As the European Parliament votes to break up Google, is it politicising competition law?

Philip Booth, professor of insurance and risk management at Cass, and editorial and programme director at the Institute of Economic Affairs, says Yes.

Taking competition action against innovative industries is bad policy – unless the EU wants a stagnant economy.

Google is operating in a sector where change happens very quickly, and dominant firms that provide poor service can be rapidly undermined by new entrants.

If companies are prevented from making profits from temporarily dominant positions, it reduces the returns to innovation and will discourage others from taking the huge risks involved when entering these sectors.

If they are subjected to arbitrary and heavy-handed political intervention, then the risk premium that investors will demand will increase.

In this business, advertising and search facilities are best bundled together to create the necessary revenue stream. Customers have plenty of alternatives to Google – literally two clicks away.

Steve Kuncewicz, a media lawyer at Bermans, says No.

Google is an easy scapegoat for legislators, partly due to the transformative effect it’s had and continues to have upon our daily lives.

It’s fair to say that it is a business which probably scares politicians, who are increasingly being forced to regulate a technological environment which is fluid at best.

That said, competition law in the EU exists for a reason, and it’s a less esoteric (although no less important) issue than, for example, privacy. If you’re doing business in the EU – as the UK well knows – you have to play by its rules.

This is a clear symbolic gesture that no business is above regulation, or too big to avoid scrutiny or provide assurances that they aren’t the only game in town.

Bricks and mortar businesses have grappled with these issues for years; now the online industries are having to do the same.

This issue was forced by Google’s competitors, but will be decided on by a higher authority.

Related articles