This week, the EU levied a fine of €4.3bn on Google, after determining that it has used its dominant Android operating system to hinder competition. The EU’s competition commissioner, Margrethe Vestager, alleged that by requiring mobile phone manufacturers to pre-install Google Search and the Google Chrome browser to get access to other Google apps, the company is abusing its market position.
Back in 2004 it was another US tech-giant, Microsoft, which the EU had in its sights. The bureaucrats were concerned that the company, which more than any other had been responsible for PCs becoming part of everyday life, was too successful and somehow their success was to the detriment of consumers. Microsoft was eventually ordered to make a number of technical changes to its software and given a huge fine, but of course it was to no avail. The EU competition commissioner at the time, Neelie Kroes, called the decision “bittersweet”; even she could see that Windows would not suffer a “significant drop in market share” as she had intended.
In the end it was technological advance which made Microsoft lose its grip on the market. Apple’s iOS and Google’s Android are now the big players on the mobile phone market, which is increasingly dominating personal computing. In 2000, 97% of all computing devices ran Microsoft’s operating system, in 2018 that number has fallen to 36%. Unfortunately, this demonstration of how the power of free markets and product innovation can successfully stymie didn’t teach the EU commission anything. So, they decided to have another go at it and charged Google.
The mere idea that a company which sells products to consumers in a free exchange should somehow be able to abuse those very same customers is ridiculous. As Ludwig von Mises observed in Human Action:
[Entrepreneurs] are at the helm and steer the ship. A superficial observer would believe that they are supreme. But they are not. They are bound to obey unconditionally the captain’s orders. The captain is the consumer.
So too with Google. The Chrome browser, one of the key targets of the EU action, has a 59% market share. Poor old Internet Explorer, which seemed so dangerous to EU politicians a decade ago, has a paltry 3%. Google has already been successful in persuading consumers that Chrome is a product which deserves their custom, and it is hardly consumers who are somehow “protected” if Google are ordered to change how Android works. They will continue to use Chrome, just as back in 2007 people continued to use Microsoft’s media player, despite the EU ordering the company to produce a version of Windows without it.
So, apart from the EU, which has managed to assess the punishment for Google’s non-crime at €4.3bn which will line their own coffers, and the bureaucrats with pseudo-jobs as competition watchdogs, who could be interested in creating trouble for Google? Well, competing companies which offer less attractive products of course. If you can’t beat Google’s products on merit, maybe you can ask a politician to somehow level the playing field. In his book “Antitrust and Monopoly: Anatomy of a Policy Failure”, Dominick Armentano of the Independent Institute went through 55 US antitrust cases. He found that in every single case, the accused firms were generally benefiting consumers by lowering prices, expanding production and innovating, and that the only beneficiaries of the cases were their inferior competitors.
The Google case is just a gigantic waste of resources. The EU and Google have spent enormous amounts of time and money on arguing (and Google have already said they will appeal, so the spending is not over yet), producing precisely nothing of value. Consumers will not benefit. Monopolies are impossible in a free market; they only real monopoly here is the government’s monopoly on the use of coercion in dealing with antitrust.