E.U. Antitrust

Google Wedging Into Trans-Atlantic Trade Talks

schmidt-phone-Reuters
How do you redirect these calls from the European Commission?

For nearly two years, U.S. and European negotiators have been essentially at loggerheads over a potentially unprecedented pact to create the world’s largest free trade zone.

In Germany, the most vocal opposition has formed around fears that a new transatlantic trade agreement, or TTIP, could undermine health, privacy and other local legal standards, which are perceived to be stronger than those in the United States.

But perhaps nowhere is the divide between Europe and the United States so great as the one that exists around the digital business models of a Silicon Valley global leader – Google, which is the subject of a five-year antitrust investigation by the European Commission.

The case remains open. The European Union’s previous competition commissioner Joaquín Almunia made three proposals to resolve the issue, but each time was forced to pull back in the face of opposition. New European Commission President Jean-Claude Juncker has signaled his interest in resolving the dispute, which he views as a key issue in developing an E.U. digital single market.

“Despite cooperation between U.S. and E.U. regulations, there has been some tension over Google in the past and new action wouldn’t be useful for the TTIP negotiations,” said Gabriel Siles-Brügge, a lecturer in politics at the University of Manchester.

Earlier this week, Google Executive Chairman Eric Schmidt met with the European Union’s new antitrust chief, Margrethe Vestager.

While Google, the world’s search engine leader with a share of the European search market exceeding 90 percent, is not a visible participant in the closed-door TTIP talks, the Mountain View, California-based giant has become a symbol of U.S. hegemony in the data world.

Earlier this week, Google Executive Chairman Eric Schmidt met with the European Union’s new antitrust chief, Margrethe Vestager, ahead of a decision on how to take the investigation forward.

She is under pressure to take action. In November, the European Parliament passed a non-binding resolution calling on her to split Google’s search engine operations in Europe from the rest of its business – in a move to rein in the Internet company’s dominance in the search market. The move prompted a massive response by U.S. politicians.

The competition commissioner has met with a number of complainants since replacing Mr. Almunia, who tried and failed three times to settle with Google. Each time, European companies, including German publisher Axel Springer, complained the proposed deals didn’t go far enough.

On Monday, Ms. Vestager will meet with the European Parliament to discuss the annual E.U. competition report. Some hope she will use the opportunity to lay out a way forward on Google.

“She will be in a position to announce something on Monday if she wants to,” said Ramon Tremosa, a Catalan member of the European Parliament and a member of the parliamentarian competition committee. “And I’m certainly going to ask her about her plans for Google.”

“Without any pressure, Google has no intention to change.”

Ramon Tremosa, member of the European Parliament

Mr. Tremosa said it’s time for action. The Internet giant has had five years to further expand its market dominance. “In my opinion, only with the threat of a fine or regulation will Google finally move,” he told Handelsblatt Global Edition, pointing to the Commission antitrust action against Microsoft as an example. “Without any pressure, Google has no intention to change.”

That’s not the only issue Google has in Europe. Several newspaper publishers – including Axel Springer, Burda, WAZ and the Müncher Merkur – are in a five-year battle with the software giant over the publishing of excerpts in its search listings.

The fight has become so prominent that Germany’s parliament, the Bundestag, in 2013 passed a so-called ancillary copyright law for print media, the Leistungsshutzgesetz, or LSG. The law requires search engine providers, in particular Google, to pay license fees to publishers for displaying search results and excerpts of news stories.

But it’s had no real effect so far. For one, critics have attacked it for limiting freedom of speech by decreasing the use of snippets through search engines and blogs, which are essential for any effective Internet research.

For another, the German parliament has made significant changes to the legislation. Under a much weaker version, news aggregators may display single words or very small text excerpts from publishers’ websites free of charge. The problem is there is no clear definition of what constitutes a small excerpt.

vestager-DPA
Margrethe Vestager is concerned about resolving competition issues with Google. Source: DPA

 

This is just one example of the divergence in European and U.S. approaches to copyright and privacy in the digital world.

As TTIP talks drag on, the divergence has bubbled to the surface, pulling in President Barack Obama.

In an interview with the U.S. media during a visit to Silicon Valley, Mr. Obama said some European companies “sometimes can’t compete” with American rivals and are “essentially trying to set up some roadblocks for our companies to operate effectively there.” He added: “We have owned the Internet. Our companies have created it, expanded it, perfected it in ways that they can’t compete. And often what is portrayed as high-minded positions on issues sometimes is just designed to carve out some of their commercial interests.”

Those statements drew a volley from German publishers, led by Axel Springer, accusing Mr. Obama of forwarding U.S. interests in its aggressive support of Google.

“This is a view that doesn’t fit into a functioning, trustful free-trade agreement,” said Stephan Scherzer, president the German Federal Association of Newspaper Publishers.

Mr. Scherzer believes Europe’s competition issues with the Internet giant could become a factor in the negotiations on free trade.


Video: Commissioner Margrethe Vestager meets the European Parliament.

“For the media, when it comes to TTIP, it’s important that existing frameworks for the free press and other media in Europe aren’t leveraged through a trade agreement, which could be one-sided,” he said.

Others, like Garrett Workman with the Atlantic Council, a think-tank based in Washington, are less convinced but don’t rule out the possibility. “I don’t think an antitrust case against Google will have a direct impact but it would not be helpful to the tenor of the negotiations,” he said in an interview.

Peter Chase, vice president of the U.S. Chamber of Commerce in Brussels, agreed that individual cases shouldn’t impact the talks.

“In general, I don’t see that a specific anti-trust case would impact TTIP directly,” he told Handelsblatt Global Edition. “Our competition authorities work closely together, but big cases often generate interesting politics.”

 

John Blau is a senior editor at Handelsblatt Gobal Edition. He covered the telecommunications and IT industries for nearly 20 years. To contact the editor: blau@handelsblatt.com

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