Business

Germany to Google: maybe you should be treated like an electric company

Google HQ

Above: Google HQ

Image Credit: Photo: Marcio Jose Sanchez, AP

Has Google reached the point where it needs to be regulated like a utility?

At least one German governmental agency is considering that possibility.

The Federal Cartel Office in that country has drawn up a 30-page document laying out alternatives if the tech giant is assessed as being too dominant in its market, according to a story yesterday in The Times of London.

One of the possible alternatives reportedly mentioned in the document, notably in the area of search engine advertising, would be to treat the tech giant as the German government might treat an energy or water provider — as a regulated monopoly.

“Regulation can be a difficult balancing act,” Parks Associates‘ director of research Brett Sappington told VentureBeat. On the one hand, “regulators want to prevent huge players from squeezing smaller local companies out of the market, [and] protect the rights and privacy of consumers of consumers.”

On the other hand, he said, “it may be large companies that have the scale to really drive development of new technologies and services.”

It’s not clear how the model of regulating electricity prices, for instance, could be applied to managing search engine advertising. Or even if it needed, since Europe, like the U.S., has anti-monopoly laws in place to restrain or even break up a company that prevents competition in its market.

One model, according to the Cartel Office’s document, would be specify exactly how Google has to deal with its competitors, and when those competitors would have to appear on the first page of search results.

In February, Google settled an inquiry brought by the European competition commission that it stifled online search by rivals, but the agreement has received criticism from Germany and France for being too soft on the company.

More complex

European responses to Google’s growing market power are more complex than simply ensuring fair competition.

The European countries “have a much more hands-on approach than is often present in the U.S. market,” Sappington noted. “[Plus,] European consumers are often much more skeptical of the intent of large technology companies than are many U.S. consumers.”

And European leaders increasingly understand that foreign tech companies are eating their lunch, and not with a good glass of wine in some outdoor café.

A recent internal document from Deustche Telecom, for instance, reportedly acknowledged that the European information and telecommunications industry is now dominated by American and Asian firms.

Additionally, the new president-elect of the European Commission has promoted home-grown European technology for the continent, with the digital economy being his chief focus.

Last month, European Union Competition Commissioner Joaquin Almunin wrote to his colleagues in the European Union about other markets where Google is active, including “social networks, video catalogue, streaming, mobile phone operating systems and apps.” Of course, as anyone who follows Google knows, that is only a fraction of the markets it is pursuing.

Neither the Cartel Office nor Google have responded to our request for comments.


We're studying conversion rate optimization. Take our quick survey and we'll share the results with you.