Big Tech: Too big for its boots

NEW DELHI: The digital arm twisting that had become emblematic of Big Tech companies, is having a moment of reckoning off late. Last month, Google suffered a major defeat over its search engine, which generates the majority of the company’s $307 billion in annual revenue.

A judge in the District of Columbia declared the search engine a monopoly, maintained in part by the billions of dollars Google coughs up each year to companies like Apple to lock in Google as the default search engine presented to consumers when they buy iPhones and other gadgets.

While the American administration has not offered its proposed sanctions, observers believe there could be close scrutiny over whether Google should be permitted to continue making exclusivity deals with OEMs that ensure its search engine is the default option for consumers.

Things are getting heated in the offices of the search engine behemoth, as well as the smartphone leviathan.

This week, Google and Apple were directed to pay billions in fines and back taxes after the European Union rejected their final appeals. Google lost its last bid to overturn an EU antitrust penalty to the tune of 2.4 bn euros ($2.7 bn).

The 27-nation bloc's top antitrust enforcer pulled up the Silicon Valley giant for violating antitrust rules with its comparison shopping service. The commission punished Google in 2017 for unfairly directing visitors to its own Google Shopping service to the detriment of competitors.

Simultaneously, Apple lost its challenge against an order to repay 13 bn euros ($14.34 bn) in back taxes to Ireland, after the European Court of Justice issued a separate decision siding with the commission in a case targeting unlawful state aid for global corporations.

The cases date back to the previous decade. The relevance of the bloc’s competition law in digital markets was underscored by stakeholders in Europe who believe that many smaller companies or rivals will be able to go to different comparison shopping sites and not depend on Google to reach out to customers.

Last week, even UK regulators slammed the company for taking advantage of its dominance in adtech to thwart competition.

Britain's Competition and Markets Authority said the company gives preference to its own services to the dismay of online publishers and advertisers in Britain’s 1.8 billion pound ($2.4 bn) digital ad market.

Interestingly, Google is still appealing its two other EU antitrust cases: a 2018 fine of 4.125 billion euros involving the Android OS and a 2019 penalty of 1.49 bn euros over its AdSense advertising platform.

Awakened by such episodes, the EU has drawn up a new law called the Digital Markets Act to prevent Big Tech companies from cornering online markets.

The DMA is a sweeping legislation that compels tech giants to give consumers more choice by complying with a set of dos and don'ts. The EU also has new laws aimed at cleaning up social media platforms and regulating artificial intelligence.

In the larger scheme of things, the ruling against Google and Apple was viewed as a surprise victory for the EU's competition commission, which has previously trained its guns on Amazon, Starbucks and Fiat with tax rulings that were later overturned on appeal.

These were part of the EU's initiatives to stamp out sweetheart agreements that allowed companies to pay little to no taxes.

Undoubtedly, this latest development has reignited the global discourse around MNCs not paying their fair share and engaging in anti-competitive practices, a clear sign of Big Tech getting too big for its boots.