06/10/2014 11:22 am ET Updated Dec 06, 2017

For Germans, Google Is a Digital Feudal Lord


Germans are not at a loss for figurative language when they put their fear of Google into words. Some called it "the kraken," others talk of "digital feudal lords" demanding "bridge tolls" from other web-based companies that depend on them. The latter appraisal came from former German Minister of Economic Affairs Rainer Brüderle (FDP), who called for Google to be broken up.

SPD leader Sigmar Gabriel, who now heads the economics ministry, recently expressed the same view cloaked in other words. In the daily Frankfurter Allgemeine Zeitung, Gabriel discussed the possibility of "unbundling" Google, as the federal government recently did in the case of the energy grid. Gabriel's experts have already considered the details. "Google would no longer be allowed to link the search engine function to paid advertisements," an economics ministry staffer explained.

This step would amount to the end of the California company's successful business model. In Germany, Google's share of the Internet search market is 90 percent. The company earns lots of money by selling targeted advertisements. But exactly this interaction of advertising and omnipresence among Internet users is what has given rise to one of the key objections. The accusation: the corporation is abusing its market power and manipulating search engine results to its own advantage. Gabriel would like to ascertain whether or not Google is systematically squeezing out its competitors -- and he has the support of Europe's highest cartel authority.

By German standards, Google's accusers are weighty opponents. Major publishers Springer, Funke and Madsack, who control a substantial share of the newspaper market, have drawn up a "Manifesto for an Open Internet Project" along with other market participants and lodged a complaint with the EU Competition Commission against the U.S. corporation. They argue that Google is manipulating the market.

A second conflict between the two sides smolders in the background of this conflict. The publishing companies want Google to pay for newspaper content displayed by its search engine. Google has declined to do so.

On other issues, the publishers and the search engine operator are able to get along. Google is cooperating with some newspapers to develop an Android app for an electronic newsstand. That could help the media sector -- under pressure from the Internet -- to push through digital subscription strategies for its products

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But the overall sentiment in the face of Google's market power is skepticism. The EU Commission is due to reach a decision this summer on possible breaches of competition rules by Google in an investigation that began in 2010. Deutsche Telekom has just joined the alliance of more than 400 companies preparing the new complaint against Google to the EU.

Electrical enginering giant Siemens is also part of the alliance. CEO Joe Kaeser is already anticipating a "digital war for data." However, to a certain extent he is also motivated by self-interest. In his plans for restructuring Siemens, Kaeser is betting on networked production plants: Industry 4.0. In the industrial technology of the future, the new generation of machines will be able to communicate with each other and data streams will play a key role. Little wonder that Kaeser sees every trend toward monopolizing the power over data in the Internet as dangerous.

Google's enormous data pool is the second reason for the German companies' anxiety. Through its subsidiaries, partnerships, participations and the search engine itself, lots of information about individual users lands in Google's databases. This pays out in advertising, because ad placement and content can be targeted very precisely to potential customers.

But Google is gathering more and more data, including the movement profiles of map service users. Following the takeover of Nest, which manufactures thermostats for household technology, it will soon even have data on consumers' energy budgets.

The first partnerships between Google and car manufacturers, involving the installation of its smartphone operating system Android in vehicles, are already established. Progress there would allow it to establish a base in one of Europe's core industries. Critics are wary of that scenario despite the California company's "do no evil" motto. In general, it is the scale and scope of Google's activities that concern German and European critics.

While European companies have to comply with comparatively strict data privacy protection laws, Google's hunger for information seems to know no bounds. That has led to demands for uniform data privacy protection standards for all participants in the market. Otherwise, the European companies reason, Europe will be dependent on the Americans in the digital age.

One indication of the change of mood with respect to Google is a recent decision by the European Court of Justice likely to go down in economic history as the "right to be forgotten." The judges found in favor of a complainant who wanted to have Google delete a link to personal information about him that was no longer valid. Now the company will probably have to prepare to handle thousands of applications to delete data.

However, the authorities are still having a tough time when it comes to legal action against the Internet giant. The head of the German Federal Cartel Office, Andreas Mundt, is well aware of Google's market power, but says he cannot do much to change the situation as long as the EU is investigating the matter. Mundt has already successfully flexed his muscles against Amazon's market power. The online retailer is no longer able to prevent its sellers from offering their products for a lower price elsewhere.

© 2014. The German Times