Google in the EU Regulatory Crosshairs

Google dominates conventional search with 67% for PCs and 83% for mobile in the US.  Worldwide through its Android mobile operating system, it serves 80% of smartphones.  Google is newsworthy because of its scale and the business practices it uses to interact with consumers and businesses.

Recently, Google earned media coverage due to allegations of European tax avoidance, and in France, due to its incomplete implementation of the “right to be forgotten” (RTBF).  Google is in a protracted court battle over the use of Oracle’s open-source Java code, and the EU is pursuing an anti-trust case against Google for its inclusion of search and other popular apps into Android.

Most consumers regard Google’s practice of compiling a thick dossier on each consumer and, “tracking you even when you’re not signed in and follow[ing] you around the Internet to serve you with “relevant” advertising and content,” as noxious. You can remove Google’s information collection and tracking tentacles but the procedures are complex.  Google also attracts attention through its many non-core businesses (e.g. a pay-day lender) that attract occasional media attention when they conflict with Google’s core businesses.

The EU seems convinced that Google is determined to “preserve and strengthen its dominance in internet search” by tying its popular apps into Android thereby forcibly introducing consumers to its apps and skipping over the usual process of persuading them to want the apps.

Tying is a tool commonly used by businesses to pull a new product into the market on the back of a better-established, more popular product.  In the Bell System days past, AT&T showed intolerance for connecting to anything but its own brand of telephones, and Microsoft’s long gone inclusion of a browser as part of its operating system were actions considered antitrust violations by some regulators at the time.

Earlier, the EU accused Google of anti-trust behavior because of using its dominance in the internet-search market to steer consumers away from rival offerings and towards its own comparison-shopping service.  This followed similar complaints that Google gave superior placement to its own services on the results pages following a search.  Ironically, under the RTBF regulations, the EU demands that Google tinker with results by excluding selected results from any visibility.

In the near future, inclusion of Google Assistant in the Android operating system may be a tempting move for Google.  There are four good voice activated assistants that are expanding in capability: “Google, Apple, Amazon and Microsoft are all in the game with Google Assistant, Siri, Alexa and Cortana, respectively.”  In English, Google currently has a distinct edge in its Assistant’s listening ability and thus a higher percentage of useful answers.  The state of development for Asian and European voice assistants may be different, and the challenge of integrating Google Assistant into most Android operating system markets may be very steep.  To the extent that Google does integrate the Assistant into Android in Europe, we can expect the EU to expand its antitrust objections.  

When crafting its marketing strategy, it is unclear how much thought Google gives to prospective regulatory push back.  Perhaps not enough, because regulatory meddling seems to grow faster than Google.

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