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Will Google go the way of Microsoft? 22.10.2020

An unprecedented lawsuit against Google has echoes of past efforts to rein in tech giants like Microsoft and Apple. Attempts to enforce antitrust laws have left some players in the dust, while others are fighting back.

The antitrust lawsuit brought this week by the US Department of Justice (DOJ) against Alphabet Inc.’s Google is an unprecedented challenge to the dominance of global technology giants. 

The suit — which alleges the firm has gained a monopoly by unlawfully paying phone manufacturers to make Google Chrome the default browser on mobile phones — is likely just the beginning. Earlier this month, a report from the US House Judiciary Committee called for vast changes to US antitrust law after concluding that Google and fellow US tech giants Apple, Amazon, and Facebook were abusing their market dominance. More suits against Google are also expected. 

The tech crackdown has gained momentum in Europe as well. On Wednesday, the European Parliament overwhelmingly backed plans to develop the “Digital Services Act,” legislation that seeks to significantly rein in tech giant’s power in the EU. 

The landmark lawsuit against Google is the latest in years of mounting government attempts to enforce antitrust laws against digital firms that once were scrappy start-ups but have rapidly developed into global powers with the potential to stifle competition and innovation. 

DOJ vs. Microsoft

In this groundbreaking 1998 case, the DOJ accused computer and software firm Microsoft of making it difficult for PC manufacturers and users to use web browsers other than Microsoft’s Internet Explorer, which came pre-installed on all Microsoft computers. The DOJ argued that Microsoft’s “bundling” of its web browser software with its operating system was the source of the company’s wild success — and that the move amounted to an unlawful monopolization, according to US antitrust law established in 1890.

Microsoft said that the two products belonged together. The company went on to win an appeal on the ruling, which would have required Microsoft to break up its business into two separate entities, one for software and one for operating systems.

In the end, the DOJ opted for a settlement with Microsoft that kept the company intact, with the tech company instead agreeing to share details of its computing interfaces with competitors.

Following the lawsuit, Microsoft ultimately fell behind other tech companies, fumbling the transition to mobile and losing to Google in the race for web browser dominance. The DOJ’s new case against Google draws directly from the Microsoft case, but with a narrower focus that could have a better chance of winning against appeal. 

EU vs. Microsoft

The EU followed through with a Microsoft lawsuit of its own in 2004, fining the American firm nearly half a billion euros for abusing its “near monopoly” status to crush the competition in markets for digital media players and low-end servers.

Microsoft was ordered to make several changes, including offering a version of Windows without its digital media player. The EU antitrust authority also required Microsoft to share its interface code with rival companies, so that competitors could ensure “full interoperability” with the Windows operating system.

  • Microsoft Media Player - IT-Unternehmen l Strafen (Imago/H. Rudel)

    EU: the great antitrust busters

    Microsoft tread the Windows ledge

    In 2004, the European Commission finished a five-year investigation into Microsoft and concluded that the US tech giant had exploited a monopoly on PC operating systems. The fine was €497 million ($579 million). Within 90 days, Microsoft was obliged to offer a Windows product without its ‘Mediaplayer’ product.

  • Microsoft (picture-alliance/AP Photo/T.S. Warren)

    EU: the great antitrust busters

    Another blow for Bill and Co

    In 2007, the European Commission went for Microsoft again, this time imposing a fine of €900 million. The reason was that they reckoned Microsoft had charged competitors unjustifably high license fees to avail of technical information. This violated previously agreed EU requirements.

  • Intel Chip - IT-Unternehmen l Strafen (Imago/Xinhua)

    EU: the great antitrust busters

    Intel Inside Job

    In 2009, a record fine was issued with the breaking of the €1 billion barrier. This time, it was the chipmaker Intel, fined €1.06 billion in what was part of a near-decade long dispute over cartel activity. The EU said that Intel had abused its market position by obliging clients such as Saturn and Media Markt to sell PCs made with Intel chips.

  • Microsoft (picture-alliance/dpa/M. Balk)

    EU: the great antitrust busters

    Just browsing, and just one browser…

    In 2013, Microsoft had to dole out another €561 million to the EU. This time, the company was accused of failing to offer an adequate choice of browser to its customers, as it had promised it would a few years earlier. The Commission said that from May 2011 to July 2012, Microsoft had failed to do this.

  • Speicherchip auf Kreditkarte Symbolbild Smartcard (picture-alliance/dpa/J. Büttner)

    EU: the great antitrust busters

    To Infineon – €100 million – and beyond!

    In 2014, the European Commission slapped a fine of €138 million on four different chip manufacturers, including the Munich-based company Infineon, which had to pay the vast majority of the total amount. Their sin was that between September 2003 and September 2005, they had engaged in price controlling activity with the likes of Philips and Samsung.

  • Google Online-Shopping - IT-Unternehmen l Strafen (picture alliance/dpa/S. Hoppe)

    EU: the great antitrust busters

    Ok Google, stop manipulating search results

    In 2017, Google was ordered to pay a whopping €2.42 billion fine into the EU coffers, with the Commission accusing the search kingpin of manipulating online shopping searches, abusing its market position as a result. The specific transgression was that Google had prioritised its own services’ price comparisons in search results ahead of its competitors.

  • Qualcomm und Apple - IT-Unternehmen l Strafen (picture alliance/Imaginechina/dpa/L. Shengli)

    EU: the great antitrust busters

    Qualcomm eats the forbidden Apple

    In 2017, Qualcomm, a chip supplier of US behemoth Apple, had to pay €997 million to the EU. The accusation was that the US company had been paying a fortune to Apple in order to thwart its own competitors. It meant that Qualcomm had abused an already dominant position to exclude other LTE chipset makers from the market.


EU vs. Apple

In July 2020, Apple successfully appealed a 2016 antitrust ruling from the European Commission that had ordered Apple to reimburse Ireland for €13 billion ($15 billion) in back taxes. The Commission had argued that the attractive tax rate offered to Apple by Ireland, the iPhone maker’s European base, amounted to illegal state aid, in the form of a “sweetheart deal” that gave Apple preferential treatment. The case centered on Irish tax legislation that the Commission argued had artificially reduced Apple’s tax rate, at times as low as 0.005%, for over two decades.

“The Commission was wrong to declare” that Apple “had been granted a selective economic advantage,” the General Court of the European Union said in the appeal verdict.

EU antitrust chief Margrethe Vestager filed a cross-appeal in September 2020, saying the Luxembourg-based court had “made a number of errors of law” in its decision. The Danish politician said the ongoing case is important for closing tax loopholes for multinational companies and ensuring transparency.

  • People wearing face mask go out for shopping at Apple Store of a commercial complex in Sanlitun, Beijing

    Apple breaks through $2 trillion market capitalization threshold

    Trailblazer

    Just two years after becoming the first US company to breach the $1 trillion market capitalization, Apple has scaled yet another summit; the iPhone maker has become the first US public company with a market value of $2 trillion. Shares in Apple have soared this year as consumers, stuck at home due to the pandemic, buy its devices to stay connected.

  • A sign of Saudi Aramco's initial public offering (IPO) is seen during a news conference

    Apple breaks through $2 trillion market capitalization threshold

    Beaten in the race

    However, Apple is not the world’s first $2 trillion-dollar company. That honor belongs to Saudi Aramco, which breached the mark in December last year on the second day of its public trading. The Saudi Arabian oil giant has slipped since then, hurt by a crash in oil prices, and has lost its crown of the world’s most valuable company.

  • Microsoft logo

    Apple breaks through $2 trillion market capitalization threshold

    Waiting in the wings

    Apple may soon be joined by American tech peers Microsoft and Amazon, which too have seen their shares climbing during the pandemic. Their stocks have been driven by a huge demand for their products and services, which allow consumers to work from home, stay connected with their dear ones, and make purchases online. Both Microsoft and Amazon have a market value of more than $1.5 trillion.

  • Apple CEO Tim Cook

    Apple breaks through $2 trillion market capitalization threshold

    New billionaire on the block

    Apple’s recent surge has catapulted Tim Cook, the company’s CEO, into the billionaires’ club, Bloomberg reported. The $2 trillion valuation will be a moment of vindication for Cook, who took charge in 2011 when the company was valued around $350 billion amid doubts whether he could take forward his predecessor’s zeal for innovation. Cook has pledged to give most of his wealth away to charity.

  • Steve Wozniak and Steve Jobs

    Apple breaks through $2 trillion market capitalization threshold

    Birth of garage startup legend

    Apple was founded by Steve Jobs and his high school classmate Steve Wozniak in 1976 in Jobs’ family garage. It was the first successful personal computer firm. Apple went public four years later in the biggest public offering since Ford Motor’s debut in 1956. By the end of 1980, the computer maker was more valuable than the iconic carmaker at nearly $2 billion.

  • Steve Jobs is seen announcing the Apple Macintosh computer at a shareholders meeting on January 24, 1984.

    Apple breaks through $2 trillion market capitalization threshold

    Back from the brink

    Apple’s next breakthrough came in the form of Macintosh, a computer with a graphical user interface. But the initial tepid response to the Mac, panned for insufficient memory and for being toylike, led to the ouster of Jobs in 1985. Jobs returned in 1997 to rescue the company from the brink of bankruptcy. Apple never looked back thanks to a succession of hit products like the iPod and the iPhone.

  • Steve Jobs demonstrates the new iPhone

    Apple breaks through $2 trillion market capitalization threshold

    The iPhone moment

    Apple’s most groundbreaking product remains the iPhone, the first phone to pack a music player, a web browser, and email capabilities in a single device. The iPhone, which started a smartphone revolution in 2007 and pushed competitors like Motorola and Blackberry on the brink, still is Apple’s money-spinner and is at the core of the company’s plans to grow its services business.

    Author: Ashutosh Pandey


EU vs. Google

The DOJ isn’t the first to take on the world’s most popular search engine. The EU has ruled against the internet giant for breaching antitrust rules three times since 2017. The European Commission has fined Google a combined €8.25 billion: for illegally boosting its comparison shopping service over competitors, for imposing illegal restrictions that ensured the use of the Google search engine on Android devices and, most recently, for illegal agreements with third-party websites that prevented Google rivals from placing their search advertisements there.

Google has appealed all three rulings. A verdict is expected next year.

Read more: Internet search services: Europe’s quest for online privacy

The EU is also mulling over whether Google’s plan to buy fitness tracker Fitbit would violate antitrust law. Critics have raised concerns the deal would jeopardize competition as well as data privacy, providing Google with access to mountains of health and wellness data. A ruling is expected in January 2021.

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