The European Commission’s investigation of Google proves it is living in the past, argues Gary Shapiro.
Gary Shapiro is CEO of the Consumer Electronics Association.
The technology industry is in the midst of a golden age of disruption. Never before have we seen a time when new market entrants with moderate or limited capital have the power to upend the incumbents. And even these incumbents are now competing against one another on price and innovation.
This is why many of the allegations made by the European Commission, in filing a Statement of Objections against Google over its search practices, ring hollow to those who follow this industry closely. The Commission’s complaint comes at a time when Google’s hard-earned market presence is being challenged more aggressively than ever by competitors. This raises important questions about the proper regulation of an industry with so much competition that in the five years the Commission has been investigating Google, the marketplace hardly resembles its former self.
First, it is off-base to state there is no competition in the space in which Google operates. In the last several years, there has been increasing competition in ways to find information online – from new entrants like Pinterest and DuckDuckGo, to voice recognition services like Siri, to the rise of mobile apps, as consumers now spend most of their time on their personal devices. In the ad space, Facebook is now seen as the major player of the future because of the mobile revolution and the shifting of television dollars to the web. And this revolution crosses continents. At the 2015 International Consumer Electronics Show in Las Vegas, we had 120 tech companies from France alone, including 66 startups.
In the area where the Commission has honed its focus, online shopping, Google is not even the market leader – consumers are far more likely to head directly to a retailer’s website. German shopping startups Idealo and Zalando have also seen great success and expanded into new markets despite heavy competition.
In short, although Google may be a leading company today, that in no way guarantees future success – especially not during this period of rapid disruption. While Google historically has been a leader in desktop search, the future is mobile and social. The Commission is, in effect, targeting an online world of the past, while the present reality continually evolves.
At the same time, European regulators should be optimistic about the future of home-grown innovation. Europe is home to some remarkable tech companies, as well as startups such as Spotify, Rovio and King. If regulators focused on lowering barriers for a true Digital Single Market, as companies have in the US and China, this growth could be further accelerated. The result? Increased competition and, in turn, more choice and lower prices for consumers.
While the Commission has determined a Statement of Objections is warranted, it is noteworthy the US Federal Trade Commission (FTC), led by Chairman Jon Leibowitz, declined to bring a formal complaint against Google after a two-year investigation. The FTC found that far from harming consumers, Google’s products and services are of benefit to consumers. The investigation was balanced and thorough, and eventually reached a fair resolution – one that accounts for the dynamism and competitiveness of tech markets and the welfare of consumers. The FTC’s decision has clearly been shown to be the right one given the fierce competition we see online.
After nearly five years of investigation, regulators should take into account the rapid developments they are seeing in these fast-moving markets – the natural by-product of a disruptive and competitive marketplace. By allowing companies to compete based on the merits of their respective products, the Commission can ensure consumers will continue to benefit from greater choice and innovation.