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!
My fellow interviewee and former Google employee Brendan Downey made some very good points when speaking on BBC Newsnight yesterday. Btw shout out to the BBC for promoting me to Associate Professor. While it is challenging to make a deeper coherent argument in less than 90 seconds, I felt it was a good conversation.
A Western tech powerhouse such as Google legitimizing China’s “Great Firewall” by introducing a censored search engine is most certainly reason for concern. Predicting the long-term effects of a potential re-entry of Google in the Chinese market, however, appears challenging.
Since Google exited in 2010, Chinese authorities have critically upped their level of censorship all by themselves, without the support of any Western company. Thus, it is unclear why the presence of a Google search engine would make matters worse than the status quo.
Contrary, disclaimers as constant reminders of censorship and supervision could potentially contribute to a desire for change of a critical mass. Moreover, the observation which topics provoke disclaimers could foster the gain of additional information within the country. From a more general perspective, market presence of strong global brands in a country in which most companies are state-run seems desirable.
It seems naive to believe that when Google exited China in 2010 under co-founder Sergey Brin, they did so mainly due the forced censorship of content. Many believe that Chinese-led cyber-attacks on its customers, specifically human-rights activists, and Google itself were the primary reason for Google’s backtracking.
In a letter Google’s employees demand to participate in ethical reviews of the company’s practices. This seems to be a brilliant idea going forward. But let’s recall that we are talking about a censored search engine as well as a news aggregation app. Neither of these likely would increase censorship when compared to the status quo but potentially offer upside. If Google though were to offer products such as email accounts or cloud services and allow Chinese authorities to access private customer information, this would turn the tides dramatically for the worse.
Google’s motivations to move back into the Chinese cyberspace–as first reported by The Intercept–with its censoring Mandarin search engine, internally called project “Dragonfly,” are clearly motivated by business considerations. The number of Chinese internet users has been growing by about 70% since 2010 while the growth rate over the same time period in the US did not exceed 20%. As a result, a fifth of today’s daily worldwide four billion internet users call China their home.
In a world where a company’s success and even more so its leaders is frequently measured in growth rates rather than volume, to forfeit a share of the pie in the single most important market by size seems an insurmountable challenge for a profit-driven company. Since the news broke, Google has been heavily criticized for “supporting” and “legitimizing” the Censorship of the ruling Communist party.
Read my opinion in the Washington Post to get a glimpse of an angle how democracy could perhaps benefit from Google’s re-entry into China.
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.