Being a global company has its advantages. To earn a lot of money abroad. But the biggest US tech companies are finding that there’s a downside as well: Every country where you make money is a country that may try to regulate you.
It’s difficult to keep track of all the tech-related antitrust action happening around the world, because it doesn’t always seem noticeable. In Europe, which has long been home to the world’s most aggressive regulators, Google alone was fined $2.7 billion in 2017, $5 billion in 2018 and $1.7 billion in 2019. This amount would be disastrous for most companies. , but they are little more than rounding errors for the reporting corporation. $61.9 billion in last quarter’s revenue.
However, increasingly, foreign countries are going beyond slapping fines. Instead, they are forcing tech companies to change the way they do business. In February, Australia passed a law that gave news publishers the right to negotiate payments from other Internet platforms—effectively Facebook and Google. In August, South Korea became first country To pass a law forcing Apple and Google to open up their mobile app stores to alternative payment systems, jeopardizing their hold on 30 percent commissions from developers. And in a potentially major ramifications case, Google will soon have to respond to the Turkish Competition Authority’s response. Demand To stop favoring your properties in local search results.
The consequences of such cases could force the new rule beyond country borders, creating natural experiments that regulators in other countries could emulate. The fact that Google and Facebook have accepted Australia’s media bargaining code, for example, could spur similar efforts in other countries, including Taiwanhandjob Canada, Even more America. Luther Lowe, who as Yelp’s senior vice president of public policy has been lobbying for more than a decade for an antitrust action against Google, refers to the phenomenon as “treatment creep.”
In other cases, companies that are being forced to change their business model overseas may decide to adopt the change globally before being forced. After the Fair Trade Commission of Japan settled the investigation, Apple decided to apply solution—Allowing audio, video and reading apps to link to their websites to accept payments—globally.
“Sometimes it’s the market driving it: Companies decide it’s too expensive to have different compliance strategies in different markets,” said Anu Bradford, professor of international and antitrust law at Columbia University. “Or, sometimes, it’s in anticipation of imitation regulation: They know it’s there, and they’re not waiting for the Russians or Turkey to make their case.”
While it hasn’t received the same amount of media attention as Australia and South Korea, the case in Turkey may be the biggest deal. That’s because it takes into account how Google uses its power as the gatekeeper for most Internet traffic.
The case is about local search, like when you search for “restaurants near me” or “hardware stores”. This is a huge category of search traffic-nearly half Of all the Google searches, according to some analysts. Google’s critics and competitors have long complained that Google unfairly uses its dominance to drive local search results into its own offerings, even if it is not the most useful result. Think of it like that, if you search Google for “Chinese restaurant,” there will probably be a widget at the top of the results page that Google calls Onebox. This will include a section of Google Maps and some Google reviews of Chinese restaurants near you. You’ll have to scroll down to find the top organic results, which can be from Yelp or TripAdvisor.
This dynamic has puzzled Google critics and competitors for years. One of those aggrieved contestants, Yelp, started the case By filing a complaint with the country’s competition authority in Turkey. Google argues that its local search results are designed to be as helpful as possible to users, not to pad its bottom line. But Turkish regulators disagreed that Google was “abusing its dominant position in the general search services market to promote its local search and housing price comparison services to exclude its competitors” from Turkish competition law. Article 6 is violated.” (I am quoting a translation provided by a Turkish lawyer.) In April they fined About $36 million. This is less than what Google earns every two hours on average in 2020. But while the penalty was modest, the rest of the decision was not. The authority issued a preliminary order ordering Google to offer a way to display local search results that does not favor itself over competitors.
At present the matter is in limbo. The competition authority has yet to issue a “rational opinion” detailing its findings. Then, Google will have an opportunity to submit its proposal for compliance with this decision. It will be up to the Competition Authority to decide whether the offer is good enough or not.
This is not Google’s first rodeo in Ankara. In 2018 the Competition Authority made a similar decision regarding Google Shopping, finding that Google privileged itself over other comparison-shopping sites. It came on the heels of a similar EU case, but with one key difference: in that case, the EU accepted Google’s solution, even though its competitors argued it was insufficient. Turkish officials did not. This gave Google a choice: come back with a solution that regulators would accept, or pull the plug on Google Shopping in Turkey. The company opted for the latter, simply shutting down its comparison shopping module in the country.
Google can do the same thing in the present case. But the stakes will be much higher. Local search is a big part of the overall search pie, and Turkey, with a population of 85 million people, is a big place. Abandoning local search would be taking away a commonly used feature in a large market. This means the company has a huge incentive to propose a fix that will not be denied by the competition authority. But this in turn carries a complimentary risk: any solution adopted in Turkey could be sought elsewhere.
Yelp’s Luther Lowe said, “If you’re one of these globally dominant companies, the downside is that if one of those jurisdictions becomes a living example in the wilderness of an antitrust measure, that’s a big domino.” -Impact is risk.” “Because all of a sudden, Amy Klobuchar can grab her smartphone at the Senate hearing where Sundar Pichai is testifying and say, ‘Mr. Pichai, I just activated my Turkish VPN, and it appears that Turkey’s Consumers are getting better deals than consumers in Minnesota.
What could it look like? Google has not publicized any proposed measures; Emily Clark, a spokeswoman, said the company awaits the release of a full opinion before ascertaining its legal obligations. Yelp argues that whoever wins organic search results should also harness their API power right to Onebox results, on the principle that Google’s own algorithm has already found them to be the most relevant results. In other words, if a search currently leads to a Google Maps result in Onebox, but the first link below is from Yelp, Yelp should populate Onebox instead—meaning you’ll see Yelp reviews first. , not Google Reviews, when trying to figure out where to get dinner.
Such changes, if widely adopted, could dramatically reshape the flow of a large portion of Internet traffic. As analyst Rand Fishkin famous In 2019, more than 50 percent of Google searches end without a user clicking on another site. This is partly because, as markup Document In the past year, Google’s own properties or “direct answers” accounted for more than half of the first page a user sees when searching on mobile.
“If this jurisdiction forces them to behave in an interoperable and non-discriminatory manner, that fundamentally replaces Google’s core mechanism as turnstiles,” Lowe said. “You get a huge influx of traffic to third party services.”
It’s easy to see why a company like Yelp would want a crack at top billing. The question is whether Turkish regulators will force Google to give it up—and, if so, whether Google will go along or send Turkish users back to the original 10 Blue Link. Either way, the results probably won’t be confined to Turkey’s borders. American tech companies conquered the world. Now the world wants to win back.
This story originally appeared on Wired.com.