The Court of Justice of the European Union on Tuesday upheld a record-breaking fine of €2.4 billion against Google. Europe’s competition minister, Margrethe Vestager, touted the decision as a victory for “digital fairness.” But what does that mean? This may explain more about me than anything related to competition enforcement, but growing up, my dad always told me when I made an appeal to fairness: “fair is a place you take your pig.”
The nebulous concept of “fairness” begs the questions: fair to who? And who decides what is fair? Fairness is a subjective standard that relies on the person deciding’s judgment. The major difference between American and European competition enforcement is how we answer those questions.
Europeans want to make sure the business landscape is as “fair” as possible to competitors while Americans have historically preferenced the experience of consumers.
Fairness to competitors sounds nice until you realize that it means a fusion of corporate and government power at the expense of consumers. What’s best for consumers usually means what is less expensive and higher quality. In this case, Europe fined Google for promoting Google Shopping, a service that helps customers compare prices for different goods and save money. Instead of encouraging similarly situated services to improve or market themselves more effectively to customers, Europe decided that it is Google’s responsibility to undercut its own service, even if that service is higher quality or saves its customers more money.
It isn’t just happening in Europe. Canada enacted a 3% digital services tax this year on mostly American tech companies. That’s about $5 billion over the next 5 years. Apparently, if you can’t generate your own innovation culture domestically, just take from others who have been successful.
That’s what “fairness” instead of consumer welfare gets you. It means Europe and Canada acting to protect the interests of its businesses while bleeding its American competitors dry.
It may also be why the European Commission just released a scathing report detailing the abysmal status of innovation and growth in Europe, much attributable to this approach. The report’s author, Mario Draghi, sums it up well: “Europe’s households have paid the price.”
This protectionist turn has been made possible with the enactment of the Digital Markets Act (DMA). Europe’s DMA upended the rules of the road specifically for a handful of the most successful and popular American tech companies. In short, it criminalized standard competitive behavior so that Europe could levy huge fines and prop up their domestic competitors at the expense of their own people.
Commissioner Vesteger can dress up her payday all she wants, but this is yet another example of Europe cracking open an American piggy bank for a quick political payday.
Image generated by NetChoice using ChatGPT’s DALL-E.