Google settles with French trustbusters

NOTHER DAY, another antitrust case against big tech. In May alone the attorney-general of the District of Columbia filed a complaint against Amazon, Germany’s competition authority went after Amazon and Google to determine whether they have “paramount significance for competition across markets”, and its Italian counterpart hit Google with a €100m ($122m) fine for restricting access to Android Auto, a version of the firm’s mobile operating system for cars.

And the pace may be picking up. On June 4th both Britain’s Competition and Markets Authority (CMA) and the European Commission, the EU’s executive arm, launched parallel probes to see if Facebook is using the data it collects to give itself an undue advantage in online advertising. The same day German trustbusters opened another case into whether Google favours its newish “News Showcase”, a curated collection of newspaper articles, in its search results. And on June 7th the French competition watchdog announced it had reached a settlement with Google over claims that the firm abuses its dominant position in the market for dishing up online advertisements. Google will pay a fine of €220m and amend some business practices.

In part the regulators are reacting to political winds. “They can do no wrong going after big tech,” quips Justus Haucap of the University of Düsseldorf. America had a similar flurry of tech-related cases last year, when the Department of Justice launched one against Alphabet (Google’s parent company) and the Federal Trade Commission pursued Facebook in concert with state attorneys-general. But other dynamics at work suggest that such cases will become even more common.

For one thing, the competition authorities are increasingly competing among themselves. First in America and now in Europe, all want to leave a mark in tech regulation, observes Thomas Vinje of Clifford Chance, a law firm. The CMA’s new Digital Markets Unit needs to make a name for itself. Andreas Mundt, who heads the CMA’s German equivalent, wants to establish his agency as a pioneer in tech antitrust. The new domestic cases are also an attempt to see off a power grab by the European Commission, which the EU’s draft Digital Markets Act would leave in charge of competition policy.

All this muscle-flexing also points to a “big pivot” in competition policy, says Cristina Caffarra of Charles River Associates, a consultancy—from “ex post” antitrust suits, filed after the fact, to “ex ante” rules that constrain digital firms upfront. Germany’s new competition act, which came into effect in January, was the first to enshrine this approach in law; German cases against Amazon, Google and Facebook make use of it. The CMA’s digital unit is expected to follow a similar path if Britain’s Parliament approves the necessary legislation. If the EU’s Digital Markets Act becomes law, big tech will have to comply with a long list of ex-ante rules.

All this may make trustbusters, particularly in Europe, rely less on a few big investigations and more on a slew of smaller ones—akin to regulation in hoarier industries, in other words. Regulators will move quickly if they think the tech giants have done (or are about to do) something untoward. The hope is that the firms may then think twice before extending their digital dominions by bundling an old product with a new one, say, or using data collected elsewhere to favour their own services.

Don’t hold your breath. In the French case, Google agreed to make life easier for rivals, for example by improving access to data. But this is unlikely to diminish its dominance in ad technology. Investors in big-tech stocks have shrugged off the antitrust onslaught. The likely outcome—a constant back and forth between firms and regulators—is tolerable to everyone.

To see why, consider an older EU case against Google. Three years ago the European Commission fined the firm €4.3bn and forced it to unbundle its search service from its Android mobile operating system. Buyers of new smartphones were presented with a “choice screen” of alternative search services, which bid to be displayed prominently. The winners did not attract many users, most of whom still plumped for Google. On June 8th the commission said that the choice screen will instead rank search services by their market share—hardly an antitrust revolution.

This article appeared in the Business section of the print edition under the headline “New rules of the road”