- - Monday, July 30, 2018


America’s high-tech colossi dominate the globe. Silicon Valley, loosely defined in a mixture of metaphors, is the ultimate Big Rock Candy Mountain. Amazon, Uber, Apple, Microsoft, Lyft, Intel, Facebook, Google, Instagram, Ebay, Twitter, Lyft, were all made in America. Europe’s high-tech companies, by contrast, are puny. Only Spotify, a Swedish music-streaming app, makes much of splash globally.

The reasons why are no secret. A healthy respect for entrepreneurship, a world-beating higher scientific and mechanical education system (not to be confused with the often goofy precincts of undergraduate studies), and access to deep-pocketed venture capital networks are all part of the story. So, too, is a political culture that most of the time promotes business rather than punishes it business.

Everything is different across the Atlantic. There, the presiding authorities tend to look at successful businesses and successful businessmen as threats to a welfare state dedicated to making layabouts comfortable, and business something to be tamed, tolerated only as a source of revenue, and the more so if the businesses are something American.

Which brings us to the news that the European Union has levied an enormous fine on California-based Google. The EU ordered Google to pony up 4.34 billion euros — or about $5.1 billion at current exchange rates. That’s on top of another unrelated $2.7 billion fine that the EU imposed on Google last year. The EU has also fined Microsoft on multiple occasions, and Facebook and Intel, too. But the $5.1 billion is the largest fine that the EU has yet imposed.

The EU argues that Google has abused its ownership of the Android operating system for smartphones in a way that has hampered competition among search engines. About 80 percent of the world’s smartphones run Android, which default to Google as their search engine of choice. Android is effectively free; Google makes up for that by directing users to its search engine and other services.

The EU sees something sinister in that arrangement. “Google has used Android as a vehicle to cement the dominance of its search engine,” says the EU’s antitrust chief. “These practices have denied rivals the chance to innovate and compete on the merits. They have denied European consumers the benefits of effective competition in the important mobile sphere.”

Google is appealing, as expected, though it must deposit the $5.1 billion in an escrow account to make sure Europe gets the money if Google loses its appeal. The EU wants to strip Google of the ties to Android and Chrome, Google’s web browser.

American and European antitrust authorities tend to take a different approach to the issue. American authorities look at what benefits consumers, and there’s little doubt that services like Android, which provide enormous benefits at no cost, have been a boon. Europeans, however, look at how current arrangements affect prospective competitors. Those competitors have been lagging, and lagging badly, behind Google. Writing in Reason magazine, Declan McCullagh observes that what may have begun as a reasonable difference in emphasis “now appears to have morphed into naked European protectionism. The economics are simple: European firms have fallen behind their American counterparts to the point that not one European firm appears in the list of top 20 Internet companies ranked by market capitalization. Any aggressive approach toward antitrust enforcement of mobile or online business practices will, not-so-coincidentally, handicap Silicon Valley companies to the advantage of smaller European rivals.” Who could have guessed a coincidence like that?

The Europeans, so outraged at Donald Trump’s trade wars, are engaging in a trade war of their own.

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