Europe’s competition chief has admitted she has been unable to restore competition between Silicon Valley giants and smaller rivals, despite hitting US tech companies with repeated billion-dollar fines.
In a wide-ranging interview at the start of her second term as European competition commissioner, Margrethe Vestager acknowledged reforms demanded from firms such as Google don’t “necessarily change anything” because the companies had “already won the market”.
She cast doubt on the effectiveness of future changes to Google’s Android mobile operating system, saying she was “not holding my breath”.
Ms Vestager fined Google a record €4.3bn (£3.9bn) in July 2018 for using Android to illegally “cement its dominant position” in search and forced it to make changes to restore competition to the marketplace.
But although Ms Vestager said Google would be introducing a “preference menu”, offering users a choice of different browsers in the new year, she admitted she was not sure whether it would work.
“One of the very impressive competencies of Google as a company is their competence of making people make choices,” she told Sky News.
Asked if she meant that Google would drive users towards its own products, she replied: “This is why it will be very interesting to see, how will such a menu of different options – how would that actually work?”
Ms Vestager is beginning a second term as European commissioner for competition, with an expanded role that has seen her labelled the “most powerful regulator of big tech on the planet”.
In her first term, she levied record-breaking fines against Google and forced Amazon and Apple to pay huge sums in unpaid tax, drawing the ire of US President Donald Trump who said she must “hate the US”.
Yet although she said she had been able to stop companies breaking European competition law, and punish past misconduct, she acknowledged that “recovery of the markets” was a “work in progress”.
This included two major cases against Google, the firm which has drawn the toughest actions from Ms Vestager (Google has appealed both judgments and the Android verdict).
In 2016, Ms Vestager warned Google to stop restricting third-party rivals on its AdSense search advertising platform, subsequently fining the firm €1.49bn (£1.28bn) in March 2019 for illegal actions “over 10 years”.
Yet although she said Google had stopped restricting rivals, Ms Vestager acknowledged that commercially “nothing has changed”, with Google still dominating the market in search advertising.
“That is a really sad example,” she said, saying it showed that even if a firm allowed competition it “doesn’t necessarily change anything in the marketplace because [it has] already won the market”.
Also in 2016, Ms Vestager fined Google a record-breaking €2.42bn (£2.1bn) for promoting its product advertising system Google Shopping ahead of rivals and downgrading their websites in search results.
Three years on, she said the changes she had required Google to make had “given more rivals visibility and more clicks to merchants that work with rivals, but very little traffic to the rivals themselves”.
She added: “We will keep monitoring this to see what should happen next.”
Faced with the difficulty of restoring competition in markets that were now dominated by monopolies, Ms Vestager said she was investigating reforms to modernise competition regulation for a digital age.
Saying she wanted to “prevent the tipping points from happening because otherwise the market repair becomes so difficult,” she suggested monitoring large companies more closely, by checking what she called “a de facto private regulator [setting] the rules for this market”.
But she stepped back from imminent rule changes, saying “we haven’t made any kind of decisions. We have opened a debate about this”.
Ms Vestager’s comments have been met with frustration by complainants in the case against Google Shopping, who last year wrote an open letter calling on her to take tougher action against Google.
“Google’s changes are just time-wasting window-dressing,” said Shivaun Raff, co-founder of Foundem, the comparison shopping service which brought the case against Google in 2009.
“It is well past time for the commission to enforce its decision. The comparison shopping market is on its last legs and needs intervention urgently, or there might not be any competition left to protect.”
Google did not respond to a request for comment.
In addition to policing competition, Ms Vestager has been given a new role as European Commission executive vice president for digital, with a mission to boost technology in the region.
Asked if she felt optimistic about the use of technology, she said: “I do. We may not want to have technology of facial recognition, but we definitely do want technology for tumour recognition, for recognition of all the things that we would want to detect early so that we get better health, so we can fight climate change.
“Technology still holds a lot of promise. But in order to fulfil that promise, we need to trust it. And for that, we need to get in control of the dark side.”
Author: Rowland Manthorpe