Google feels political wind shift against it in Europe

Google has absorbed many blows in Europe over a torrid month: from court defeats over privacy to political jibes and even threats to be broken up. But for some Googlers nothing beats Gandhi.

India’s colonial liberator was invoked last week at an anti-Google conference in Paris, where Arnaud Montebourg, France’s firebrand economy minister, likened the US search giant to “a new East India Company” seeking to plunder Europe’s riches.

In an audience packed with Google foes – from media companies like Germany’s Axel Springer and France’s Lagardère to Deutsche Telekom and even Microsoft – Mr Montebourg saw a noble resistance. These were the digital “Gandhis”, he said to rapturous applause. “Long live the European forces for digital freedom!”

Mr Montebourg may not be known for his moderation, but he is one of many European politicians now targeting the US technology company as the political winds have turned against it in Paris and – more unusually – Berlin.

Google executives fear that shift is making it easier for national champions such as Springer to stir up protectionist instincts, leaving it vulnerable to a regulatory backlash. “Of course they are worried, who wouldn’t be?” said one official who had spoken to Google recently.

Google is fighting on multiple fronts. For four years it has been embroiled in an EU antitrust probe into alleged manipulation of search results. There are complaints about how it licenses its Android smartphone platform that could trigger a full investigation.

On the regulatory front, it is facing tighter EU data protection rules that would hamper its operations. And last week – in a ruling that could have big implications for Google’s search business – Europe’s highest court told it to delete certain links to a user’s past because he wanted to exercise a “right to be forgotten”.

The disaffected are a mixed crew but there is unity of purpose. “It’s not anti-Google, its not anti-America, its not anti-internet,” Mathias Döpfner, chief executive of Axel Springer told the FT. It was fear of Google’s “unique power”, he said. “If a winner really wants to get everything, that may lead to a situation where the winner loses everything.”

By adopting a measured approach on antitrust regulation and deploying heavy lobbying on data protection, Google looked to be at least containing the threats it faced. What turned the tide, all sides agree, was the US spying scandal, revealing that even the phone of German Chancellor Angela Merkel was tapped by America’s National Security Agency.

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For Ms Merkel, who grew up in communist east Germany, it was a personal intrusion she is struggling to forgive. The outrage in Germany, meanwhile, has permeated through politics. US tech groups such as Google deplored the suggestion that they were being used as a backdoor for NSA spying. Still, the company found itself at the frontline of the German debate.

Sigmar Gabriel, Germany’s economy minister, warned of “totalitarian tendencies” that might justify breaking up Google’s business. Martin Schulz, the centre-left candidate to be European Commission president, said it seemed to be amassing power “which doesn’t belong in a pluralistic democracy”.

Even Ms Merkel, questioned whether the “classic monopolies” such as Google should be trusted with personal data.

Besides the hit to its reputation, the political shift poses two potential problems for Google: aggravating its tangle with EU competition authorities and provoking new legislation to curb its power.

On the antitrust front, Joaquín Almunia, the EU’s competition chief, is under intense pressure to ditch a draft settlement with Google he is keen to adopt. It would impose restrictions on how Google presents search results – although critics have derided it as “worse than nothing”.

In a joint letter sent last week, Mr Gabriel and Mr Montebourg instead called on Mr Almunia to press charges and extend the probe to areas such as data protection and unfair tax breaks. The ministers warned that “confidence in the instruments of competition law is at stake”.

Mr Almunia is confident he can persuade a majority of EU commissioners to adopt the settlement. Overriding the competition commissioner in such a big case – now four years old – would be a huge upset. But doubts are growing. Mr Döpfner says most commissioners he has called are “very supportive”.

Some people involved think the pressures make it more likely Mr Almunia will decide to launch a formal probe of Android. Meanwhile on other areas – such as copyright or data protection – Mr Almunia is stressing that this is not a matter for antitrust enforcement but regulation.

That is the second big Google concern. A new data protection law that would restrict how Google can use personal data and beef up the powers of regulators is already under discussion and could be passed as soon as next year. Tech companies fear it may be the beginning of a broader assault in which Google would be regulated more like a utility.

Political and business leaders from more northern liberal states are increasingly concerned. But for the moment, Google critics are in the ascent. “It cannot be that Google and Co. are better off than those who invest here and create jobs,” Tim Höttges of Deutsche Telekom told his shareholders meeting this week, to rapturous applause.