Google Appeal Against Record EU Fine of £ 3.8 Billion Begins Today As US Business Threatens To Dissolve Company | Scientific and technological news
Three years after receiving a record fine from the European Commission along with an injunction to stop abusing its control over the Android operating system, Google is preparing to go to court.
Back in 2018 the company was fined 4.34 billion euros (3.8 billion pounds sterling) to force phone makers to preinstall apps, including Google Search and Chrome, excluding other search engines and web browsers.
The fine was only a fraction of the 116 billion euros (£ 99 billion) parent company Alphabet recorded in revenue that year, but the real cost to the company was the threat to its revenue future if smartphones land in the hands of consumers without Google already installed applications.
Google’s five-day appeal against the ruling is pending before the European Court of Justice in Luxembourg, where the company hopes to see the Commission ruling overturned in its entirety.
Failure to do so could completely reshape the smartphone landscape, but other challenges targeting Google in the United States pose a much greater risk to the business and could lead to the search giant splitting into several smaller companies.
Break the monopolies
While there is an overabundance of comparisons between the late 19th century oil industry and today’s tech industry, the slow movement of regulators is one of the most striking similarities.
It was in 1890 that the United States Congress passed a law to combat the monopolies that had arisen over the previous half century, but it took more than three decades for this law to be used to dismantle Standard Oil, a company who in 1904 controlled over 90% of America’s oil production.
Standard Oil’s business excelled not only because of its innovations in petroleum refining, but also because the company had eagerly acquired competitors and used its commercial weight to secure deals with railroad companies (they- even a target for early antitrust action) at reduced rates that the remaining oil companies could not compete with.
In a landmark 1911 ruling, the United States Supreme Court upheld Standard Oil as an illegal monopoly and ordered it to split into 34 independent companies. While this power is not available to the European Commission, there is a growing movement in the United States calling for similar actions against tech giants some believe to be guilty of the same anti-competitive practices.
Modern antitrust law
Google is a very different company from Standard Oil, but the alleged injustice of its practices – using its control of Android to force phone makers who want to include the Google Play app store on their phones to pre-install Google Search as well. and Chrome – follows the same pattern of undermining rivals.
The investigation into Google’s coercion of phone makers officially began in 2015, although the Commission made its first inquiries into the company’s practices in 2013 when an association of Google’s competitors calling themselves FairSearch filed a claim. a complaint against its business practices.
The decision came three years later in 2018 and now, three years later, Google’s appeal has reached the European Court of Justice. Thomas Vinje, lawyer for FairSearch and partner at law firm Clifford Chance, told Sky News he expected there to be another appeal after the hearing in Luxembourg.
“Antitrust enforcement alone is not, on its own at least, sufficiently robust, sufficiently effective, to be able to address these truly extraordinary concerns. I am not sure the world has ever been faced with a situation where it is there is such a concentration of power in such a central part of today’s economy, and the antitrust law falls short, ”he said.
“This is largely because these are complex cases,” said Vinje.
“They’re more complex than railroads or petroleum distribution – I’m not saying they’re straightforward – but the problems in Big Tech today are a lot more complicated. So there’s a lot more room for it. darkening … and dragging things out.
“So under the very proper rights that defendants have in these cases, the cases are just taking too long.”
What is Google’s response and appeal?
Google, which claims that the most popular search term on competing search engines such as Bing is the word “Google” itself and which controls over 90% of the web search market, takes issue with the claims. Commission regarding its dominance, although that will not feature prominently in its arguments next week.
During a press briefing before the hearing, the company told reporters that it believes a lot has changed since the Commission issued its decision.
Key to Google’s appeal is the argument that its control ensures that Android is a platform that can run on millions of smart devices made by different manufacturers, increasing the economic benefits for developers – including manufacturers of competing web browsers like Opera, which backs Google’s appeal – and ultimately consumers.
Google will note that a revenue-sharing agreement it had with phone makers and mobile network operators, cited as an illegal contractual restriction by the Commission, ended in 2014.
The company also strongly contests how the Commission calculated the fine of 4.34 billion euros (£ 3.8 billion), something which the Commission said was “calculated on the basis of the value of Google’s revenue from search advertising services on Android devices “within the European Economic Zone.
What is the threat in the United States?
Even if Google succeeds in overturning or modifying the Commission’s decision, it faces three other challenges in the United States, backed by tough powers to fight monopolies.
The first complaint was filed last October in a case led by the Trump administration’s Justice Department and joined by 11 states – albeit with apparent bipartisan support – accusing Alphabet of “illegally maintaining monopolies in the markets general research services “.
It followed a Congressional report that accused Amazon, Apple, Facebook and Google from monopolize the digital market and recommended that antitrust laws be used to break them.
Two more cases were brought against Google in December.
One of the 35 state attorneys general accuses the company of anti-competitive practices in order to maintain its dominance in research, while another filed by the 10 state attorneys general focuses on the company’s monopoly power over digital advertising markets.
Google has denied engaging in anti-competitive practices.