The fine is gigantic: €2.4 billion, (£2.1 billion) by far the biggest ever in this type of antitrust case. But, strange as it may seem, Margrethe Vestager’s decision in the European Commission’s competition case against Google isn’t about money. It's much more than important than that.
For at least a decade, this generation of large tech companies has grown without much in the way of outside resistance. Now, in Vestager, they have met someone who can challenge their power.
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Vestager is the antitrust chief who, last year, required Apple to pay back taxes to Ireland totalling €13 billion (£11bn). She is pursuing Amazon for unpaid taxes and Facebook for its acquisition of WhatsApp. Few people in the world have more power and influence over the future of the internet – and the Google case, her biggest so far, shows the way she is thinking.
If Google, Amazon, Facebook and Apple are the warring houses of Westeros, then Vestager is Daenerys Targaryen, swooping in on dragons. She has the ability to change the nature of the game.
Of course, power in the digital age is rarely as raw as it is in Game of Thrones; nevertheless, it is immense. To understand Google’s influence, think about shoes. When you use its search engine to look for a pair of Pumas, the first set of links instructs you to: “Shop for Pumas on Google.”
That first link is perhaps the most precious space on the entire internet. It attracts the vast majority of visitors: especially when, as in this case, it comes with images. But what might not be obvious to the majority of casual users is that these links are part of Google’s paid shopping service. They’re not the most relevant answers. They’re the ones that make Google money from the companies that are willing and able to pay the most.
The same is true for other areas: finance, flights, images, restaurants, maps. Think what happens when you Google an address: you don’t get a range of ways of seeing the world, you get a Google map, scattered with paid-for pins in attractive locations. For many industries, Google is the window to the web – and it is a window tinted in the primary colours of Google's logo.
This might seem banal, perhaps even insignificant, after all, it’s only shops and restaurants, directions to friends’ houses, but that narrow frame misses the point. Google has the ability to influence every single decision we take, every single day, in ways we barely understand. If that isn't power, nothing is.
Vestager's decision refers only to a small part of Google's empire: Google Shopping, first launched in 2004 as “Froogle", before being renamed “Google Product Search” in 2008. As the various relaunches suggest, the product was far from an immediate success. But, with the backing of a search engine that has more than 90 per cent of the market, it could hardly fail.
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To see this process in action, look back to July 2015 when Google announced expandable Shopping Ads for search results on smartphones. The idea was that these would expand when a user tapped on them – but clearly, that wasn’t very effective, so, two months later, Google cut straight to what it wanted and made its Shopping Ads larger. Much larger. The result? Growth that searchengineland, the authority in this area, called “incredible.”
Google argues that it is simply fighting its own corner. Locked in the Game of Thrones, it is faced by powerful rivals such as eBay and, especially, Amazon. (Google’s short response, denying Vestager’s charges, mentions Amazon five times, a heavy hint to regulators and a sign of who it fears.) Vestager counters this by saying that Amazon is a different company. That's not to say it can't, or won't ever, be subject to antitrust cases but in this instance, Amazon is not a search engine. Also, that argument relies on showing that search is not a monopoly – and it is that contention that Vestager has decisively rejected. As she put it in her statement today: “From now, we will consider Google as a dominant company."
This is why today’s announcement is so important: it sets the scene for action right across Google’s domains. As Vestager said: “Today’s decision is a precedent, a precedent that can be used as a framework to analyse such conduct.” She hedged on what that could mean, saying: “You have to treat different things differently.” But with this decision, she has sent a clear signal. Google’s days of dominance may be beginning to wane.
To see the impact of Commission decisions, one only has to look back to 2009, to a time when Internet Explorer had 55 per cent of the global browser market. In December of that year, the Commission decided Microsoft had abused the dominance of its Windows operating system to push people towards its browser. It made the company introduce Browser Choice, a pop-up asking Windows users which browser they'd prefer. The result? Today, Internet Explorer is used by only 21 per cent of internet browsers and Google's Chrome ultimately came out on top.
Vestager has given Google 90 days to change its ways or face punitive further fines of up to 5 per cent of the average daily worldwide turnover of Alphabet. She says she has left the way they do this up to them – a wise move because it avoids putting the European Commission in the position of running Google. But now Google is working to satisfy Vestager. Like Microsoft before it, it is beholden to Commission.
What the changes will look like only Google knows. Perhaps it will start to link to other shopping comparison sites? Perhaps it will turn Google Shopping into a completely different service, detached from Google search? That would be the start of a slow dissolution of the search bar. Instead of seeing all those options at the top - maps, books, news and so on - users would only get Google search, just as they did when the company first launched. It could be argued that this would make it harder for us everyday folk to find what we're looking for.
In time, we might start to see results that look more like Google images, with pages of tiles suggesting different options, provided by different companies. Think what that would look like for maps. All of a sudden, Googling becomes very different.
The other tech giants will be watching, waiting to pounce on any sign of weakness, but perhaps also fearing for their own status. The Silicon Valley approach has always been to aim for scale: now the European Commission has said, loud and clear, that if you are beyond a certain size, you will have to reckon with them. In time, we might see Facebook forced to divest itself of WhatsApp and Instagram, or Amazon split up into different entities. This one decision has the potential to change how we search, shop, socialise and more.
How this will turn out remains to be seen. But for now one thing is certain: more fights are coming. The battle for power in the digital realm has only just begun.
This article was originally published by WIRED UK
