Yesterday regulators in the EU charged Microsoft with a breach of promise to consumers for not having provided rival browser choices. The ruling, handed down by EU antitrust commissioner Joaquin Almunia, paves the way for fines stemming from Microsoft’s 2009 settlement agreement. Even more significantly, the scope of the EU commissioner’s authority may well snag other global tech companies.
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This dispute has already cost Microsoft more than $1 billion euros. Almunia, the EU’s antitrust watchdog, made no bones about slamming the world’s biggest software company for failure to comply, in a news briefing held on the subject, Almuria told reporters:
“If companies enter into commitments, they must do what they are committed to do or face the consequences. Companies should be deterred from any temptation to renege on promises or even to neglect their duty.”
The import of this decision where Microsoft is concerned, is one thing. Having to slightly modify Windows 8 is nothing compared with what regulators can decide on. A larger set of issues exist for similar companies doing business internationally though. While the general public may consider officials like Joaquin Almunia overly conservative, even archaic, nothing could be further from the truth.
One of the EU’s most influential commissioners, and head of the progressive think tank Laboratorio de Alternativas, Almunia represents a mindset that not only seeks to balance competition in favor of consumers, but to change society progressively. Microsoft and other dominant players such as Google, any company approaching monopolistic control of a market, has a major hurdle to overcome in the years to come.
I mention Google for a number of reasons. First, Reuters’ revelation that most of the officials at the U.S. Federal Trade Commission (FTC) believe an antitrust suit should be brought against Google, this should be a red flag for the world’s most dominant Internet company. The point of potential contention there being that Google intentionally and “illegally” used their dominant position in Internet search to harm their competitors. Hold this thought for a moment. The chart below from StatOwl shows the high end calculations for Google’s market share. One has to ask; “What is the ultimate purpose of dominating a market?”
The Sum of All Corporate Fears
Taken to the international level, dominant players like Google have huge problems when all is said and done. Already, EU commissioners have slammed Google over changes to the company’s privacy policies. Some 30 European data protection commissioners contend Google allows ‘uncontrolled’ and non-consensual use of personal data. Anyone who surfs with Chrome of who uses Gmail and other Google products, knows the Internet giant is “profiling” them for at the least serving ads. The EU commissioners believe Google must roll back their operation to comply with EU rules. Now, insert unfair competition in search, and the EU’s most influential decision makers stand in front of Google’s revenue stream, but more importantly Almunia and his fellows stand to create a presedent the FTC and other bodies cannot ignore.
As we begin to see, the relatively unbridled growth of tech giants may have reached its zenith. Companies like Microsoft, Google, and some others, often operate in the gray area of competitive business where watchdogs and safeguarding mechanisms have to come into play. For years Google has offered so called “free” services that essentially entice users to take advantage. Some would say these free services are designed to “bait” potential customers for later revenue potential. If you look at Google “simplifying” signups for YouTube and Gmail (etc.) by streamlining privacy controls, it’s pretty easy to suggest some Machiavellian approach to gaining more control of user data. The same goes for Microsoft dragging their feet on the competitive browser issue.
While all this litigation seems a waste to the consumer, the cost of doing business fairly cannot be considered wasteful, not if we as a society really want fair and square business practices. Google, Microsoft, and the rest of the corporate world understand this all too well. However, pushing the limits too far is unwise. Microsoft shareholders stand to lose as much as €7 billion euro if the Competition commission decides they are in full breach. As for Google, greater reach dictates even greater possibility of lost revenue.
And the Word Was.... No
Finally, Google contends they never manipulate anything basically. For those in the world of tech, statements by former chairman Eric Schmidt to that effect, they seem ludicrous. The soul of the geek that creates such tools, “tweaking” and manipulating is scientific glee. That aside, Google is already discussing how they can avoid as much as €4 billion euro in sanctions over Microsoft and other complaints EU search is as unfair as the U.S. contingent.
A word from Joaquin Almunia (above at the press conference) at this juncture will be critical for Google, Microsoft, . And if you think I am wrong this article on The Hill illustrates just how afraid Google is, and how political your Internet search partner is too. According to disclosure by the company, some $13.1 million has been spent already this year on lobbying. The key thinking here has to be questioning “does Google use search to unfairly position their own products.” No doubt Google execs are at this moment pouring these regulations as to how the EU sets fines for antitrust rulings.
Interestingly, the company claims that even if their search did boost Google products, it would not be illegal. Or in other words, unfairness has nothing to do with legality. For many it would seem Google founder Sergey Brin’s “Don’t do evil” is a matter for interpretation.
We have to admit at some juncture, anti-trust litigation may be all about consumer trust.
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