EU Antitrust Action Today Is Just the Beginning of Google's Troubles in Europe

04/15/2015 10:55 am ET | Updated Jun 15, 2015

The announcement today that the European Competition Commissioner has launched an official antitrust action against Google promises to be just the first step in a likely escalation of actions against Google and other big-data platforms increasingly dominating the online -- and, increasingly, the offline -- economic landscape.

The initial probe by the European Commission is centered on how Google systematically uses its search-engine dominance to favor its own e-commerce services at the expense of rivals. As the Commission notes in its initial filings, Google's online shopping services failed miserably until it began favoring its own shopping services in its search-engine results, so its "conduct may therefore artificially divert traffic from rival comparison shopping services and hinder their ability to compete, to the detriment of consumers, as well as stifling innovation." In the European legal process, this initial "Statement of Objections" will give Google 10 weeks to respond before a more formal decision on whether Google violated the law will be made.

In this, Europe would be addressing the core issue of search-engine manipulation that the United States Federal Trade Commission said was not an antitrust problem in its 2013 decision, but then Europe will have the advantage of actually addressing the evidence from the FTC's own staff report that the FTC itself buried.

More importantly, this looks to be just an initial step for the European Commission. At the same time, the EU has opened a separate formal investigation into how Google uses its dominance of the Android mobile operating system to force handset manufacturers to install its apps and otherwise "abused a possible dominant position in the field of operating systems, applications and services for smart mobile devices."

This resurrects an issue that four years ago briefly dominated debate on Google's abusive practices, after a private lawsuit's discovery revealed internal Google memos highlighting a systematic campaign by the company to use Android to coerce manufacturers into using its services, in that case its geolocation services. As I wrote at the time in "Window Into Google's Monopoly Maneuvers," the memos revealed "Google executives' views on how they sought to reinforce Google's monopoly and collect personal information from its users." Google literally forced manufacturers such as Motorola and Samsung to suspend shipping devices until they removed a rival geolocation service by its Skyhook competitor, in the name of remaining "compatible" with Android standards. As Google's Dan Morrill had sad in an email, pretending that the issue of "compatibility" with the Android system was the reason for excluding Skyhook was hardly a persuasive argument to allied manufacturers:

[I]t's not like it isn't obvious to the OEMs [manufacturers of the smartphones] that we are using compatibility as a club to make them to things we want. (p. 116)

Using compatibility as "a club" will no doubt be a red flag for antitrust regulators in Europe -- even if our own regulators have given Google a pass at every turn.

Of course, Google wanted its search apps and other services installed on Android devices, no doubt a focus for the European Commission, but the key is why this was so important. It's not just to generate initial additional search and advertising revenue on mobile devices; it's also that each of those apps collects crucial additional data on each user, which strengthens the ability of Google or any other data platform to more effectively make money off each user -- "monetize the relationship," in Silicon Valley parlance.

And this is where the European Commission may be taking the first steps towards even bolder action in the online world. Just last week, EU Competition Commissioner Margrethe Vestager said that in addition to the current antitrust probe, the EU will be exploring how companies' control of personal data gives them unfair power in the marketplace. In a speech, she argued:

Some companies, while apparently not generating euros or cents, still make money because holding very large volumes of data generates value. ... Many people still don't realize that sites that appear to be free are actually paid for by the information you provide through your searches and behavior online.

The EU has never looked at control of personal data as an antitrust issue, so this represents a critical shift by the Commission. As regulators begin focusing on this issue, one we've argued at Data Justice is critical for understanding growing exploitation and economic inequality in the new information-driven economy, Google and other big-data platforms are only going to come under increasing political fire.

The action today is ultimately going to be less about one company than about Europe signalling that a totally new approach to promoting competition and equity in data-driven markets is needed. In a speech this week, EU Data Minister Günther Oettinger argued for just this kind of new approach to regulation by European regulators, one that replaced "locked environments and platforms" with platforms that "must be more open and interoperable."

Part of this is fear by Europe that U.S. companies will dominate the future, but this fear should be one joined by a range of industries and individuals in the U.S. as well -- a fear that a handful of companies end up dominating the whole economy at the expense of all consumers.