The EU’s mad fight against Google

Last Wednesday, the EU charged Google with using its dominant Android operating system to hinder competition. The EU’s competition commissioner, Margrethe Vestager, is concerned 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 2016 that number has fallen to 26%. This demonstration of how the power of free markets and product innovation can successfully stymie monopolies unfortunately does not seem to have taught the EU commission a lesson. So they are having another go at it with the new charges against 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 36% market share. Poor old Internet Explorer, which seemed so dangerous to EU politicians a decade ago, has a paltry 12%. 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 EU 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. Over the next years the EU and Google will have to spend enormous amounts of time and money on arguing, producing precisely nothing of value. Consumers will not benefit and Google will likely not feel any financial impact except for the cost of the case itself and the fines which will eventually be levied (especially if the US follows with its own charges). 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.


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