EU Fines Google in a Dose of Net Neutrality Schadenfreude

Via engadget:

The European Commission's long-running investigation into Google has finally come to an end, and it's not good news for the search giant. Commissioner Margrethe Vestager confirmed today that the company has been fined €2.42 billion ($2.72 billion) for unfairly directing users to its own products rather over those of its rivals. It's the biggest financial penalty the Commission has ever handed out, eclipsing the €1.06 billion ($1.4 billion) charge incurred by Intel back in 2014.

In a statement, Vestager said: "Google has come up with many innovative products and services that have made a difference to our lives. That's a good thing. But Google's strategy for its comparison shopping service wasn't just about attracting customers by making its product better than those of its rivals. Instead, Google abused its market dominance as a search engine by promoting its own comparison shopping service in its search results, and demoting those of competitors.

Via calls for "net neutrality"** in this country, Google has been arguing that ISPs must act as common carriers of its content and must ignore the fact that nearly half of all US ISP bandwidth investment is used without compensation to support the business model of just two content providers (Google and Netflix).  Google does not want ISP's to somehow favor other content providers over themselves, even though these others cost orders of magnitude less to serve than does Google's Youtube division.

Well, as I wrote before, the EU is bringing karmic justice to Google via this decision.

Hah!  I think this is a terrible decision that has nothing to do with economic sanity or even right and wrong -- it has to do with the EU's frequent historic use of anti-trust law as a way to bash foreign competition of its domestic providers, to the detriment of its consumers.  But it certainly is Karma for Google.  The EU is demanding that Google's search engine become a common carrier, showing content from shopping sites equally and without favor or preference.  The EU is demanding of Google exactly what Google is demanding of ISP's, and wouldn't you know it, I don't think they are going to like it.

** I put "net neutrality" in scare quotes because I think it is a term that means exactly the opposite of what it says.  Neutrality is what we had 2 years ago, with no regulation that favored either content providers or bandwidth providers in the typical negotiations and back-and-forth that occurs in every supply chain.  "Net neutrality" actually means tipping the scales and being non-neutral in favor of content providers over ISP's.

  • Brad Richards

    I understand your position: video content providers use a lot of bandwidth. But I disagree that this is a problem.

    Currently, there is no contractual agreement between an ISP and content providers. The end customer decides how much bandwidth (or speed) they require, and how they want to use that bandwidth. If the end customer watches lots of video, they will want a fatter connection. Meanwhile, the content providers also pay for their access to the net, on their end (but not on my end).

    The point of net neutrality is to prevent a set of contracts on both sides of the ISP connection. If ISPs had contracts on both ends - end consumers and content providers - then the ISPs will no longer be serving the end customer (or will do so even less than they do today). I watch video, so I have a fat connection, that's the end of my influence. Amazon pays the ISP to give their video service over all others, but I want to watch CBS - which now suffers delays and packet loss.

    It's *my* connection - I don't even want those bidding wars to start. If they do, the end consumer will be entirely at the mercy of whichever content providers pay the ISP the biggest bribes.

  • james

    Intel has appealled its fine. Hasn't paid a dime so far.
    Google has annoounced they pan to appeal.
    This could go on longer than the EU

  • morganovich

    brad-

    i think that analysis is a hobgoblin. it has never happened. with ISP's spreading, competition ramping up, 50mp satellite coming in 2 years, 5g, etc, the idea that an ISP is some sort of monopoly that can screw its users like that and get away with it seems awfully fanciful.

    meanwhile, the damage to the network from net neutrality is very real. some bandwidth needs to be preferenced over other bandwidth to enable efficient network construction. my IP phone is low bandwidth, but needs very low latency or it sounds awful. a file transfer on bitorrent is the opposite. it needs big bandwidth, but is not sensitive to 200ms delays.

    if all traffic needs to be treated equally, then i either build a low latency network for all traffic and carry files needlessly quickly and therefore drive up costs or i run it as high latency and cheap, and voip doesn't work.

    NN is a terrible program both technically and from a basic rights standpoint and was designed to address a problem that did not exist and is extremely unlikely to even exist.

  • sean2829

    Google gets slapped with $2.7 billion fine, Europe suffers massive cyber attack. Just coincidence I'm sure.

  • ErikTheRed

    Brad is very correct about the problems (this behavior has been discovered and documented by people who know what they are doing), but as you point out Net Neutrality is a terrible solution: as close as you can get to literally burning money. If we are going to be legislatively stuck with ISP duopolies as most of us are now, it may not be the most terrible solution. The root cause of these problems is the mandated duopolies; everything else flows from that.

    To me, this is the crux of the debate: the Net Neutrality people have a point and in most people's minds that gives them credibility. The problem is that they have a really awful solution.

    What we really need are free markets.

  • johnmoore

    "net neutrality" is like socialism - a very dangerous kool aid.

  • a_random_guy

    You're talking about something else entirely: quality of service. QoS is built into the protocol already. Your VoIP packets - if your router is properly configured - already have priority. That's your decision, because it's your router and they're your data packets. NN would allow your ISP to mess with your traffic. Not using the VoIP provider who paid them money? Your packets suddenly no longer have priority.

    The point about mandated monopolies and duopolies is also correct, of course. However, that is not so easily solved. In cities, there may be enough density to actually get some competition amongst providers. In towns and rural areas...not so much, even without regulations. 50Mps satellite connections with decent latency (I assume you mean OneWeb)? I have a bridge to sell.

    There are _already_ problems with ISPs messing with people's traffic. One service paying for priority over a competitor - not yet widespread. However, ISPs injecting ads into your web pages - that's been a reality in some areas since at least 2013.

    I want a pipe, a dump pipe. But my pocketbook isn't nearly as deep as Amazon, Google, Netflix &co. This is one of the few places where government regulation looks like a useful answer.

  • Indeed the EU is using antitrust laws to bash US intruders, but there is another motive. It follows the trial lawyers' M.O. There is a pile of money sitting around waiting for someone to tap it. In the case of trial lawyers it is insurance companies. In the case of the EU, it is Google's stranded assets that are being held in European banks awaiting a change in American tax law. Whoever moves first will win the pot of gold.

  • obloodyhell

    But Google's strategy for its comparison shopping service wasn't just about attracting customers by making its product better than those of its rivals. Instead, Google abused its market dominance as a search engine by promoting its own comparison shopping service in its search results, and demoting those of competitors.

    }}} Well, as I wrote before, the EU is bringing karmic justice to Google via this decision.

    So, you're taking issue with GOOGLE doing the exact same thing with ITS products and services, that MICROSOFT has been doing with ITS products and services... which you have defended up and down the line multiple times in the last decade or so I've been reading?

    Nice double standard, Warren.

  • obloodyhell

    Indeed.

  • obloodyhell

    }}} with ISP's spreading, competition ramping up,

    Uhhhh, yeah, meanwhile Comcast and a couple other companies gobble up every other cable provider, And the phone business is still AT&T, and.... no one (not surprisingly) So I have two -- TWO -- options for Broadband where I live, AT&T and Cox. Both charge about 60 bucks a month for identical service. THEORETICALLY I could go with Verizon, but I heard they are shutting it down and... verizon service sucks where I live.

    Satellite? That's fine if all you do is unidirectional, but once you want to game, well, forget it, the latency -- driven/limited by the speed of light -- will kill you.

    No, the competition is not increasing. I'm not overly afraid of things, it's in too much flux for a true monopoly to last, but... let's not encourage it.

    **I** am the client. Sell to ME, not to the highest bidder.