(The Big Disrupt) Google: Why Google's future In Europe Is About Get Expensive

With the news of Google being slapped with a record 2.4 billion fine, it caps an end of a saga that really isn't over just yet. Google were found last week to be guilty of abusing their dominant market position in search to promote its Google shopping service over its competitors. 

This really should send shivers down the spine of other tech giants such as Facebook, Apple and Amazon who habitually use their dominant position in one market to bolster a service in other. Indeed, one of the reasons why Google, Facebook, Apple and Amazon are so feared is because they can use their dominance one or more markets along with a large war chest to bury even their most strident competitors into submission. 

The last decade or so has produced one case study after another of US tech companies beating their competitors to a pulp whether its Apple taking over the smartwatch market in a matter of months or Facebook using its dominant position in social media to copy snapchat out of existence as the self-titled camera company currently hovers just above its original IPO price.  

With this in mind, it's little surprise that Walmart, a highly profitable company that represents 14% of the $700 billion grocery market, has 4,692 stores and a world class distribution network took a big hit on Wall Street when Amazon, barely a blip in the marketplace, made headlines for buying Whole Foods, which only has 466 stores and a 1.2% share of the market.  

In any other case, Walmart would have nothing to worry about but since Amazon enjoys a dominant position in more than one marketplace and has one of best loyalty programs ever in Amazon prime, it can quickly hoover up market share offering its other services (for a time at least) free to entice prime subscribers to shop at Whole Foods online or click and collect in store.  

In short, Google, Facebook, Apple and Amazon pose a threat to competition in any market they enter and no one knows this more than the EU. While the 2.4 billion fine isn't exactly going to bring Google to its knees, the EU has been sniffing round Google's mobile open source OS Android accusing the Mountain View based company of forcing manufactures to load its apps over competitors which should concern Google as it may have a better case however, not much has happened since last year.        

In truth, Google and other US based tech giants run the risk breaking EU antitrust law as it focuses on the anti-competitive behaviour of dominant companies that effect the it actual competitors as opposed to the American tradition of protecting consumers from the use of  the dominant firms market power. 

While Google dominance in the search and mobile OS markets has been probed by the Federal Trade Commission in the past, it has largely come out of its battles with the FTC unscathed as the FTC has been unable to prove that Google's dominance negatively impacts consumers given most of Google's products and services are either free or priced competitively in the markets it operates in.  

What this means is that the FTC can't punish Google for using its dominance in one or more markets to bolster a service in another even if that service itself becomes a dominant player so long as it provides net benefits to the end consumer.  

However, antitrust in Europe is a different monster entirely and Google in particular could end up cutting more checks than it bargained for as the EU legal process is nowhere near as litigious as its American counterpart and Google has a lot of powerful enemies, Oracle, Microsoft and Newscorp among them, who are more than willing provide evidence against the company through the EU's complaints driven system. 

In sum, Google may be 2.4 billion pounds lighter but with the EU looking to bring Silicon Valley behemoths like it to heel and its bevy of rivals all too willing to help, fines in the billions could become business as usual. 

(The Big Disrupt) Brexit: Mark Wallace breaks down the macroeconomic effects of Brexit and the single market

Check out and watch this insightful video by Mark Wallace as he breaks down the likely effects of the UK's historic vote to leave the EU.

(The Big Disrupt) The Digital Revolution on Wheels: Connected Cars & the Single Market

Check out and watch this insightful video by EU Observer TV on the growing connected car market and the role the digital single market plays in it's growth

(The Big Disrupt) Brexit: Why Brexit could bad news for Tech and media companies.

For years now officials and proponent of a more united Europe have dreamed of expanding the single market to digital commerce dubbed as the "digital single market" and with the UK voting to leave the EU after just over 4 decades in it, the dream may well be over.

While members of both the remain and leave campaign have stated their desire to trade with the EU and take part in the digital single market, It's very likely that the Brussels will drive a truly hard bargain to discourage other nations looking to follow the UK's example which may mean companies operating in the UK may become highly disadvantaged to firm based in remain EU member states. 

Tech and media stocks  were hit hardest when the UK voted leave confirming tech and media companies' apprehension of a leave victory wasn't unfounded. However, the real damage is likely to be long term as UK based tech firms will be at a serious disadvantage to firms still in the EU as while the UK may still take part in the digital single market, the EU may also hobble UK based firms by imposing freedom of movement and capital restrictions on the UK. 

While nobody is entirely clear on what happens next as the UK hasn't applied to leave the EU and EU leaders are unwilling to negotiate an exit until they do, should they impose freedom of movement and capital restrictions, it will almost definitely trigger a  number of tech companies to consider moving their headquarters elsewhere, most likely to be Germany, Ireland or France. Vodafone's CEO Vittorio Calao stated publicly two days before the vote that the world's second largest mobile phone company would consider moving their HQ if the freedom of movement and capital were restricted and with the EU having a strong incentive to make an example of the UK, the odds of the EU either severely restricting either one or both is not entirely out of the question. 

The biggest problem for tech and media firms is that the digital single market, which offers a streamlined set of rules and benefits, is now fractured . What this means is that tech and media firms have to follow two sets of rules to do business in Europe and this seriously put the UK at a huge disadvantage tech and media firms would largely do business freely in the UK but face a mountain of red tape as soon as they want to enter a market anywhere east of the English channel.

  

While the proponents of Brexit have a point when they say that the EU has no choice but to allow the UK to access the single market as it's comfortably one of the biggest and most lucrative markets in Europe and strategically important to a number of Silicon Valley giants (particularly Google and Apple) who represent just over half of the digital single market, all this likely won't stop tech and media firms jumping ship to other EU members to avoid the red tape that the EU would likely impose on the UK to access it. 

Proponents know this than most which is why very few have called to end the current limbo the UK finds itself in as it has dithered to trigger article 50 which would start proceedings for a UK exit out of Europe. There is even strong support for the EU blocking UK's access to the digital single market altogether with German finance minister Wolfgang Schauble adamant that a vote to leave the EU also means an exit from the single market. While it's currently unclear whether this will happen or not, it's more than likely it will be hotly contested for what looks like months and years to come. 

In sum, Brexit looks like it could be a disaster for tech and media firms for reason stated above but with the current state of uncertainty over what will happen next, the true effects of this historic vote has yet to reveal itself.