Europe Googles ‘monopoly’: A defence of giving preferential treatment to clients is hardly living up to the Don’t be Evil motto

European politicians may vote this week to force the world’s biggest search engine to be broken up. But Andrew Dewson asks if the biggest risk to the company is bad publicity

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The Independent Online

The European Parliament looks determined to hand Google a Thanksgiving turkey on Thursday when it votes on legislation that could result in the break-up of the world’s largest search engine, at least within its jurisdiction.

If the measure gets enough support it won’t change anything overnight, but it is likely to have some influence on the EU’s new Competition Commissioner, Margrethe Vestager, who is less than a month into the job. With pressure likely to continue coming from France and Germany, the two largest EU economies, Ms Vestager will face a tough decision on whether to act or not.

So, if Google is really living up to its company motto, “don’t be evil”, why does the EU want to break it up? There is little doubt that this is the ultimate goal of legislators backing the vote – who have some powerful allies including Rupert Murdoch and Mathias Döpfner, the chief executive  of Axel Springer, both of whom have spoken out against Google’s use of its position within publishing. The man behind the legislation, German MEP Andreas Schwab, also works for a law firm that has several clients in the German publishing industry.

Supporters of the legislation want to see Google split into two businesses, one that manages its search engine and another that manages its many other subsidiaries. They are mainly concerned, publicly at least, about monopoly and neutrality, with four key concerns first published in 2012. Monopoly is not an uncommonly used word when talking about the economies of the states that make up the EU. Europe is full of monopolies, state-run and private. But for some members of the EU, especially the powerful Socialist voting block, Google is one monopoly too far.

It is important to remember that the European Parliament is not the same as the Competition Commission. It has limited powers in areas affecting commerce, while Google has very deep pockets and will probably have the support of the US government. That’s a battle in which Google is bound to fancy its chances, particularly as Washington reached a settlement on similar anti-competitive charges in early 2013.

As for the Google response to the vote, it has declined to make any official comment although it is clear from a speech made by chief executive, Eric Schmidt, in Berlin in October that the company will fight back hard. Mr Schmidt used several references in that speech to point to what appeared to be unassailable technology powers – Yahoo, Nokia and BlackBerry – whose power was rapidly diminished not by legislation but by superior competition. “Someone, somewhere, in a garage is gunning for us,” he said.

The last time the EU tried to take on an American tech giant it chose Microsoft. Back when the computing marketplace was dominated by personal computers, Microsoft bundled Internet Explorer in with Windows in an attempt to corner the browser market in the same way that it had cornered the operating system market. The EU failed to force Microsoft out of it, but Microsoft became more cautious and ended up getting beaten at its own game by more nimble, innovative start-ups.

The EU’s complaints are that Google priorities its own specialist businesses over competitors in some search engine results, which is where neutrality comes in. For example, it has several niche search operations covering fields such as restaurants and news, and can treat these services differently in general search results.  It also accuses Google of manipulating search results, copying content created by third parties, such as restaurant or travel reviews, and imposing restrictions that affect the way search results, and thus services supplied by competitors, are listed.

This can give Google’s own businesses a huge advantage. Likewise when it launches a new venture or when buying an existing one, which is does on a regular basis. The EU claims this is damaging to rival companies, all of which want their own products at the top of a Google search result. 

It’s not just about manipulating results or content, putting its own companies at the top of search results. Other organisations, including the UK-based Foundem, have forcefully rejected  Google’s proposed remedies for the commission’s concerns.

The problem for Google is that its neutrality, or at least the perception of its neutrality, is the main reason it controls approximately 90 per cent of the search engine market in Europe. Consumers like to go somewhere where they believe they are getting an impartial response, not where companies can pay to play.

So to defend its right to give some customers preferential treatment, as Google may end up doing, could turn out to be a poor business decision despite the obvious short-term benefit. That is the antithesis of the thinking behind “Don’t be evil”, which was adopted as a way for the company to focus on long-term investment and intellectual challenges for the greater benefit of society rather than short-term profits.

Back in 2012 the EU seemed to be happy to look for a negotiated solution, which is still the most likely result no matter how the Parliament votes on Thursday. The prospect of forcing a tech giant to break itself up in Europe has implications for Google’s global business, which has a market capitalisation of $360bn.

If the European Parliament votes in favour of the legislation, as expected, don’t expect much Thanksgiving cheer from Google or the US. This battle is far from over.