I am grateful to BeFM, South Korean public radio, to give me the chance to comment on their show “Morning Wave in Busan” on South Korea’s new legislation trying to rein in the control of tech giants such as Apple and Google over payments for content in their respective app stores. We talked about increasing competition, and thereby potentially increasing quality and/or decreasing prices for consumers, while increased fraud and privacy protection issues will likely bring about a challenge. Find the full interview HERE!
The European commission dishing out a record fine to Google for anti-competitive behavior appears among other t
hings to be a sign that the EU plans to crack down hard on anti-competitive behavior in the digital economy, an area that historically has been hard to govern due to its fast-paced nature. One deeper question arising from the ruling than the direct impact on Google is how will the EU treat bundling of digital services in the future. If forced bundling itself is interpreted as anti-competitive, then companies like Facebook, Intel and even Apple could be under threat. As of now, the EC fined Google for forcing handheld manufacturers into contracts via their market power that limit competition. While the same cannot be said Apple because of its closed ecosystem, if the EU’s claim would carry over from contracts to forced bundling in general, even Apple would be under threat.
The recent history would suggest that neither the DOJ nor the FTC will follow suit. The US, however, faces a problem or the danger to lose face in this particular case due to its reminiscence of the DOJ against Microsoft case in 1999, where Microsoft was fined heavily for forced bundling of the internet explorer with Windows. Also political forces could see Google as an easier target after the EU’s ruling to boost their reputation in the light of the DOJ’s failed case against the AT&T/Time Warner merger.
The stock market presumably did not react strongly since, even if Google were to change its business plan slightly, the lack of competition in search does not seem to be a major threat to Google. Furthermore, Google is well-positioned also with their own handheld device, the Pixel to respond. Also, I assume that most analysts share my sentiment that the US is unlikely to follow suit. See parts of my AP interview above.