What Google's € 2.4 billion appeal loss says about Big Tech business models

What Googles E 24 billion appeal loss says about Big.jpgsignature50ce70b49e63cf2e7cd033b342707e6a

Google fined € 2.4 billion (£ 2.1 billion) for blocking competition in the EU after a 2017 decision was upheld on appeal by the EU's general court . This is a saga dating back more than 15 years, in which the European Commission has accused the tech giant of using its search results to treat the service favorably. His comparison stores the competing products.

The fine, from which a portion goes directly to the UK as a result of the EU withdrawal agreement, is also a testament to the long-running fight against big tech by competition commissioner Margrethe Vestager. It suffered a devastating loss in July 2020 when the same court ruled against a € 13 billion fine imposed on Apple for a complex - but legal - tax avoidance scheme.

But this time, the tide has turned and the message is clear: the regulators will not allow Google and its tech giants to direct customers to their own products. They may now have to rethink their business models as a result. The internet may come as we know it - in which most services are free to use but users pay by providing their private data aca.


    The case against Google

    It all started in 2005 when British couple Adam and Shivaun Raff, Foundem, developed a new comparison buying service. Google had its own comparison service called Froogle (now Google Shopping), although it was acknowledged in 2006 in an internal document, "it just doesn't work".

    Foundem found itself controlled by Google search results. Unless you specifically search on it, it will only appear after several browsing pages. Without customers being redirected from the main search engine, Foundem never started.

    After suspecting that Google was restricting competition, Adam and Shivaun Raff tried to convince the company to give them some visibility. In 2009, they waived and lodged a complaint with the European Commission against Google for abuse of a key post.

    Over the years, several other comparison services such as Expedia and Yelp have joined the complaint. They had also tried to compete with Google, just to see their websites suddenly dropped to the bottom of the search results with the strongest search algorithm.

    Google's competitors in other markets then began to accuse the American company of anti - competitive practices. One complaint was about Google forcing the pre-installation of free Google software on Android phones, for example. Another was about Google forcing advertisers to use the company's services if they wanted to place ads on YouTube. Overall, Google is battling a long series of similar cases on appeal against the commission.

    This is where Google's fines over Froogle get really bad. It is far from being the largest of the European Commission's, but it is perhaps the one that will be the biggest successor as it is likely that the forthcoming appeal cases will use the one this as a precedent.

    Great technology and consumer rights

    Internet companies like Facebook and Google earn their revenue by tracking their customers' data to show them ads that are relevant to them. They build an estate of companies - for example Google Search, Google Maps, Google Shopping, and YouTube - and try to ensure that when customers leave one service they stay in the estate.

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    Google's estate is called Alphabet, and 80% of it Alphabet revenue comes from Google ads. The problem arises when a company like Google tries to keep customers on their estate by thwarting competitors.

    Google and other tech giants know almost everything about us because they collect information from so many different sources. The logic of the current judgment is that these sources should operate as separate entities.

    In the future, the Google Maps or your flight comparison experience may not use the information Google holds about you, or the company may have to share the data with competitors. At the same time, Google may not be able to pre-install any of its services on Android phones and may have to give users a fair choice instead of Gmail, Maps, or YouTube.

    This issue also reinforces different approaches to competition policy in the EU and the US. The main aim of competition policy, both in the US and in Europe, is to protect consumers.

    But in the U.S., competition authorities in a similar case in 2013 decided that the behavior of tech giants is not hurting consumers. Their understanding was that what makes Google rich is what makes users happy, that users have no intention of giving out their personal data to this company because they are 'get advice that is specific to them as a trade.

    In fact, it may seem that consumers do not care about providing privacy simply because they are not aware of what Google knows, and how much money they make. out of their data. For example, when people started noticing that what is now called Meta, Facebook's estate, looking for ways to make money from WhatsApp users, it caused excitement.

    European regulators have taken a completely different approach. Their rationale goes back two decades since they first fined Microsoft for pre-installing Media Player and Internet Explorer with the then Windows 95 operating system.

    The same critical complaint has now been lodged with Google. By preventing competitors from entering the market, consumers lose the advantage of potential innovations. With that reasoning, we like Google's free services simply because we have no idea how good the alternatives might be if given the opportunity to improve.

    The European Union's general court has ruled in the European Commission's opinion that Google's conduct is anti-competitive. Google may be trying to appeal to the European court of justice, but the general court's decision is likely to remain a guiding principle for years to come, with a huge impact on consumers.

    If tech giants can't make money from their current business model, they may have to find other sources of revenue, either costing consumers directly or by creating a clearer system in which consumers are aware of the value of their data and sell it for free. Whether the US will follow suit, and with whom the UK will choose to align if trust policies begin to radically overlap across the Atlantic, they are now the next big questions.

    Article by Renaud Foucart, Senior Lecturer in Economics, Lancaster University School of Management, Lancaster University

    This article is republished from The Conversation under a Creative Commons license. Read the original article.

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