Nicholas Hirst
Suing a tech company may be the easy part.
Winning before everyone loses interest is hard.
The Socrates-style question surrounding the European
Commission’s new case against Google’s Android operating system is not whether
the company abused its power over mobile devices, but whether people will even
be using smartphones and apps in five years.
Already, the Commission’s ongoing 2010 case against
Google’s search engine is less important to the tech industry because customers
are switching from PCs to mobile devices. The regulators’ 20-year antitrust
battle over Microsoft’s Windows also ended with a yawn as consumers found other
ways to download rival music and browsing software. And while the Commission
keeps going after chipmaker Qualcomm, Chinese competitors are leveling the
field faster.
“These are complicated cases,” says Damien
Geradin, a lawyer and professor of antitrust law at the universities of Tilburg
and George Mason. “In
most instances, the forces of creative destruction will do more to address
situations of lock-in than antitrust remedies.”
There are, of course, notable exceptions. The
Commission’s swift probes into patent standards and e-books arguably nipped a
problem in the bud.
Thinking fast and slow
Few doubt the role of market enforcer is a valuable
one, but it’s a job that is shackled by legislative and legal systems from
another age.
Antitrust cases routinely run for four or more
years, stretching from the Commission’s initial investigation to a final
decision. Court appeals can take almost twice as long.
“Of
course it is better to be fast than slow but it’s even better to be just,” is a
common expression of Margrethe Vestager, the European commissioner for
competition.
By
contrast, the mantra of her predecessor Joaquín Almunia was that
fast-moving markets require quick intervention.
That
philosophy drove him to settle with Apple and publishers rather than drill
down on suspicions they colluded to fix the price of e-books.
His allegations that Motorola and Samsung used their
patents to hold rival phonemakers to ransom were also quickly
concluded without sanctions.
Yet his repeated efforts to settle a
2010 probe into Google’s search engine failed.
In the meantime, complainants have become increasingly
irrelevant. Price comparison sites Ciao and Kelkoo both saw their traffic
drop by more than 65 percent between 2007 and 2014, according to ComScore,
and were sold off by Microsoft and Yahoo, respectively.
Streetmap and Hot-Maps, both complainants, mothballed
their mapping services. Even Microsoft, longtime rival and antitrust agitator,
withdrew its complaints against Google on Friday.
Meanwhile, Amazon, Facebook and others have moved in
to challenge Google’s dominance.
Google declined to comment. The Commission
declined to comment on the record.
Disappearing dominance
Vestager is not averse to speed. In a surprise
move, she leveled two sets of charges against Qualcomm in
July. Her latest case against Google was filed within one year,
almost to the day, of the formal inquiry beginning.
Last week’s charges against Android
accuse the Silicon Valley darling of using a series of contracts and
payments to funnel users towards the No. 1 search engine and block rivals
in the mobile space.
Android ran 81 percent of smartphones shipped in 2015,
according to Strategy Analytics, while Google processes some 90 percent of
Internet searches in Europe.
“Google has a more dominant position than you would
ever imagine in the last 50 years,” says Gerd Leonhard, a futurist and CEO of
The Futures Agency, citing the amount of personal data Google holds. (Leonhard counts
Google among his consulting clients.)
But that dominance could disappear. Google and
other giants like Alibaba and Facebook are in a global race to develop
artificial intelligence, or AI.
“Google knows that in five more years there is no more
search with a keyboard and a computer,” Leonhard says.
Neil Mawston of Strategy Analytics says Android
could become the hub of an ecosystem of connected devices, or the market
could morph with the release of devices that can be folded or
rolled up. Chatbots — computer programs that can undertake tasks in
response to to text commands — could replace apps, or the Chinese
could overtake the software market.
Facebook is targeting virtual reality, while other
tech companies are investing heavily in wearable gadgets.
A breakthrough in any of those technologies could give
their creator a major competitive advantage.
“We are at a tipping point where AI is really taking
off,” Sundar Pichai, Google’s CEO told investors of parent-company
Alphabet last week. “In the long run, I think we will evolve in computing from
a mobile-first to an AI-first world.”
That may explain why Google’s rivals want a
solution sooner rather than later.
Paulo Trezentos, the founder of Aptoide, a growing
Portuguese app store with 50 employees and a formal complainant against Google,
is still hopeful: “We don’t think it is too late.”
Thomas Vinje, an antitrust lawyer representing
FairSearch, a group of companies opposed to Google, stressed the need for
speed.
“We are interested, frankly, in changes to the
conduct, that’s what we care about,” he said.
Lawyers and some regulators have argued the Commission
should employ never-used powers to impose temporary remedies or
interim measures, pending a decision.
“Investigations […] should not take 10 years
to complete, and arrive only when the market has changed beyond recognition,”
warns Alex Chisholm, the head of the U.K.’s competition authority.
But what of the hundreds of millions of existing
phones that already run on Android in Europe?
The Russian answer
Roman Krupenin, a senior lawyer with Yandex, a Russian
search engine, says the Commission could force Google to show a ballot
screen to all existing Android users, giving them the option of
using other search engines.
That is a solution imposed by the Russian competition
authority, which opened and closed its probe into Android in the space of
seven months. Google is appealing.
It is also similar to one solution
employed by the Commission at the end of its 20-year standoff
with Microsoft.
European antitrust officials required the
software giant inter alia to sells
its dominant Windows operating system without automatically
pre-installing other Microsoft software, such as Media Player or Internet
Explorer.
Yet by the time the remedies were applied, users were
already downloading rival software through the fast-growing internet.
Cheerleaders of the Commission, however, say its
enforcement action encouraged innovation.
“Microsoft was a fundamental pest to innovation
and hobbling it was the best thing that happened to the digital economy,” says
Andrew Keen, a tech entrepreneur and author of book “The Internet Is Not The
Answer.”
“Google’s
get-out-of-jail card is to say that things change so quickly.”
Additional reporting by Chris Spillane.
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