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By Rana Foroohar
Fines continue to rise, and companies too. The impressive anti-trust sanction of the European Union (EU) of 4,300 million euros against Google for abusing its power in the mobile phone market was almost double what Google had last year accused of favoring the results In search of their buying service in the face of their competitors.
In both cases, the central question was how Google was using the power of its huge ecosystem – it accounts for about 90% of the EU's leading research markets and its Android software is used in more than 80 % of the world's smartphones – to eliminate its competition.
Google appeals this latest decision, and will present technical arguments, with varying degrees of merit, to prove that this is not a monopoly But the case also casts a troubled light on the concentration power in a small group of companies. The resulting oligopoly is the great economic and political challenge of our time.
Several surveys published in recent years show that concentration rates and profits have increased in the majority of industries in the United States since the 1990s. Jason Furman, former director of the Council of Economic Advisers, said this phenomenon could indicate the emergence of barriers to entry in some markets.
Academician David Autor reported the same consolidation to a decrease in the participation of workers in the US economy. There is also evidence that a small group of "superstar" companies outperform other companies, not only in terms of profits but also in terms of productivity.
In a paper released last month, OECD economists linked the insufficient spread of new technologies with low productivity growth. Large companies, particularly in the most digitally connected sectors of the economy (technology, finance and media), are incredibly productive. The others, not so much. The result is that economic growth as a whole has suffered.
Another Cause of Corporate Power Concentration is the "political catch". The United States has developed modern antitrust policy and still criticizes the old "statist" Europe. But a study by academics Germán Gutiérrez and Thomas Philippon shows that EU markets are, in fact, more competitive. They have lower concentration levels, less extraordinary benefits and fewer regulatory barriers to entry.
The study reveals that growing political lobbying in the United States is the main reason why concentration levels between the two regions have diverged since the beginning. "The European institutions are more independent than their American counterparts," he says. "They implement pro-competitive policies more strongly than any country."
This serves as a counterpoint to the often-used argument in Silicon Valley that Europeans do not have a giant superstar or internet because they are simply not innovative. . Apparently, American technology groups have forgotten that it was a British computer scientist, Tim Berners-Lee, who invented the global computer network (WWW) while he was working at CERN, the European research laboratory in Europe. physical. 19659003] The fact that Margrethe Vestager, the EU's competition commissioner, has not been intimidated by Google's recent lobbying efforts to change copyright laws in Brussels , is an important point in his favor. Joseph Simons, chairman of the Federal Trade Commission (FTC), pledged "vigorous" enforcement of antitrust laws that will include hearings later this year on issues such as competition and consumer protection. They would be the first general policy hearings on the subject since 1995.
Makan Delrahim, head of the antitrust division of the US Department of Justice, recently told the Financial Times that he thought "the data is an important badet ". Although he is not opposed in principle to business models or trading deals with large technology companies, he is concerned about the abuse of dominance. One of the cornerstones of anti-competitive behavior is the US case against Microsoft in the late 1990s, in which the company was found guilty of using its monopoly of the operating system to smother competitors such as Netscape, a competing browser. Other critics believe that Google's current behavior is similar to that of Microsoft. Regulators on both sides of the Atlantic have to deal with this situation.
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