Google’s $1.7b warning for the Silicon Valley

If there was any lingering suspicion that the final months of Margrethe Vestager’s tenure as European Commissioner for Competition would fizzle out quietly, the last week’s announcement on Google has dispelled it.
She’s imposed a remarkable 1.5 billion-euro ($1.7 billion) fine on the Alphabet Inc. division for its historical practice of forcing websites using its search bar to display only advertisements served by its Ad Sense for Search product. Sure, it’s less than the earlier fines of 2.4 billion euros and 4.3 billion euros apiece, but it’s more than a lot of observers had expected.
Given Google stopped the practice several years ago, it suggests a sustained push to force tech giants to refrain from anti-competitive behavior from the outset with any new ventures. Fixing mistakes further down the line won’t be enough to merit escaping punishment. The intention is surely to force Silicon Valley firms to think twice about many of their practices before they put them in place.
The search giant sought to get ahead of the announcement by declaring overnight that it would make it easier for users of its Android mobile operating system to pick services from its competitors.
While downloading alternative search engines and web browsers has always been possible, the company will now present a screen where users have to actively choose a default app. Google’s offerings won’t be the automatic choice. The practice of forcing carriers to preinstall Google Search and Chrome web browser while excluding others was the subject of the 4.3 billion fine last year.
Significantly, it’s not a concession that the commission explicitly requested. That suggests that Google might be getting Vestager’s message: It’s trying to get ahead of the curve and change the way it operates before regulators demand it.
At first glance, the situation looks very similar to the time when, back in 2010, the commission forced Microsoft Inc. to give Windows users a choice of web browsers to install, rather than forcing them to default to its Internet Explorer product.
The similarities are really only superficial. Internet Explorer was not the beachhead for a data business. Both Chrome and Search are, and have already generated reams of it. That’s a defensive moat that’s almost impossible for any competitor to breach — unless Google is forced to share much of what it’s gathered with rivals.
Don’t get me wrong: The move will undeniably help Google’s competition. The traffic boost that rivals DuckDuckGo and Microsoft’s Bing will receive is likely to be significant. And it’s positive that the company is waking up to the fact that it needs to take actions that allow it to be seen as a force for good, and behave less antagonistically. After Vestager’s announcement on Wednesday, Google pledged to make further unspecified changes, underscoring the sense that it’s tamping back its more combative instincts.
The Silicon Valley giant is taking steps in the right direction. But today’s fine indicates that it’s far too little, and far too late.

—Bloomberg