EU Imposes Billion Dollar Fine on Google Search
Consumption is the sole end and the sole purpose of all production. The true measure of the value of every commodity, therefore, is the quantity of labour which it enables a man to purchase or command. In this instance, the consumer in this story is the European citizen who seeks information, or perhaps a rival service seeking a fair path to that citizen’s attention. Let us ask whether the arrangement imposed by the European Commission serves them, or whether it serves merely to discipline a producer who has become too efficient at his own craft.
The Commission has levied a fine of one billion dollars upon Google Alphabet Inc., accusing the firm of anti-competitive practices within the European Union. The charge is specific: that Google utilized its dominance in general search to boost its own specialized services, thereby demoting rival offerings in the search rankings. The Commission argues that this constitutes a distortion of the market, harming competitors and, by extension, the consumers who rely on those competitors for choice. It is a claim that requires us to look past the spectacle of the fine and examine the nature of the competition itself.
One must begin with sympathy for the position of the digital merchant. It is natural for a man to excel in his own trade, to improve his methods, to lower his costs, and to offer a superior product. If Google’s search engine is indeed more useful, more rapid, and more accurate than the alternatives, then its dominance is not a crime; it is the reward of industry. The consumer benefits when the best service rises to the top, provided that the ranking is determined by merit and not by manipulation. The producer’s interest is to innovate; the consumer’s interest is to receive that innovation. These interests align, until the producer begins to use his size not to improve his own product, but to obstruct the path of others.
The Commission’s contention is that Google did just this. They allege that the firm rigged the boardroom of the search results, placing its own goods on the pedestal while pushing rivals into the shadows. This is a serious accusation, for it suggests that the mechanism of selection - the search algorithm - has been corrupted. If true, then the consumer is indeed being defrauded. They are shown a result that is not the best, but the most favoured by the proprietor. In such a case, the market fails to perform its essential function: to direct resources to their most productive use. The consumer pays in attention and in money for a service that is inferior to what the market could provide if left to its own devices.
Yet we must apply the test of sympathy carefully. Who is the victim here? Is it the family in Berlin or Paris who pays a few cents more for a search result, or is it the rival firm that finds its door locked? The Commission seems to believe that the consumer is the primary victim, for they claim that choice is reduced. But let us consider the nature of choice in the digital age. The consumer does not choose between one search engine and another in the way they might choose between a baker in one street and a baker in the next. They choose the tool that works best. If Google has demoted rivals, it may be because those rivals were indeed inferior, or it may be because Google made them so. The distinction is subtle, but vital.
The Commission, in its zeal to protect the rival services, may be mistaking the symptoms of competition for the disease of monopoly. The rival firms are the ones who have organised to seek this regulation. They have a concentrated interest in seeing Google penalised, for every dollar Google gains is a dollar they do not gain. The consumers, however, have a diffuse interest. They do not organise to demand a fine; they organise, if at all, to demand a better search. The proposal of this fine, therefore, comes from an order whose interest is often different from that of the public. It comes from those who wish to be protected from the very success that benefits the consumer.
We must ask: does this fine serve the consumer? If it forces Google to improve its own product, to make its rivals better, then perhaps it does. But if it merely punishes Google for being good at Google, then it serves only to protect the less efficient from the discipline of the market. The consumer’s welfare is not served by the preservation of weak competitors. It is served by the triumph of the strong, provided that strength is earned through merit and not through the corruption of the rules.
The fine of one billion dollars is a heavy hammer. It may break the back of the monopolist, or it may shatter the very engine of innovation that benefits us all. The European Commission believes they are restoring fairness. I suspect they are merely rearranging the deck chairs of a ship that is already sailing toward the horizon. The consumer, standing at the bottom of the queue, cares little for the fairness of the deck. They care only for the bread. And if the baker who bakes the best bread is fined for baking it too well, then the queue will grow longer, and the bread will grow stale.