Have you heard the term Gafa yet? It hasn’t caught on here in the United States --- and I’m guessing it won’t --- but in France, it has become so common that the newspapers hardly need to spell out its meaning. Everyone there already knows what Gafa stands for: Google-Apple-Facebook-Amazon.
In America, we tend to think of these companies as four distinct entities that compete fiercely with each other. But, in Europe, which lacks a single Internet company of comparable size and stature, they “encapsulate America’s evil Internet empire,” as Gideon Rachman put it in The Financial Times on Monday. Nine out of 10 Internet searches in Europe use Google --- a more commanding percentage than in the United States --- to cite but one example of their utter dominance in the countries that make up the European Union.
Not surprisingly, this dominance breeds worry in Europe, however fairly it was achieved. The French fear (as the French always do) the imposition of American culture. The Germans fear the rise of an industry more efficient --- and more profitable --- than their own. Industry leaders, especially in publishing, telecommunications and even autos fear that the American Internet companies will disrupt their businesses and siphon away their profits. Europeans worry about the use of their private data by American companies, a worry that was only exacerbated by the Edward Snowden spying revelations. There is a palpable sense among many politicians, regulators and businesspeople in Europe that the Continent needs to develop its own Internet platforms --- or, at the least, clip the wings of the big American Internet companies while there’s still time.
I bring this up in the wake of the decision by Margrethe Vestager, the European Union’s relatively new (she took office in November) commissioner in charge of competition policy, to bring antitrust charges against Google, the culmination of a five-year investigation. The case revolves around whether Google took advantage of its dominance in search to favor its own comparison-shopping service over those of its rivals. Vestager also opened an inquiry into Google’s Android mobile operating system --- and said the European Union would investigate other potential violations if need be.
Not long after announcing the charges, Vestager made a speech in Washington. “We have no grudge; we have no fight with Google,” she said. “In all our cases, we are indifferent to the nationality of the companies involved. Our responsibility is to make sure that any company with operations in the territory of the E.U. complies with our treaty rules.”
Well, maybe. But it is also true that, to an unusual degree, this investigation, especially in its latter stages, has been driven by politics. The political rhetoric around Google in Europe has been so heated that had Vestager decided not to bring a case, her political standing might have been weakened, “probably compromising her ability to pursue effectively other high-profile antitrust cases,” wrote Carlos Kirjner, an analyst with Sanford C. Bernstein & Co.
Consider, for instance, what happened last year when Google was close to settling the case with Vestager’s predecessor, Joaquin Almunia. Google had agreed to make changes that it found cumbersome and intrusive, but it wanted to get the case behind it and move on. Instead, European politicians, especially in France and Germany, and prodded by Google’s competitors, complained that Almunia was being too accommodating to the company. “The offers by Google aren’t worthless, but they’re not nearly enough,” one such politician, Gunther Oettinger of Germany, told The Wall Street Journal.
At the time, Oettinger was serving as the European Union’s energy commissioner, making him one of the 28 commissioners who would have to approve any settlement. By September, he had been nominated for a new job: commissioner for digital economy and society. At a hearing before a European Parliament committee, he took credit for blowing up the Google settlement.
As the digital commissioner, Oettinger has continued to advocate for what has become the German position on Google --- namely that Google’s power must be reined in. In a speech two weeks ago, he essentially said that Europe should begin regulating Internet platforms in such a way as to allow homegrown companies to overtake the American Internet giants. And on Thursday, a document leaked from his office to The Wall Street Journal that outlined just such a plan, claiming that if nothing was done, the entire economy of Europe was “at risk” because of its dependency on American Internet companies. There have even been calls in Europe to break up Google.
Europe has every right to regulate any company and any sector it wants. And it can bring antitrust charges as it sees fit. But given the rhetoric surrounding Google and the other American Internet giants, suspicion of Europe’s real motives is justified.
From here, the European charges against Google look a lot like protectionism.
