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Vestager's Misguided Google Crusade

July 16, 2018 in Economics

By Massimiliano Trovato, Alberto Mingardi

Massimiliano Trovato and Alberto Mingardi

MILAN — “Your tax lady, she really hates the
U.S.”

That’s how, with his typical touch, Donald Trump reportedly
voiced his concerns about the harsh treatment of American companies
by the EU to a top European official.

The tax lady is European Commissioner for Competition Margrethe Vestager.

While it’s painful to think that the U.S. president is unable to
refer to one of Brussels’ foremost figures by name, or at a minimum
get her job title right, Trump’s attitude toward Vestager is
unlikely to change anytime soon, as she prepares to hit Google with
a fine of up to $11 billion — the largest antitrust penalty
in Europe to date.

Android may be dominant,
but there’s no reason to believe consumers are being
harmed.

But this is one area where Trump gets something right. This
crusade of Vestager’s against Google is misguided at best — and more
likely to harm European consumers than to help them.

The case is part of a three-pronged probe into Google’s
business practices. The first inquiry dealt with Google Shopping, Google’s
price-comparison service. The Commission concluded the company had
abused its market power by discriminating against competing
services and “Big G” was fined €2.4 billion.

The second concerns Adsense, Google’s advertising network, and
is still is underway. The third targets Google’s mobile operating system, Android.

The tech giant is charged with smothering competition in the smartphone industry by
imposing unreasonable restrictions on device manufacturers looking
to license its software, including a requirement to preinstall a
whole set of Google apps and to use Google’s search engine as the
default option.

Vestager inherited the Google Shopping and Adsense proceedings
from her predecessor, but she launched the Android investigation on
her own. From a political perspective, this case is bound to define
her entire legacy as Europe’s antitrust czar. So, it’s unfortunate
for her that the case seems to have been built on shaky
grounds.

While it’s true that Android is used by more than 80 percent of
smartphones worldwide, the history of the tech sector shows us that
such arrangements can change very rapidly. At one point or another,
Yahoo, Nokia and even MySpace were all thought to have conquered
indisputable monopolies. Now we speak about them in the past
tense.

Too often regulators assume that in tech markets the past is a
good indicator of the future. It is not. And so, in assessing
Android’s dominance it’s important to look carefully at
the mobile market and how it affects consumer welfare.

Android is a Google product — but it’s also much
more …read more

Source: OP-EDS

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