Antitrust Case Against Google -2020 | UPSC

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IASbhai Daily Editorial Hunt | 16th Nov 2020

“What we fear doing most is usually what we most need to do.” – Tim Ferriss

Dear Aspirants
IASbhai Editorial Hunt is an initiative to dilute major Editorials of leading Newspapers in India which are most relevant to UPSC preparation –‘THE HINDU, LIVEMINT , INDIAN EXPRESS’ and help millions of readers who find difficulty in answer writing and making notes everyday. Here we choose two editorials on daily basis and analyse them with respect to UPSC MAINS 2020-21.

EDITORIAL HUNT #244 :“ Antitrust Case Against Google -2020 | UPSC

 Antitrust Case Against Google -2020 | UPSC  Antitrust Case Against Google -2020 | UPSC

Rajat Kathuria | Mansi Kedia
 Antitrust Case Against Google -2020 | UPSC

      HEADLINES:

Antitrust case in tech space needs to be built on intellectual evidence, rather than on ideology

      CENTRAL THEME:

Anti-trust proceedings against Google could mark a shift from the times when it, along with Microsoft, Amazon, Facebook and Apple, dictated terms in the tech world.

SYLLABUS COVERED: GS 2 : 3 : Competition Commission of India : Trade

      MAINS QUESTION:

Google is facing a new antitrust case in U.S. and India. It is alleged to have abused its Android operating system’s position in the smart television market.Comment -(GS 3)

      LEARNING: 

  • What is Anti-Trust proceedings ?
  • Consumer Protection
  • Cartelization effect
  • Predatory Pricing
  • Way Forward.

      INTRODUCTION: 

  • ANTITRUST LAWS : Antitrust laws are regulations that encourage competition by limiting the market power of any particular firm.

This often involves ensuring that mergers and acquisitions or monopolies, as well as breaking up firms that have become monopolies. 

  • CONSUMER PROTECTION : Antitrust laws are statutes developed by states to protect consumers from predatory business practices and ensure fair competition.
  • WIDE APPLICATION : Antitrust laws are applied to a wide range of questionable business activities, including market allocation, bid rigging, price fixing etc.

      BODY: 

THE TECH SPACE

  • THE CHARGES ON GOOGLE : The use of monopoly power to exclude potential rivals from gaining a foothold in the market, also known in competition law as “exclusionary conduct”.

Anti-trust proceedings against Google could mark a shift from the times when it, along with Microsoft, Amazon, Facebook and Apple, dictated terms in the tech world. 

  • MICROSOFT’s MARKET SPACE : In 1998 accused and found Microsoft guilty of using its considerable muscle in the operating system (OS) market to effectively destroy Netscape Navigator in the browser market.
  • THE MICROSOFT PACKAGE : Microsoft did this by bundling its own browser, Internet Explorer with its Windows OS and “refused to deal” with any computer hardware manufacturer who dealt with the now-defunct Netscape.

 Antitrust Case Against Google -2020 | UPSC

SOURCES : ECONOMIC TIMES

Microsoft’s almost complete dominance of the OS market at that time meant that no serious hardware manufacturer had the nerve to challenge it.

  • ALLEGATIONS ON GOOGLE : Google exercises exclusion by paying phone-makers such as Apple ; huge sums of money to pre-install its proprietary search engine on devices
  • Thus cementing its monopoly in search and sustaining it by the advertising profits it generates because of its dominance.
  • COMPETITORS CONCERNS : For competitors it is a virtuous cycle that gets created in search and advertising for Google but not so for consumers, who are deprived of alternatives.

Two years ago the European Commission (EC) had fined Google a record $5 billion for abusing its market power.

  • THE SEARCH DOMINANCE : The EC claimed that Google abused the ownership of its Android mobile operating system to reinforce dominance in search.

Specifically, Google forced Android handset and tablet manufacturers to pre-install the Google search app and its own web browser, Chrome etc.

  • EXCLUSIVITY IN MARKETING : The EC also found Google guilty of making payments to large manufacturers that agreed to exclusively pre-install the Google search app on their devices.

 Antitrust Case Against Google -2020 | UPSC

GOOGLE’S MARKET SHARE | SOURCES : TECH CRUNCH

TECH SUPREMACY

  • BATTLE FOR AI : One is the battle for technological supremacy between China and the US manifested in ambitions of dominance in Artificial Intelligence (AI).
  • COUNTER IMPACT : Presumably self-serving, was created in the US that to counter the state-led, data-abundant development of AI in China, the US needed to create its own national champions.

      IASbhai Windup: 

WAY FORWARD

  • DIGITAL CONGLOMERATES : This digital “conglomerisation” is reminiscent of the merger waves in the US in the 1980s and 1990s when several firms with free cash flows bought others in order to build empires.
  • MARKETING PUNISHMENTS : Managerial hubris are not resolved by the market punishing the bad managers because a firm has to maximise profits and efficiency which will be punished by the competitive forces of the market.

Antitrust action can reduce the exercise of market power and potentially improve the welfare impact.
 

  • A STRUCTURAL CHANGE : A structural remedy or breaking up the tech monopoly, while appealing to the popular spirit, is, according to us, a recipe for failure.
  • PROFOUND NETWORK : Google can be affected in this space for a short time or the broken entity will become big again sooner than later.

The case for or against antitrust action in the tech space needs to be built on powerful intellectual evidence, rather than on ideology.

       SOURCES:   THE HINDU EDITORIAL HUNT | Antitrust Case Against Google -2020 | UPSC

 

TRENDING NOW : Important The Hindu Editorials 

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