, etc.

This Google-driven deal wholly evades accountability to EU competition law.

If Googleopoly can negotiate a “get out of jail free” card for systematically abusing its exceptional dominance, what political message does that send to the rest of the European Commission that is trying to hold Google accountable for gross violations of data protection, tax, and copyright law?

The privacy authorities of Germany, France, U.K., Italy, Spain, and the Netherlands are all furiously trying to get dominant, data-voracious, Google to obey European privacy law and respect EU data protection sovereignty. This sweetheart settlement suggests that Google’s lobbyists have more political influence with the EC than these countries do as members.

Europeans are very upset about pervasive NSA spying. They hoped potential revocation of the US-EU data protection safe harbor could be a lever to get privacy disrespecting U.S. firms like Google to better protect EU data. Now they must worry the EC-Google privacy-evasion fix is in here as well.

European tax officials are indignant with dominant Google’s aggressive tax stance that the company does not owe any taxes on Google’s advertising profits from tracking Europeans’ private behavior.

Google’s shameless position is they should owe no EU taxes, not even on profits made from its now-sanctioned abuses of dominance.

In a nutshell, Google takes Europeans private data without authorization, profits from it handsomely, but should owe no European taxes for this partially ill-gotten gain in Europe. Game, set, match to Google’s EC lobbyists.

Last but not least, many European content creators have long accused Google of profiting from the use of their copyrighted material without permission or compensation.

Tellingly, after several years of refusing to compensate Belgian media for profiting off the theft of their content, Google conveniently agreed to a multi-million Euro payment to the EC Brussels-based media at the exact time it knew that the Brussels-based EC antitrust investigation was coming to a head.

At a minimum, Google’s self-serving timing created the public perception of trying to buy favorable coverage and political support for a Google-favorable, settlement deal – which is what they got.

True or not, Google’s Belgian content settlement creates the perception of a quid pro quo that Google’s vast EC lobbying operation helps those that help them.

In the short term, this expedient deal most meets the political needs and schedule of the Directorate General for Competition.

However, it does so at the expense of what’s best in the long term for Europeans. That’s because it makes the jobs harder for all the other directorates and countries that still have the difficult responsibility of getting Google to respect EU rule of law and European sovereignty going forward.

When Google predictably ignores Europeans’ legal concerns in the future, they can thank the Directorate General for Competition for throwing them under the bus.

In sum, the biggest problem with this expedient Google-EU settlement, which allows Google’s leadership to boast they have done nothing wrong, is that it affirms the view that Google is so politically well-connected that it is largely untouchable, and effectively above the law in the EU.

Getting away with a 90 percent share in dominance, an abuse of dominance, and no admission of wrongdoing will only embolden Google to thumb their nose at competition, privacy, tax, and copyright law enforcement going forward.

The old adage is true, “One gets the behavior one tolerates.”

Scott Cleland is President of Precursor LLC, a consultancy serving Fortune 500 clients, some of which are Google competitors. He is also author of “Search & Destroy: Why You Can’t Trust Google Inc. Cleland has testified before both the Senate and House antitrust subcommittees on Google and also before the relevant House oversight subcommittee on Google’s privacy problems.