Dismantling Giants

Breaking Up Is Hard to Do

Google for Disort-DISTORTED
Picking apart Google could be easier said than done.
  • Why it matters

    Why it matters

    • Concerns in Europe over Google’s market power is putting pressure on E.U. and national politicians to look at Google and other Internet firms’ market power. This may lead to new regulations affecting operations of the U.S. company and others.
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  • Facts

    Facts

    • The E.U. parliament will vote on Thursday on a proposal to unbundle Google.
    • The European Commission has been investigating Gogole for four years on the misuse of market power.
    • Germany’s economics minister Sigmar Gabriel warned in May that a breakup of such firms should be seriously considered.
  • Audio

    Audio

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This week, the E.U. parliament began the debate over the dismantling of Google.

This is not a new idea.

In mid May, in a debate about Google and politics, Sigmar Gabriel, the German economics minister, called on politicians to consider unbundling the ownership of “information capitalists,” even if only as a last resort.

His listeners reacted with concern, because of the market power of the search engine giant.

Despite its linguistic proximity to expropriation or “dismantling,” the concept of ownership unbundling is not social or social democratic but is often seen as an instrument of regulatory policy in capitalist economic systems.

In the United States – backed by the Sherman Act – large companies have often been unbundled.

In Germany, there have been no prominent unbundling procedures up to now, because no appropriate legal basis existed.

But politicians have long considered introducing a legal framework to unbundle large corporations suspected of misquestionable activity.

A clause was introduced in 2013 modelled on an E.U. law to allow the German Federal Cartel Office to take any  corrective measures necessary; such as spinning off joint ventures, for example.

But it’s still uncertain whether the regulation provides enough legal basis for more aggressive plans. After all, these would encroach on the the rights of companies and their investors. In any case, national regulations probably lack the reach to unbundle international firms like Google.

National regulations probably lack the reach to unbundle international firms like Google.

Assuming politicians manage to tackle the issue on a European level, the question arises as to how the various business areas of Google should be divided to safeguard against the abuse of power.

Over 92 percent of Internet searches in Germany are conducted using Google. This means that Google’s treasure trove of data makes it unassailable. This may have long-term impact on all economic areas and new developments, including for the automobile industry.

If the search engine was separated from all other Google services, it could ensure non-discriminatory access for service and product providers to Google users through neutral search results on the one hand; and non-discriminatory access to the trove of data on the other hand. 

The independent search engine should be overseen by trustees or an advisory board, who could ensure search-engine neutrality and non-discriminatory access to data. The conduct-related obligations currently being considered by the E.U. commission only make provision for an optical separation of Google’s own services. With that, it can hardly be ruled out that competitors will be disadvantaged in the search. Since the algorithms are not transparent, it may only be possible to find evidence of discrimination in rare cases.

 

To contact the author: gastautor@handelsblatt.com.

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