Tags: google | antitrust

Google and Co. Still Face a Long and Costly Antitrust War

Google and Co. Still Face a Long and Costly Antitrust War
(Sebastian Czapnik/Dreamstime)

By    |   Wednesday, 06 September 2017 12:47 PM

Intel Corp. rose to become the world's biggest maker of computing chips by churning out ever smaller and more powerful microprocessors on a rapid product cycle that averaged about 18 months.

Its legal battle with Europe's antitrust watchdogs over chip pricing has followed a much slower timeline: it has taken 10 years for Intel chalk up a win.

It's a pretty big win though. On Wednesday, the European Court of Justice ruled that a lower court did not give sufficient airing to Intel's arguments that the rebates it gave to customers who bought its chips did not actually harm competition. The judges in effect rejected the European Commission's position that it didn't need to prove harm since the rebates were inherently illegal given Intel's dominant position in the market for a certain kind of microprocessor. Now the whole thing will go back to the lower court and a final decision could take years.

The ECJ decision could embolden more companies to challenge the commission's antitrust rulings. It's the first time the commission has lost on appeal in more than 20 years, and appears to raise the bar on what types and the amount of evidence it takes to impose antitrust fines. Lawyers for mobile chipmaker Qualcomm Inc. and Alphabet Inc.'s Google, which both have separate competition cases underway, will scrutinize the ruling for signs of whether it improves their chances.

That said, it would be foolish to think that the EU's competition authorities, led by Danish ex-politician Margrethe Vestager, will simply back down. Vestager is more likely to set her lawyers the task of providing more evidence to back their claims. There's little chance she'll let her legacy at the commission be one of failure. She showed her steeliness in June when she fined Google 2.4 billion euros ($2.9 billion) for favoring its own shopping service in search results, and is soon to rule in a separate investigation against Qualcomm.

Also Europe's push back against the tech giants is bigger than this one case. Increasingly politicians and regulators -- both nationally and regionally -- are coming down harder on Silicon Valley companies, who often behave as if the rules of the old economy on everything from labor to tax don't apply to them. And while penalties that run into the billions may seem trifling for companies awash with cash, the potential remedies are a genuine threat to their business practices. 

For example, Germany recently passed a law that allows fines to be imposed on social networks like Facebook if they don't take down hate speech or other illegal content quickly. France is working on proposals to tax tech companies based on local revenues to curb what it calls "unfair" tax avoidance. In national capitals, as well as in Brussels, there's a willingness to consider new legal theories to enforce stricter rules.

Silicon Valley will surely fight back. That doesn't mean they'll be able to keep expanding with little respect for local niceties. Even in the U.S., the conversation about the power of a handful of tech companies is getting louder; the word "monopoly" is being thrown around with more frequency than in decades. Just look at the dust-up over a recent New York Times report that Google leaned on the New America Foundation to fire a bunch of scholars who espoused ideas on how antitrust laws need modernizing to keep up with the realities of the internet economy.

Intel may have prevailed in one skirmish, but Big Tech is still embroiled in a long war.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

Leila Abboud is a Bloomberg Gadfly columnist covering technology. She previously worked for Reuters and the Wall Street Journal.

© Copyright 2019 Bloomberg L.P. All Rights Reserved.

   
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Intel Corp. rose to become the world's biggest maker of computing chips by churning out ever smaller and more powerful microprocessors on a rapid product cycle that averaged about 18 months.
google, antitrust
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2017-47-06
Wednesday, 06 September 2017 12:47 PM
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