Europe’s Google decision brings new calls for U.S. action
In U.S., tech firms helped by view that their practices benefit consumers, outweigh risks
Europe’s latest move to rein in Google puts pressure on U.S. regulators and lawmakers to curb the power of the Silicon Valley giant—a step they have thus far been reluctant to take.
The European Union slapped Google parent Alphabet Inc. with a $5 billion (U.S.) fine for abusing the dominance of its Android mobile platform on Wednesday, the EU’s second major antitrust action against the internet search provider in a little more than a year.
No similar action appears on the horizon in the U.S., where Google and other top tech companies have benefited from the prevailing view that their business practices, on the whole, benefit consumers beyond any concerns they might raise. Their considerable political clout in Washington also has helped shield them from scrutiny.
But in recent months, various U.S. policy makers have voiced concerns that Google’s practices are stifling competition and endangering the privacy of billions of users. These voices have helped put an assortment of potential policy measures against Google and other companies on the table.
Democrats such as Sen. Richard Blumenthal of Connecticut and Sen. Amy Klobuchar of Minnesota, along with a handful of Republicans like Rep. Todd Rokita of Indiana, have called for U.S. antitrust officials to reopen an investigation into Google.
“The point here is not that bigness is necessarily bad and certainly not illegal, but the misuse of that bigness and market power to stifle innovation and consolidate dominance is against the law,” Sen. Blumenthal said in an interview Wednesday.
A spokeswoman for Alphabet declined to comment on the potential for U.S. regulation.
Sen. Mike Lee (R., Utah), the chairman of the Senate subcommittee on antitrust, competition policy and consumer rights, cautioned against following the European approach, which he said could undermine competition and innovation in the U.S.
“Appropriate competition policy should serve the interests of consumers and not be used as a vehicle by competitors to punish their successful rivals,” Mr. Lee said in a statement.
President Donald Trump on Thursday lashed out at the EU in a tweet, calling Google “one of our great companies” and saying “They truly have taken advantage of the U.S., but not for long!”
The Federal Trade Commission has broad powers to bring legal actions against companies that abuse market power. Joseph Simons, sworn in as FTC chairman in May, said part of his job will be to look for anticompetitive activity on the big tech platforms. He recently announced his agency would be embarking on a lengthy series of hearings around the country to help determine whether changes in the economy—including new technologies— mean that new enforcement approaches are needed.
“We’re going to look closely at what the EU is doing,” Mr. Simons said at a Wednesday House hearing, adding that he had spoken with EU antitrust chief Margrethe Vestager on Tuesday. Mr. Simons noted that the EU has a somewhat different antitrust regime than the U.S. does. But he added that the FTC has enough legal authority to determine whether a company is engaging in anticompetitive behavior.
The FTC closed an earlier probe into Google’s search dominance in 2012 without bringing a case. On the central issue—whether Google used anticompetitive tactics for its search engine—the competition staff recommended against a lawsuit, although it said Google’s actions resulted in “significant harm” to rivals. In three other areas, FTC staff found evidence the company used its monopoly to help its own busi- ness and hurt its rivals.
Because the products made by Google and other tech giants are beneficial to many Americans, any moves to restrict their growth could ultimately be bad for consumers, said Gus Hurwitz, assistant law professor at the University of Nebraska and a director at the International Center of Law and Economics.
“It’s hard to see an antitrust claim successfully being brought and it’s hard to justify regulation against these companies,” he says, “without being really cautious about causing collateral harm to the overall ecosystem.”
Despite Google’s size—the company powers nearly all of the world’s searches, owns the operating system used by 80% of smartphones and is the leading seller of digital ads with 30% of global sales, according to eMarketer Inc.—an antitrust case may be difficult to make under U.S. antitrust laws, which focus on whether companies have harmed consumers. In many areas, Google is driving down prices and making life easier for Americans.
“Today’s decision rejects the business model that supports Android, which has created more choice for everyone, not less,” Sundar Pichai, Google’s CEO, said in a blog post following the decision.
Assistant Attorney General Makan Delrahim, the antitrust enforcer at the U.S. Justice Department, has taken an interest in scrutinizing tech giants. “If there is clear evidence of harm to competition in digital platforms, enforcers must take vigorous action and seek remedies that protect American consumers,” Mr. Delrahim said in an April speech in Chicago.
It’s also possible that antitrust won’t be Google’s biggest concern. As Facebook Inc. has come under fire for its role letting an outside software developer mishandle the data of tens of millions of users, Google could be facing more pressure over privacy in the coming months.
GOP leaders in the House and Senate questioned Alphabet CEO Larry Page in recent weeks over privacy issues, including whether the company collects user location data from Android phones and how outside app developers are permitted to review the personal emails of Gmail users.
In a letter to Mr. Page, a group of senators said that Google may not be doing enough to safeguard Gmail and asked the company to detail all the instances in which app developers have shared Gmail data with third parties.
But at Wednesday’s House hearing, Mr. Simons, the FTC chairman, said he’s “a little nervous” that tightening privacy rules in the wrong way could end up reducing competition by entrenching the dominance of big players. Commerce Committee Chairman Greg Walden (R., Ore.) said he sees the same potential for harm from overregulation.