Google’s European fine is a flashback to Microsoft’s ugly antitrust battle

Google’s European fine is a flashback to Microsoft’s ugly antitrust battle

July 18, 2018 0 By Nazmul Khan


Today, the European Commission handed down a $5 billion fine to Google for anti-competitive behavior, the single biggest antitrust ruling the company has ever faced. The commission’s central complaint is that by requiring Chrome and Google search as default services on any device using the Google Play Store, Android is engaging in anti-competitive behavior. As part of the ruling, Google must stop forcing Chrome and Google search on manufacturers, and stop any efforts to block forked versions of Android. We still don’t know how Google will respond to the ruling — particularly whether it will end up directly charging phone makers for Android licenses — but it’s clearly a major blow to Google and the strategic value of Android as a platform.

For older readers, this all might sound familiar. 2018 marks the 20th anniversary of a different set of regulators cracking down on a different platform-dominating operating system over monopolistic software-bundling deals. In 1998, US regulators grilled Microsoft over its requisite bundling of Internet Explorer in Windows, even calling Bill Gates to the stand to testify. At the time, Microsoft was a singular force, sold alongside 95 percent of Intel-compatible PCs. That dominance gave the company an advantage in the emerging web client market, herding users toward Internet Explorer over competitors like Netscape. The Department of Justice responded with one of the strongest antitrust pushes in tech history, mandating years of close oversight on its source code and APIs, along with serious restrictions on how aggressively the company could integrate its browser into Windows.

From afar, it looks like Google is getting ready to take the same ride. This time, the platform is Android, which funnels users to Google search and Chrome. Google has even fallen back on some of Microsoft’s defensive tactics, publishing a “how to uninstall” video this morning that echoes a video Microsoft introduced in its own trial. Both have the same message: see how easy it is to change the defaults? Surely we can’t be a monopoly, right?

Google occupies a similar position as the one Microsoft held in 1998. It’s an inescapable platform, one that’s printing money, thanks to a network of complex deals that never quite touch the consumer. By the time Internet Explorer became a problem, Microsoft had already run into problems for forcing manufacturers onto MS-DOS through complex licensing deals, another echo of the current case. Given the massive scope, it’s not so surprising that both companies ran into antitrust issues. When a company controls one of the world’s biggest software platforms, it’s hard to resist the temptation.

But the differences are also glaring: while Windows was a dominant platform in 1998, Internet Explorer was just getting started, attracting roughly a quarter of the users of Netscape Navigator. In 2018, Chrome and Google search are already behemoths in their own right: Chrome commands around 60 percent market share for browsers, and search commands around 90 percent among search engines. Most of that user base has nothing to do with Android bundling, and while it might strengthen the antitrust case, it limits the impact of today’s ruling. Scrapping mandatory bundling will hurt search and Chrome numbers in the short term, but it’s hard to argue it will lead to a golden age of competition among mobile browsers and search engines. What’s more likely is that it will free up manufacturers to cut deals with Bing and other Google alternatives. That’s good news for manufacturers’ bottom line, but it’s not exactly a win for consumer choice.

The commission’s ruling also comes at a very different time for the industry at large. It seems bizarre now, but Windows wasn’t just a platform. It was a product people — not just manufacturers, but everyday consumers who wanted their computers to run the latest operating system — paid actual money for. (Even stranger, they bought it in a physical store, walking out with a cardboard box that said “Windows” on it.) There was a dollar price associated with Windows. And the more dominant the platform became, the more manufacturers and regulators started to worry that the price could rise.

But like Facebook and every other big software product in 2018, Android deals in data rather than cold hard cash. Android users eventually translate to money, but only after trickling down through a maze of targeted ad products. It’s an attention economy, and even the company’s harshest critics acknowledge that it requires an entirely new way of thinking about antitrust. Today’s ruling is our first peek at what that kind of regulation might look like, but it’s anyone’s guess how effective it will be in the future.

The biggest difference between the Google and Microsoft antitrust rulings may be what comes next. Microsoft pushed back against the Department of Justice for years, but the fight ultimately doomed Internet Explorer and marked the beginning of the end of the Microsoft’s dominance over the industry. It’s already too late to push Chrome and search down a similar path. Instead of blocking a fledgling product, regulators are trying to pare back an enormous one. For anyone who’s scared by Google’s growing power, it may simply be too late.



Source link