Business leaders and politicians have been speaking about how the world is becoming “flat” for over a decade. Country borders were fading, regulations were being lifted, and profits were being enjoyed by companies of all sizes. Right after Donald Trump was inaugurated in January, however, the Economist came out with a provocative article entitled “The Retreat of the Global Company.” Its argument is that our flat world is becoming increasingly bumpy. Certainly, the record fine of €2.4 billion ($2.7 billion) that the EU levied on Google has left a mighty lump.
The real story about the Google fine is not its size, but the future compliance precedent that has been thrown down. The EU began probing into complaints on behalf of European shopping sites back in 2010. Google has been largely successful in avoiding any serious collateral damage. However, EU antitrust chief Margrethe Vestager has wasted no time in requiring Google to stop its practices. The firm has to do so within 90 days or else face a fine equating to 5% of the daily revenue of Alphabet, Google’s parent company. It seems there is a new sheriff in town.
While Google is furiously trying to figure out how to comply with the EU’s restraining order, it must also deal with a ruling handed down by the Canadian Supreme Court. A small Canadian technology firm called Equustek Solutions Inc. found that a distributor, Datalink Technologies Gateways, wrongfully repackaged and sold one of its products. Google removed the related pages from the Canadian version of its search engine, but the court ruled that the search results must be removed worldwide. Its logic hinges on the fact that protecting freedom of speech does not also mean protecting the right of pirates to unlawfully sell goods around the world. It has stacked another powerful precedent on top of the EU decision.
Are all the regulatory guns pointed at Google justified? Well, yes and no. Regarding online shopping, there is no doubt that Google uses its muscle to promote its own shopping services over those of its competitors. Google argues, however, that its ad platform offers a way for companies both big and small to promote their products. The Canadian Supreme Court decision was crafted to protect the interests of Canadian entrepreneurs who are being ripped off outside of Canada. The danger here is that governments and companies will use this ruling as a justification for censoring content from the web based on the situation in their home countries.
Globalization is not in retreat because Google has to pay a big EU fine, or because the Canadian Supreme Court has ordered the tech giant to take down a few webpages. These incidents, however, do represent the trend that the Economist identified at the beginning of this year.The world was never flat, but it is about to get a bit bumpier. It is ironic that China has become the biggest champion of globalization, while the US and the EU adopt protectionist measures. Google has a target on its back, and these recent precedents will only fuel the fire. Let’s just hope that in the war between governments and companies, the consumer is not the biggest loser.
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