Billion-Dollar Fines Don’t Hurt Tech Giants, Ex-EU Enforcer Says
(Bloomberg) -- Silicon Valley is more worried about being forced to change how it does business than mega antitrust fines, according to the European Union official who pushed through landmark decisions against Microsoft Corp., Intel Corp. and Google.
While a 1.06 billion-euro ($1.2 billion) fine for Intel in 2009 sent a “big message” to tech giants, levying such costs isn’t the most important thing regulators can do, said Cecilio Madero Villarejo, who retired last month from his role as a deputy director-general in the European Commission’s competition authority.
“The number doesn’t matter -- what they care about, these companies, is that you declared them as having violated the law,” he said in an interview with Bloomberg. “What they hate” are “remedies we impose.”
The Spanish lawyer said the EU withstood immense pressure from the U.S. and intense company lobbying to reach its current status as the technology industry’s most feared antitrust regulator. Without an early win against Microsoft 16 years ago, Madero said “it would be 100% unimaginable” that competition and digital commissioner Margrethe Vestager would now be poised to impose tough new rules on American platforms.
Madero said those rules may curb the likes of Google in a way that the EU’s 2017 antitrust order against the company didn’t.
He described the order for Google to give equal treatment to smaller shopping search rivals as “not ideal” since it was “obvious” the market had already tipped, jargon for where big players swallow up part of an industry.
“With these type of tipping markets, and the big companies, the solution is regulation and the regulation that we are now preparing is extremely ambitious and it’s going to happen,” he said.
The Spaniard conceded that back in 2017 he and his team “thought that we were going to the extreme of what we could do.”
The EU has been repeatedly criticized by smaller firms for not doing enough to change how Google displays their product search results. In response, Google said more than 600 comparison shopping services take part in its shopping ad actions “winning billions of clicks.”
Madero said EU enforcement on big tech was largely built on a March 2004 decision against Microsoft, when regulators levied a then-record 497 million-euro penalty, finding that it unfairly tied its media software to its ubiquitous operating system and hampered rivals by withholding information needed for their servers to work with Windows.
Getting there wasn’t easy. Madero, 64, said he picked up a “half-dead” complaint from Sun Microsystems when he became head of an antitrust unit focusing on technology. The bets were against the EU ever managing to overcome a Microsoft “tsunami” of technical discussions.
U.S. officials also exerted influence ahead of the decision. Madero described getting an “ultimatum” from the Department of Justice’s Renata Hesse during otherwise friendly talks in San Francisco.
Hesse declined to comment about the meeting, saying her close working relationship with him on Microsoft led to “outstanding” cooperation. Intel also declined to comment on the EU antitrust case.
Microsoft pointed to a book by its top lawyer Brad Smith in which he calls its clashes with regulators at home and abroad in that period a “painful experience” where the company learned to “look in the mirror.”
Had Microsoft won a court case about the EU ruling in 2007, antitrust enforcement against the tech industry would have been closed down, Madero said. The EU’s victory helped “set the patterns of conduct for antitrust authorities around the world,” he said.
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