
Google’s $6B Miscalculation on the EU - ghosh
http://www.bloomberg.com/news/features/2015-08-06/google-s-6-billion-miscalculation-on-the-eu?cmpid=BBD080615_BIZ
======
guelo
If you look at what has happened in China after Google left, how they were
able to quickly grow massive web companies, protectionism seems like a no-
brainer for every slightly advanced country. Silicon Valley sees the huge
first-mover advantages and is moving as fast as possible to move into every
liberalized market. But it makes no sense for a country to allow Silicon
Valley to take these industries for themselves. This is the fastest growing
industry for the next several decades with the best paying jobs. It only makes
sense to nurture the local companies and local talent instead of giving it all
away to the Americans. Europe is always fretting about how they need to create
their own Silicon Valley but it's easy to do, kick out the Americans! You'll
have your own Baidu, Tencent and Alibabas in no time.

~~~
dylanjermiah
At the expense of the citizens. Why not let companies compete?

~~~
biokoda
Short term expense of the citizens. Nurturing local business is a long term
benefit strategy.

Protectionism is how every nation on the planet developed. Why are Americans
driving South Korean/Japanese cars and not the other way around? Because the
south koreans and the japanese imposed large tariffs on car imports and the US
did not. Their car companies had free range on their own turf. Which gave them
time and money to develop.

Silicon valley is not giving the outside world any chance of competing.

~~~
rtpg
The US practices a huge amount of protectionism as well.

The reason that the Americans are driving Japanese cars is that they were
built in the US (which happens because of the protectionism). Ford doesn't
build cars in Japan. The end result is good for most people (consumers get
more choice, jobs are still in the country).

~~~
bduerst
You're forgetting the bailouts for the American auto industry and the ghost
town known as Detroit. Protectionism stagnates technological development
because of the artificially stymied competition.

Once the major players from hyper-competitive markets inevitably enter the
protected market, then they outperform the resident industry there.
Protectionism props up non-competitive markets, which is disruptive for
citizens when they fall down.

~~~
rtpg
That's a good point.

The auto industry might not be the best place for where you want to apply
protectionism. But one pretty good usage is when the local industry is in its
infancy.

It's pretty well accepted that the IMF forcing so many African countries to
drop agriculture-related tariffs has been among the biggest failures of modern
economics.

------
IBM
>Although she uses Google frequently, Vestager says it doesn’t cloud her view
of the case. “Congratulations for being big, but don’t misuse it. For
Europeans, this is very fundamental,” she says.

>That might be the scariest thing of all for Google. It isn’t dealing with an
antitech ideologue or a competition czar consumed with cementing a personal
legacy. It faces a straightforward prosecutor in a hostile political climate
dominated by powerful local business interests with their own regulatory
agendas. Good luck to Google searching for a way out of that.

I've been following this story for a while and I watched the press conferences
she gave and that's the impression I got from her as well.

I think Google is definitely not going to skate by like they did in the US
with a slap on the wrist. The investigation into Android is going to be
another big one and if they break up Google's ability to bundle/tie in their
services, it pretty much neutralizes the entire benefit of Android to Google
as a defensive moat.

~~~
roymurdock
So Vestager is a straightforward politician that is actually doing her job and
has no other agenda than supporting local businesses and protecting the
interests of the consumer?

This is fantastic. I wish we had some more people of her caliber in US
politics. Reflects well on the EU that she was elected.

~~~
M2Ys4U
>Reflects well on the EU that she was elected.

It would, if hers was an elected position :P

The European Commission is a bit of a strange beast. As is the rest of the EU,
to be honest.

The Commission consists of the President of the European Commission, the High
Representative of the Union for Foreign Affairs and Security Policy
(effectively its foreign minister), and 26 other commissioners.

The President of the European Commission is elected by the European
Parliament[0], and the High Representative is then chosen by the European
Council[1], with the consent of the Commission President, who cannot be from
the same country as the President and will be one of the Commission's Vice
Presidents. The other 26 Commissioners are then appointed by the unrepresented
Member States, so they each have one Commissioner.

The Commission President then assigns each of the Commissioners (except the
High Representative) a portfolio and then the entire body is subject to a
confirmation vote by the European Parliament before it can take office.

[0] It can't just vote for anybody, though, the European Council technically
has to propose a candidate "taking in to account" the results of the results
of the election to the European Parliament, although in 2014 (the first time
they had the opportunity since the rule was introduced) Parliament
successfully managed to establish the precedent that the Council _must_
nominate the designated candidate ("Spitzenkandidat") of the European
Political Party[2] that won the most seats at the election in the first
instance.

[1] The European Council is the body consisting of the heads of state and
government from the EU Member States, not to be confused with the Council of
the European Union, which consists of ministers from Member State governments,
and the Council of Europe which is a distinct organisation.

[2] European Political Parties aren't political parties in the same way they
are at national levels - they are more coalitions or federations of national
political parties - and they are also distinct from political _groups_ in the
European Parliament.

~~~
roymurdock
Thank you for the intense clarification! The EU certainly is a strange and
complicated alliance.

------
JoshTriplett
> “Dominant companies can’t abuse their dominant position to create advantage
> in related markets,” she said bluntly, formally accusing Google of
> exploiting its supremacy in general search to dominate the market for online
> product searches

It seems completely ridiculous to call those two different markets. Finding
the most relevant X on the web is fundamentally part of the same market no
matter what X is.

Now, if they'd accused Google of using their market position in search to
promote gmail, for instance, they might have a point. Not a very good point,
but at least an understandable point. But calling "general search" and
"product search" two different markets? They seem to just be looking for a way
to extort concessions out of a company that seems like a tempting target, all
the more so for not being an EU company.

Later in the same article is an indignant accusation that Google's display of
other types of search results don't label themselves as ads. Of course they're
not; if you search for an address, and you conveniently get a map of that
address (which is one of the most likely things you were looking for), that's
not an ad, that's the content you actually wanted. (By contrast, the garbage
next to it telling you about other services related to random keywords in the
search terms _are_ ads.)

Now, the crazy 2014 deal that fell through certainly does sound like
antitrust-style collusion; it's certainly ridiculous to have competitors bid
for the right to appear as a list of competing services at the top of Google
search results. But far from the "extortion" it's described as, it sounds a
lot more like collusion between multiple large companies to exclude smaller
players. The solution isn't to find a way to include more companies; it's to
forget that that anticompetitive arrangement was ever proposed, and continue
on with the current situation where Google shows users whatever it thinks
they're looking for.

(I'm not suggesting that Google has pure and altruistic motives here; far from
it. They're out to make money. I'm just saying that they've done nothing
_wrong_ here, and more generally that there's no wrong here for anyone to be
accused of doing. That some random local company in the EU got annoyed at not
being at the top of Google search results should not be Google's problem, or
anyone's problem other than that company's.)

~~~
hansibansi
First of all, the reason why they differentiate product and general search is,
because Google injects a carousel at the top of the page, regardless of its
relevancy. Thus, the differentiation. Secondly, the big discussion of abusing
its market dominance was ultimately triggered by Yelp and other vertical
search engines. Google first ripped of Yelp by scraping their content and then
added it to their own Google Places search. After that, they decided to give
their own service more relevancy. This would not be a problem, IF they were
competition in the European market, but Google has an average market share of
90 percent in Europe (note, that it has up to 99 percent in other markets like
Germany) and thus Yelp is super dependent on Google. Overall, this is NOT a
fair market and Google has such a dominance in that market that new players
are not likely (or ever) to appear. A 99 percent market share is a monopoly,
there are not many non-government markets that experience such a malfunction.

~~~
adventured
There was an easy solution for Yelp: opt out of Google search results.

What Yelp wants, is to have their cake and eat it too. They want to benefit
from what Google offers, and they want Google to behave exactly as they would
prefer, assuming control over Google's product through government power.
Classic competitor hypocrisy, the same behavior displayed 15 years ago by
Microsoft's extremely envious competition. They didn't want to beat Microsoft
in consumer operating systems, they wanted to chain and control Microsoft's
operating system to their benefit.

~~~
simonh
If search results that hit Yelp data linked to Yelp there'd be no problem.
However if it links to Google Places because Google scraped the Yelp data and
loaded it into the Places database - that's a problem.

Suppose someone launched an 'Encyclopedia Search' service that searched
Wikipedia, Encyclopedia Britanica, etc and linked to their sites. The the
service then started loading the Wikipedia and Britanica content into it's own
respository and linked searches to that. It's still searching the same data,
and taking you to the same articles, it's just that now you're not going to
Wikipedia or Britanica anymore. Would that be ok? If not, what's the
difference?

~~~
9872
Poor analogy. Yelp contains facts and user reviews. Encyclopedias contain
facts conveyed through written articles. The writing and reviews may be
copyright protected. Facts are not.

~~~
simonh
Curated collections of facts are absolutely protected by copyright, provided
they meet certain criteria. For example you can use that data to create a new
curated data set for a different purpose, but you can't just copy all the data
and use it in the way it was orriginaly compiled for because that's copying
the curation. I can't say authoritatively if Yelp's data is likely to meet
these criteria, but we're not talking about copyright violation anyway, we're
talking about anti-competitive practices.

Using a dominance in search to scrape data from competitors for use in other
services and then link to them from search in preference over the data's
source may well be anti-competitive, even if the scraping itself isn't
illegal.

------
louithethrid
Im in Germany, i can see no investment to grow a european google. Oh, yes
there are great declarations of grandios plans.

But my experience in a baker-shop can tell you everything on the european
attitude towards technology. "So what are you doing for a livin?" "I work as a
software developer.." "Oh, so your company doesent produce anything real?"

You cant force a culture to embrace something new that it detests. This
doesent mean that this culture will not buy the products, but it will never
produce them on the level as californium.

Another example? People pay ridiculous amounts of money for public television
in germany. And it is bad. Outright horrible. Not regarding production
quality, not the acting, execution and direction. Then what is missing to
create a german game of thrones? The answer: A diffrent production culture,
that doesent view half a hour of screaming drama as a authentic drama, and
understands that a joke on the henchmans axeblade makes drama so much more
impacting. Will that change come? No. Cultures only adapt when they suffer and
europe is not suffering enough.

~~~
Zirro
Please don't speak of a "European attitude towards technology" when there is
none. For example, I can't imagine hearing the attitude you describe here in
Sweden, and I believe you could find plenty of germans who would disagree with
you as well.

Not only are we many different countries, but we are also different
individuals. There is no common "European attitude towards technology".

~~~
jaawn
This is a very reasonable point. By the same logic, there should not be a
single European action taken against Google either. The people behind all of
the political resistance to Google in EU countries seem to all be from, or
tied to, EU corporations who want to take some of the market from Google by
force. They are trying to push through regulations that are good for their
_company_ with little regard to what is good for the _people_ of all the
different EU nations.

------
choppaface
Much of this debate centers on the premonition that Google highlights their
own content and services in order to fight competition and maximize their own
profits. They are acting intentionally and rationally. But their monopoly is
hurting others, so we (er, the EU) convict(s) Google of malice.

However, another plausible position is that Google is merely behaving
_negligently_. There are some studies (paid by competitors, sure) showing
users _dislike_ Google promoted content and products. Those products should
probably have their A/B tests ended, but nobody has the guts to pull the plug
(and willpower to evolve the effort into something else). Knowledge Base has
sucked away ~30% of Wikipedia's traffic, which thankfully has not _yet_ hurt
donations. Google certainly doesn't want Wikipedia to fall apart.

If we want to draw a parallel to Microsoft's monopoly, we could point out how
IE was initially a good product but then fell behind the competition. Pushing
it on consumers not only hurt consumer choice, but (over time) locked users
into a poor experience. But did we really need to carry out a lengthy (and
ineffective) anti-trust case?

Building a legal case is expensive and highly political. If discovery doesn't
uncover evidence of malicious intentions, then one must prove competitors and
consumers were harmed. But if the monopoly has been held for so long, how can
one prove those damages without resorting to small, expensive, and contrived
studies?

We should begin to embrace an _expectation_ that the producer of any
successful product will eventually become negligent. Protecting consumer
choice is not just about fair discovery, but ensuring the diversity needed for
markets to evolve (for better or, perhaps in the short term, for worse). Why
do we have to go to such effort to show how Google is specifically doing harm?
Why can't we say they had their turn, and here are places where they have
concentrated marketshare and thus places in need of diversity?

~~~
iribe
This reminds me of the EU imposing browser choice on Microsoft's European
customers. The result was a larger market share for google in the EU. In the
USA, where no choice was mandated, Microsoft push forth bing and as a result,
it has ~9% market share and growing. Given the choice, everyone chooses
Google. I think Google would be fine with giving users a choice of default
maps when searching a location, default reviews, etc. But the EU would not
like the outcome and they would come back for more regulation when their
intent, to harm google aka knock em down a peg aka "bring diversity" is not
met.

The fallacy with the EU's position is the notion of 'diversity'. Code word for
"let our companies compete better". If the free market doesn't want that, any
'remedy' will in fact harm users. What the EU must do is simply focus on the
question, "are consumers harmed". Anything else is begging for problems. EU
bureaucrats are not smarter than the market. If EU companies are able to
attract the capital and users to them, wonderful. But the fundamental problem
is 'attracting capital' to a rigid (and apparently protectionist) market.

------
jaawn
I have seen several comments that basically say "Google puts customers first,
but this goes against the EU's strong preference to protect local workers."

It is not "customers over workers" it is "customers over local corporations
with less developed products". Google has offices in 40 different countries
([https://www.google.com/about/careers/locations/](https://www.google.com/about/careers/locations/)).
Workers could easily go work for Google without moving to America...and Google
offers some of the best, most competitive career prospects of any company.
Until this changes, there is no reason to presume that Google's behavior in
Europe is somehow hurting "workers."

Sure, _if_ Google was providing inferior products, and paying its workers
lower-than-market salaries and abusing its dominance to keep better products
out of the market, then all of this fuss would make sense. Fear of this
happening at _some_ point is not, in my opinion, a good justification for such
heavy resistance to Google's activities.

We shouldn't confuse the interests of local (i.e. European) corporations with
the interests of the people. It being harder for a Danish company, for
example, to enter the online search, mapping, or shopping market doesn't mean
it is harder for Danish people to _work_ in online search, mapping, or
shopping. It also does not mean it is harder for Danish people use high-
quality products in these industries. I don't see how Google's actions so far
constitute "abuse of dominance" even if you take a protection-of-workers
stance...only if you take a "protection of the local corporate CEO" stance.

~~~
aoeuasdf1
Well said. Google is hardly an American company anymore. Their EU workers pay
EU taxes.

------
weddpros
For a long time, countries agreed that free-trade was the best way to avoid
another war. Europe was created as an economic region first, to avoid another
war.

But today I'm afraid Europe suffers memory loss.

They're using coercion against another country (always the same one, the USA)
for ideological reasons... which is the very definition of war.

The fact they're citing money as the reason only makes it more frightening.
Prosperous countries avoid war and favor trade instead, if possible.

As a European citizen, I can witness the anti-american mindset: it's growing,
nurtured by press and politicians. Don't think "it's not the USA, it's
Google/Amazon/Apple/Microsoft/Facebook": they actually cite the USA all day
long until Google is a synonym for the USA in people's mind.

A quick check with the first article I can find in my Google newsfeed: in the
french press, about Apple Music, the article starts with "Le géant américain
de l'informatique Apple" (The american IT giant/behemoth Apple)

The internet is an amazing promoter of free-trade, so unsurprisingly it's the
perfect target for Europe.

Please don't call it a conspiracy theory: it's not one, because I hope I'm
wrong ;-)

~~~
parasubvert
Free trade unfortunately also leads to what is called a "branch plant economy"
where policy decisions are made by foreigners with much less interest in your
national or regional success.

Trade makes everyone better off, in general, but is risky, because policies
can change. Free trade in particular gets even riskier as it means the
populace has fewer levers of influence against the corporations. Canada is
experiencing this with auto manufacturers - many Japanese and American (some
German) companies build cars in Canada and Mexico for the broader North
American market because of North American free trade and lower labour costs in
both countries (the exchange rate, single payer health care in Canada, more
reasonable unions, etc). But now so many jobs depend on these companies, the
Regional Governments can't let them leave in economic downturns. So they
subsidize. Is this all a net positive? Probably, but it's hard to know.

When you accept the upside of trade you need to accept the downsides - but
most don't. "Let the free market choose" isn't an answer because we live in a
Democracy, one feature of which is to prevent the market from getting what it
wants when the people don't like it.

The USA dominates technology with only a few counter-examples in Europe (SAP,
Amadeus, ASOS) - but LOTS in China. If the future is going to be these
companies diversifying into every other market ("software is eating the
world") you can bet there's justifiable anger at the U.S. (At beating them in
a new area of knowledge and practice) and a desire to put up barriers while
they get their shit together as China did.

This isn't war, it's competition. There's a big difference.

~~~
weddpros
How many Europeans use Google? 90%. That's democracy: the people of Europe
gets what it wants.

When Europe says "we'll fix what's wrong with Google", do they want to convert
the last 10%?

If not, then it has nothing to do with the people.

You think democracy is what protects people against companies? How strange. If
there's no demand for a lousy french dropbox-like service, and people use
Dropbox instead, it's because the market will give people what they want: they
chose Dropbox.

Now pass a "democratic" law to ban Dropbox because it's not hosted in France,
and all we're left with is the opposite of democracy. No choice anymore, and
the best product is gone. Who's winning? The french dropbox-like with its new
state-guaranteed monopoly. The people has lost.

A french comic once said "So you're telling me the rich are bad, and the poor
are good, and all these good people want to become the bad ones?"... I mean
the french "dropbox-like" would love to be Dropbox. The french Uber like would
love to be Uber. Exalead would love to be Google. But it's not the good vs.
the evil.

It's just a matter of performance... until the law comes into play, in less
than democratic ways, to cut competition.

~~~
Riesling
> How many Europeans use Google? 90%. That's democracy: the people of Europe
> gets what it wants.

Regulations are not trying to fix "what is wrong with google". They are trying
to keep the competition going, which ideally results in a better product for
the consumers.

~~~
weddpros
When dealing with privacy, they're definitely saying what's wrong. Right to be
forgotten. Retribution of newspapers for headlines... That's not about
competition. Not at all.

Also, Google is not a monopoly. There are plenty of alternatives
(Yahoo/Bing/etc). Google is not even trying to buy them.

~~~
Riesling
Well, regarding privacy, google is in the wrong! They are collecting all the
data they possible can and then transfer them to the U.S. where Europeans do
not enjoy any right to privacy (which is considered a basic human right here).
This is just trying to make a foreign company comply with European laws. I do
not see a problem here. If the process was totally transparent (where does the
data go, who uses the data) European citizens could make an informed decision.
But this is not the case. It is totally intransparent. Who knows what the data
is used for? The EU has the duty to protect its citizens.

As for the retribution of newspaper headlines. This might be some form of
protectionism.

Calling Bing and Yahoo an alternative to google honors them. Just try them
both exclusively for one week and see if you would really call them that.

------
maldusiecle
Surprisingly little talk here about the degree to which Google _has_ abused
its search market position in ways that push other players out. I would have
expected more. Antitrust laws exist for a reason. If Google uses its dominance
in search to stop better solutions from having a chance, it hurts everyone--
consumers included, but startups especially. It's not just a matter of
"protectionism," it's a matter of keeping the market open to innovation.

------
nradov
Does anyone remember Quaero?
[https://en.wikipedia.org/wiki/Quaero](https://en.wikipedia.org/wiki/Quaero)
In 2005 the French and German governments sponsored a "European" competitor to
Google. It failed.

------
bla2
Good reporting. Shows how much the EU is owned by the publishing industry.

~~~
ftoste
yes, also the unconscionable betrayal by the modern day benedict arnolds-msft,
yelp, getty images, and iac enjoying their bratwurst and lederhosen, while
lady liberty weeps in silence.

~~~
bla2
Hm?

------
ftoste
nationalism on HN? oh dear. will techies start calling french fries freedom
fries?

