Mario Monti is a former prime minister of Italy and EU commissioner.
The European Commission sanctioned Google on Sept. 5, for abusing its dominant position in the bloc’s advertising technology market. The sanction had two components: a €2.95-billion fine, as well as the obligation of introducing changes to the company’s business model that will ensure the discontinuation of the abuse.
In reaction, U.S. President Donald Trump issued a statement on how “Europe today ‘hit’ another great American company.” Taking to social media, he warned: “We cannot let this happen to brilliant and unprecedented American ingenuity and, if it does, I will be forced to start a Section 301 proceeding to nullify the unfair penalties being charged to these taxpaying American companies” — a proceeding that would presumably lead to the imposition of tariffs by the U.S.
But, with all due respect, Trump is missing a key point: There is no discrimination here. The Commission sanctions cases of abuse of dominance that take place in the EU market, whether they’re carried out by EU or non-EU companies.
More to the point, this is exactly what the U.S. antitrust authorities do with respect to the U.S. market. Incidentally, just yesterday, the Federal Trade Commission in Washington opened an investigation into the advertising practices of Google and Amazon, much along the lines set out by the Commission.
We’ve been here before — and with the same players too.
Let’s rewind 20 years to when I was Competition commissioner: In 2004, the Commission sanctioned Microsoft after a long investigation involving constructive discussions with Co-founder Bill Gates, then-CEO Steve Ballmer and then-General Counsel Brad Smith, among many others. Eventually, it imposed a fine of almost €500 million and, more importantly, ordered changes to the company’s business model.
Interestingly, the complaints that prompted the investigation mainly came from U.S. companies, including the start-ups of the early days of the internet economy. They were complaining that Microsoft, which had — through its merits — legally earned a highly dominant position in operating systems for personal computers, was leveraging its position onto neighboring markets by obstructing other companies in a variety of ways, thus stifling innovation.
In fact, I remember one such U.S. start-up — only about three years old when we began our investigation — had a rather intriguing name: Google. And I remember then-CEO Eric Schmidt visiting the Commission to praise our “courage.”
Incidentally, European corporate leaders, who sometimes urge the Commission to be less rigorous in its enforcement of competition rules, should also keep these past cases in mind — especially if they want a more innovative and competitive European economy, as we all do. Perhaps they should put the issue into a broader perspective and think twice.
With its Microsoft decision, the Commission — followed by several other competition authorities across the world — allowed for the emergence of Google and other start-ups to become hugely successful. In fact, it put pressure on Microsoft to change its behavior and embrace a corporate culture building on collaboration rather than monopolization, supporting open-source projects and fostering partnerships with other companies.
And many analysts believe it is these changes, stimulated by the past determination of competition authorities, that help explain Microsoft’s success over the last decade, under the leadership of CEO Satya Nadella.
Against this backdrop, Trump’s view that EU competition policy is driven by discriminatory motivations against U.S. companies is simply unfounded. What’s true is that in any national or supranational context like the EU, institutions such as competition authorities and central banks have been set up in the eminent American tradition — dating back to the late 19th century (with the Sherman Anti-Trust Act of 1890) and the early 20th century (with the Federal Reserve Act of 1913) — precisely with the goal preventing these abuses, whether by companies in the marketplace or by governments abusing future generations via high inflation.
Of course, it’s no surprise that leaders with an autocratic vision wouldn’t feel at ease with institutions entrusted by governments and parliaments of the past with preventing power from becoming absolute. But it was the U.S. that set postwar Germany, and later the EU, on this track.
When occupying the country after World War II, America imposed the creation of two institutions on the newly born Federal Republic of Germany: First, the Deutsche Bundesbank — an independent central bank modeled on the Federal Reserve System, meant to avoid a repetition of the hyperinflation that contributed to the advent of Nazism. Second, the Bundeskartellamt competition authority, modeled on the Federal Trade Commission and the Antitrust Division of the Department of Justice, with the power to prevent the reemergence of cartels and trusts in heavy industry — another factor that had contributed to Hitler’s aggression and World War II.
Then, at Germany’s request — and on the basis of the country’s democratic and economic resurgence — these two institutions were transposed to the EU level.
So, today we must thank the U.S. not only for its decisive help in saving the continent from Nazism and Fascism and protecting it from Soviet Communism, but also for injecting postwar Europe with such powerful antidotes to the aberrations of the past.
Perhaps Trump might forgive us if we aren’t ready to give up this great American legacy.
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