The expected guilty EU antitrust verdict against Alphabet-Google’s flagship “general search service” for abusing its dominance, will be a tipping point for Alphabet-Google this summer. It will effectively divide Google’s history into the two-decade-long, Google pre-monopoly-enforcement era, from the impending Google monopoly-enforcement era, that will likely last a decade plus, if the only plausible proxy, Microsoft, is any indicator.
For the last decade overall, and the last seven years in the EU, Google, its lawyers and PR team have masterfully delayed this inflection point from becoming a reality. Their delay tactics bought the company invaluable time as a business to broadly extend, entrench, and consolidate its massive monopolization across several of the most crucial functions of the Internet ecosystem.
As a stock, the delays have helped to fortify the company’s financial resilience with the Alphabet restructuring, and with Alphabet-CFO Ms. Ruth Porat’s sage belt-tightening and skilled investor whispering, which has been instrumental in helping increase Google’s stock 87% in her two years in the job.
What most don’t appreciate here is how the creation of the Alphabet corporate structure affords Google the capability and convenience to more easily break itself up to unlock value to deflect and minimize the impending stock risk if an EU antitrust remedy involves, or signals a future structural component.
As a news story, Google purposefully has taken by far the lowest extended public profile I have seen since the company went public in 2004.
Google obviously appreciates that it unilaterally can greatly minimize any viral nature of any negative Google news by starving the upcoming EU-Google-antitrust-fire of oxygen of its public attention, by commenting minimally publicly or with “no comment.” This lessens news interest in the event, at the time, and in total, which in turn effectively demotes the algorithmic ranking of news stories on the topic, much more than if the antitrust action was taken against any company other than the world’s info-opoly.
Anyone that tracks Google closely knows that Google News’ coverage of Google itself has plummeted relatively during this period, from being the legendary, self-promoting, amplifier of all new, cool, and 10x innovative, things Google, to Google seldom even showing up as a named technology category of news. This is a great side benefit of being: the world’s only aggregator and ranker of the top 75,000 news sources in Google News with one billion readers; the world’s TV with a billion plus viewers; and also being the world’s info-opoly – where the masses access to the world’s information… is power.
It is clear from these clever preparations that Alphabet CEO Larry Page knows this historic Google-antitrust inflection point is coming.
Why and how will this expected historic EC DG-Comp decision herald a new future for Alphabet-Google and the Internet ecosystem?
A lot will change.
Brand/Reputation Risk: Alphabet-Google, one of the very top global brands in every ranking, will go from being able to legitimately claim publicly that it has done nothing wrong, and is innocent of any antitrust charges against it, to officially being found guilty of abusing its search monopoly by destroying competitive choice and innovation in the world’s biggest market, fined, and required to remedy the harms by helping restore the competitive market they destroyed. (Alphabet-Google can and will appeal to Europe’s High Court, but experience indicates it would be a longshot for Google to be exonerated.)
The reason Google has been so relentless in insisting it is not a monopoly, it is not anti-competitive, and it has done nothing wrong, is that its foundational search franchise is built upon the notion that it is an honest broker of the world’s information, that has not and would not violate its 2 billion users trust.
Central to all of Google’s settlements and proposed settlements, has been being able to publicly claim, they are an innocent, virtuous, and generous victim. Obviously, they believe this perception is crucial to their brand and reputation.
Just this week we learned from a Barron’s Survey of institutional investors about which companies are most respected. Wells Fargo’s storied problems with breach of trust made it drop from #7 to last in the ranking of 100 companies in America. This extreme won’t happen to Alphabet-Google, but directionally this inflection point in Google’s history is not one of getting even more respected, but getting less respected. Changes in trajectories matter because they are inflection points.
Domino Risk: Precedent also matters.
This expected foundational EU finding that Google is a search monopoly gatekeeper, that abuses its dominance requiring ongoing strong remedies, will make it much easier for the EU to apply this finding and enforcement regime to more verticals than just shopping (like travel, hospitality, etc.), to the EU’s Android OS/Google Play case, to the EU’s search advertising case, and to potential future charges of antitrust abuse in search-dependent products, in addition to Google Play.
Within the EU, this official precedent and fact, that Google is an abusive monopolist, can be used by private companies in private actions in EU member countries and possibly even leading to increased antitrust-related actions in EU member states as well.
In the U.S. and around the world, it provides other antitrust authorities a critical evidence base, and a successful antitrust prosecution template to emulate or modify that makes it easier and less scary for others to follow based on their own nation’s laws.
For the world antitrust community, the EU’s Vice President for Competition, Margrethe Vestager, has proven to be the quintessential fair, tough, and brave antitrust enforcer, and to have devised a patient, objective, straightforward, fact-driven, unassailable, approach and process, that even Google has not been able to sully.
In sum, the next decade-plus will be very different for Google than its first two decades, if the EU as widely expected rules Google an abusive monopolist requiring serious remedies to restore competition.
The domino effects this narrow case with broad implications will have, will create an ongoing media and social discussion over a prolonged period of time that will have a negative brand and reputation effect. As explained here, Google will be able to cope with, and minimize these downsides better than any other company could. Simply Google can make this bad situation, appear less bad.
Nevertheless, this new impending Google is-guilty-of-gatekeeper-monopolization reality and dynamic, will not only change Google’s future, but everyone else’s future that finds or monetizes information via Google’s gate to the globe’s information.
[Originally Published at Precursor]