It’s been a busy week in the world of tech.
In fact, I can hardly keep up with it.
When I had to decide on a topic for the blog, I was torn between multiple major events.
Eventually, I settled on the “biggest” event in the tech space: Google’s $2.7 billion fine from the European Commission, the executive arm of the European Union (EU).
To many people, this may just seem like a bad day for Google.
But the technology company — which is still deciding whether or not to appeal the fine — could walk away from this altercation with more issues than just a lighter wallet.
The Google fine is just the latest fairly aggressive move against U.S. tech companies from the EC, raising the question: Are we starting to see targeted regulation in the technology sector?
Let’s dig a bit deeper…
Why Did the EC Fine Google?
I would like to say that this $2.7 billion fine has come out of the blue, but it hasn’t.
Google has been embroiled in a debate with the EC for years, and the fine comes after the close of a seven-year investigation.
The EC alleges that Google unfairly promotes its own shopping platform, which detours traffic that otherwise would benefit other retailers.
You actually probably know what I am talking about. Whenever you search for a product on Google, a shopping box will pop up at the top of the page. This often dissuades people from scrolling past the box to look at other options.
What can I say? People like pictures. And, if such action was as intentional as the EC claims, Google was being brilliant.
But the EC doesn’t share my applause.
It has given Google 90 days to adjust the feature or face heavier penalties.
This could cut into Google’s profits, which raises investor concern.
Should Technology Investors Worry About Increased Regulation?
We talk about regulation a lot in the technology world.
Investors are quick to blame regulation for a lack of profits, as they view government interference as a key setback for technology companies.
But despite all this whining, technology companies don’t face that much formal regulation. Rather, the regulatory challenges they face come from them expanding into long-established sectors where regulations do exist.
A good example is the self-driving car effort. Companies have to get licenses to test self-driving cars.
But even these old regulations don’t thwart progress. When California denied Uber a license to test its self-driving cars, Uber just moved the operation to Arizona.
But the EC-Google fine is a more targeted attack. It indicates a new interest in policing technology companies in their own spaces. Plus, the EC has gone after multiple American technology companies, not just Google.
Some say the EC is punishing the Silicon Valley for innovation. Others view it as a long-needed crackdown.
But the bottom line is: Should investors be worried?
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First, it’s true that mega-tech companies like Amazon, Google, and Apple have benefited from being pioneers in the technology space. Technology is still fairly new, which has allowed many companies to shape their own rules and defy government requests. We saw this when Apple refused to open the San Bernardino shooter’s phone: The company was protecting itself.
But even though regulation is creeping into the technology space, these companies probably will stay on a profitable course.
The honest truth is that these companies are now giants: They aren’t bothered by flies.
Even with the EC ruling, Google is hardly quaking in its boots. The company dusted off the allegation like summer camp gossip and quickly issued a statement where it “respectfully” disagreed with the ruling.
I am curious to see where this goes.
Realistically, we may see more confrontations between technology and the law. But the technology companies, at least the ones worth their salt, are ready for the challenge.