Despite Google record fine, ‘super-monopolies’ unlikely to change much

2017-06-27-google-fine

Silicon Valley behemoth Google was hit with a record €2.4 billion ($2.7 billion) fine Tuesday from the European Union for improperly promoting its own services in search results, and ordered to change its practices within 90 days or face further penalties.

“We respectfully disagree with the conclusions announced today,” Google’s general counsel reportedly said, adding that the company would “consider an appeal” of the fine. Yet while the amount is more than twice as high as the previous record, an appeal of the European Commission’s finding that Google promoted its own shopping service over rivals may not prove practical. $2.7 billion is a staggering amount of money for most people to even conceive of, but it is small change for a company like Google, which pulls in over $90 billion annually in revenue.

“As a shareholder of Google you’re looking at this and saying: ‘We won again,'” venture capitalist Roger McNamee told CNBC.

“Google, Facebook, Amazon are increasingly just super-monopolies, especially Google and Facebook. The share of the markets they operate in is literally on the same scale that Standard Oil had … more than 100 years ago — with the big differences that their reach is now global, not just within a single country,” McNamee said.

“The reality is that this fine is not large enough to change Google’s behavior. The only thing that’s going to change it will be regulations that actually say you can or cannot do something. The fines just aren’t large enough to move the needle. And in the United States there is no prayer of any regulation, so Europe is the only place that can happen.”

Indeed, as Klint Finley of Wired notes:

The big issue for Google isn’t necessarily the fine, or even the change to its shopping listings in and of themselves. It’s the mere fact that regulators are forcing it to change how it handles search. The company has been retooling its search results to be more than just a list of websites. As Google expands into new areas, such as voice-controlled virtual assistants, it seeks to provide people with what they’re looking for directly, whether that’s an answer to a question, the address of a restaurant, or a list of nearby movie showings. Today’s order chips away at that idea by opening the door to more lawsuits.

Finley is not alone in suggesting that more lawsuits could be forthcoming.

“Antitrust experts and tech executives say the ruling, in particular, could be precedent-setting in instances where tech giants have become gatekeepers for our digital lives,” writes Sam Schechner of the Wall Street Journal.

Others have framed the EU fine against Google as primarily a public relations problem for the company.

“Given the depth of Google’s pockets, this is by no means a commercial disaster but it has the makings of a brand disaster. Google has always presented itself as ‘the good guy’ of technology, but if this record fine stands then it would be harder for them to argue that,” Rupert Bhatia, director of PR at crisis management agency Rhizome Media reportedly said.

Google may be a huge enough company for a $2.7 billion fine to barely make a dent, yet the PR ramifications of the ruling may indeed haunt the tech giant, whose motto “Don’t be evil” often seems more like a mantra to repeat as a reminder not to give in to an urge rather than any kind of statement of principles.

“The way that Google’s product works makes its anti-competitive behavior much more obvious” than Facebook’s, McNamee pointed out in commenting Tuesday on the EU fine. Yet there is also something to be said for The Atlantic contibuting editor Ian Bogost’s contention that “For Google, Everything Is a Popularity Contest.” He explores the company’s self-referential and self-serving approach to what counts as important information in an in-depth article on the “the limits of the search giant’s philosophy,” also published Tuesday.

“It’s as if Google, the company that promised to organize and make accessible the world’s information, has done the opposite,” Bogost writes. “Almost anything can be posted, published, or sold online today, but most of it cannot be seen. Instead, information remains hidden, penalized for having failed to be sufficiently connected to other, more popular information. But to think differently is so uncommon, the idea of doing so might not even arise—for shoppers and citizens as much as for scholars. All information is universally accessible, but some information is more universally accessible than others.”

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