Not every trade war involves tariffs. The European Union's record $5 billion fine against Google for antitrust violations involving its Android operating system is protectionism masquerading as consumerism. And the risk for America isn't that the penalty will sink the U.S.-based technology titan — parent Alphabet makes that much dough every couple of weeks in revenue — but that anti-tech activists here will be encouraged to ramp up their attacks against the country's most innovative companies.
Coming just days after President Trump slammed NATO for skimping on defense, it might look like Europe quickly found a clever way to finance some additional military spending. But the EU's actions against Google began with a wide-ranging investigation back in 2010 that previously led to a $2.7 billion fine against the company for using its market share to unfairly benefit its comparison shopping service. The core of the EU's complaint this time around is that Google used restrictions on the use of Android — which runs more than 80 percent of the world's smartphones — to unfairly favor its own search, browser, and other services. A mobile phone company that wants to offer the Google Play app store must also preload a suite of other Google applications. In addition, it must make Google search the default search application. These and other "illegal practices," according to EU antitrust boss Margrethe Vestager, "denied rivals the chance to innovate and compete on the merits."
To accept the EU's case, however, one has to ignore the reality of the modern internet, where users easily and frequently download millions of apps some 100 billion times a year. Indeed, even though developers must preload Search, Chrome, and some other Google services as a condition of licensing the app store, the arrangement is not exclusive. A device maker could also preload rival app stores and other apps. As it is, the Firefox browser, for instance, has been downloaded more than 100 million times on Play. And consider this: One thing that really bugged the EU was that the Android home screen displayed a Google Play icon and a folder of 10 other Google apps vs. the myriad of preloaded apps on the Apple home screen.
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Such preloading has long been a part of Google's phone business. It's one thing that allows Google-developed Android to remain free, which has subsequently drastically lowered the cost and availability of smartphones. This has increased the number of people who own them. Developers in Europe and elsewhere are thus able to distribute their apps to over a billion people around the world. If Google couldn't preload its money-making apps onto Android phones, it probably wouldn't give Android away for free.
Another reality: Google has a powerful app store competitor — Apple, which rakes in a whopping 87 percent of smartphone profits.
But maybe this isn't just about competition. Amazon, Apple, and Facebook have also been the target of legal or regulatory actions lately, after all.
Yet you won't find the U.S. suing Europe's super-successful platform companies because, well, there aren't any. Likewise, Europe has generated only a tenth of the fast-growing tech startups, or unicorns, found in the U.S. Instead of company creation, Europe seems to be specializing in regulation and investigation. The whole thing stinks of platform envy.
Then again, Europe's gonna Europe. Perhaps more important for Big Tech is to what extent activists and policymakers here — both on the left and right — view Europe as a model for what they should be doing. While still more an issue for Washington and Wall Street than Main Street, the anti-tech movement isn't going away. Progressives view it as an important front in their battle against inequality and oppressive corporate power. And many conservatives see left-leaning Silicon Valley as a political foe.
At a House hearing on Tuesday, Republican lawmakers pressed executives from Facebook, Twitter, and Google-owned YouTube over supposed bias against conservative views. Rep. Steve King (R-Iowa) even mused about the idea "of converting the large behemoth organizations that we're talking about here into public utilities." Whoa. Even Europe isn't going that far, though some tech critics there think governments should develop public versions of Facebook and Google.
Lawmakers and regulatory agencies should be careful. Big Tech is where the fast productivity growth can be found in the U.S. economy right now. And rather than stagnant monopolies, they are in sharp competition with each other across a variety of businesses. If Washington is going to do nothing about these unceasing attacks against America's tech giants, maybe they could at least avoid launching their own.
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