Dominant US tech companies could be forgiven for feeling victimised.
Yesterday, the European Commission announced the launch of an inquiry into competition in the e-commerce sector.
This follows closely behind its announcement on 15 April that it had sent Google a “Statement of Objections” outlining its view that the search engine was abusing its dominance by favouring its own comparison shopping service in its search results.
On the same day, the Commission announced a separate investigation into whether Google was abusing its dominance or entering into anticompetitive agreements with the manufacturers of Android mobile devices by requiring pre-installation of its own apps like Google+, Chrome and Gmail.
This will be déjà vu for Microsoft, which faced a similar investigation for bundling its browser, Internet Explorer, onto Windows desktops, culminating in a binding commitment from Microsoft to insert into European Windows releases a "choice screen" suggesting to users other browsers that they might install. The screen certainly popped up on my PC (can’t say I opened it) but, in March 2013, Microsoft was fined €561 million for failing to comply adequately with this commitment.
Last year, the highest fine ever imposed by the Commission was upheld in court: €1.06 billion on Intel for abusing its dominance in offering rebates to HP, Dell and other computer manufacturers if they purchased the majority of their CPUs (central processing units) from Intel.
Dominant American tech companies certainly seem to have had a rougher ride from European antitrust regulators than from their US counterparts, leading to grumblings west of the Atlantic that the Europeans are, in part, driven by a wish to assist their own challenger companies. Even President Obama has hinted as much.
European sector inquiries (and their national equivalents) are certainly not immune from political pressure. Such pressure is widely acknowledged as a contributing factor in the instigation of a UK investigation into retail banking for small businesses and individuals.
The e-commerce inquiry does not overtly target dominant US brands. The intention is to investigate barriers to cross-border trade, as the vast majority of European online shoppers buy from within their own country.
Still, a clear line of inquiry will be vendors with an online presence in multiple countries, of which the market leader is obviously Amazon. Such companies face scrutiny as to whether they compartmentalise geographic markets to ring-fence the more lucrative and dissipate competition.
Sector inquiries do not start with an assumption of antitrust practices, but they may reveal such practices and lead to investigations of companies suspected of unlawful behaviour. The US giants could therefore be forgiven for thinking “what fresh hell is this?”. Yesterday’s piece in the New York Times reporting on the inquiry certainly betrayed such suspicions:
"European officials say the overhauls are not aimed at American tech companies, which often hold large market shares in the digital industries that have sprung up in recent years.
Yet by trying to change how Europeans gain access to digital and telecom services, policy makers will inevitably have to contend with American tech companies that have used their large domestic market — with few internal restrictions in areas like trade compared with Europe — to outmuscle their European competitors, which have struggled to grow beyond their national borders."