Google practices run afoul of some European values

The EU's anticipated enforcement action against Google is a reminder to US firms that the American ideology that may unconsciously undergird their products and even their industries doesn't translate perfectly across borders.
The EU's anticipated enforcement action against Google is a reminder to US firms that the American ideology that may unconsciously undergird their products and even their industries doesn't translate perfectly across borders.PHOTO: REUTERS

IS THE European Union (EU) out to get Google?

You might think so, considering that EU regulators are poised to bring anti-competitive conduct charges against the search giant, while US regulators happily settled their differences with Google a couple of years ago.

Add the European regulatory efforts to force Google to let people eliminate certain permanent- seeming records of their past conduct, and you might think there's some deeper cultural explanation, such as old world scepticism of new world technology.

It turns out that culture does matter in the EU's action against Google - but for more complicated reasons than you might think.

Google has, in fact, achieved greater market penetration in Europe than in the United States, so Europeans, as opposed to their bureaucratic overlords, clearly like Google very much.

But European antitrust law has a subtly different focus than its American counterpart. It protects competitors, not competition.

And therein lies a tale of what makes European values different from American ones.

Antitrust law is an immensely complicated field, and the non-expert - like me - enters at his peril. Nevertheless it's worth knowing that, as interpreted by the European Court of Justice, Article 82 of the Treaty on the Functioning of the European Union differs from US antitrust law, which is based on judicial interpretation of the 1890 Sherman Act.

The European treaty provision prohibits "abuse" of a "dominant position within the common market". This prohibition imposes on a company what the European court calls "a special responsibility not to allow its conduct to impair genuine undistorted competition".

This language suggests a different emphasis than US law, which focuses on prohibiting anti-competitive behaviour that harms the consumer.

The European approach implies that market dominance itself can be the source of a legal violation, even if the dominant company isn't trying to act anti-competitively.

US courts don't think in terms of the abuse of a dominant position. A brief filed before the Supreme Court by US government antitrust agencies a decade ago actually argued that the Sherman Act is not an "abuse of dominance" law at all.

A decade ago, it was commonplace for antitrust scholars to say that EU and US laws diverged sharply as a result of this value difference - that US law protects competition itself for the benefit of consumers, while EU law favours the existence and rights of competing businesses.

To be sure, a rival view exists today, namely that more sophisticated economic theory is leading to convergence between American and European standards.

Yet the difference between American regulators' attitude towards Google and that of their European counterparts strongly suggests continued divergence.

Why should this difference in values exist?

It's tempting to conclude that the EU's political culture emphasises the usefulness of multiple large actors competing in parallel - much like the union's member states.

In this cultural sense, Google looks like the US itself: an imperially dominant player whose very position of dominance threatens the capacities of actors who might want to compete. It doesn't help for this analysis that Google is a US-origin company. It also shouldn't escape notice that the information revolution is still broadly understood in Europe as having an American origin.

The US values of freedom of speech and information, taken to the point of absolutism, haven't found the same degree of popularity in Europe as has the information technology itself.

The EU's willingness to limit the flow of information, for example by allowing individuals the right to remove embarrassing information about themselves, is in this sense of a piece with European limitations on hate speech that would never be allowed in the US.

When it comes to information, Americans tend to believe that the government should allow any result the private market allows. This, after all, is the heart of Oliver Wendell Holmes Jr's famous appeal to the metaphor of the marketplace of ideas to justify free speech under the First Amendment.

In practice, Google need not panic. European penalties for the abuse of dominance are less draconian and more gentlemanly than US penalties for violating antitrust laws. Europe has no analogue to American criminal antitrust law, and there are no treble damages available to those who show a violation. It could even be argued, as my colleague the antitrust authority Einer Elhauge suggested to me in conversation, that weaker penalties are a reason that Europe has more aggressive standards of legal violation.

Yet the EU's anticipated enforcement action against Google is nonetheless a reminder to US companies that the American ideology that may unconsciously undergird their products and even their industries doesn't translate perfectly across borders.

Information may want to be free, but nation states persist. And they, or their proxies like the EU, still get to do the regulating.

In the 2004 case Verizon Communications v Trinko, the US Supreme Court didn't go quite that far, but it did essentially say that dominant market players should not be obligated to share their competitive advantage in order to promote competition.

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