Being a global company has its perks. There’s a lot of money to be made overseas. But the biggest US tech companies are finding out that there’s also a downside: Every country where you make money is a country that could try to regulate you.
It’s hard to keep track of all the tech-related antitrust action happening around the world, in part because it doesn’t always seem to be worth paying close attention to. In Europe, which has long been home to the world’s most aggressive regulators, Google alone was hit with a $2.7 billion fine in 2017, a $5 billion fine in 2018, and a $1.7 billion fine in 2019. These sums would be devastating for most companies, but they are little more than rounding errors for a corporation that reported $61.9 billion in revenue last quarter.
Increasingly, however, foreign countries are going beyond slap-on-the-wrist fines. Instead, they’re forcing tech companies to change how they do business. In February, Australia passed a law giving news publishers the right to negotiate payments from dominant internet platforms—effectively, Facebook and Google. In August, South Korea became the first country to pass a law forcing Apple and Google to open their mobile app stores to alternate payment systems, threatening their grip on the 30 percent commission they charge developers. And in a case with potentially huge ramifications, Google will soon have to respond to the Turkish competition authority’s demand to stop favoring its own properties in local search results.
The consequences of cases like these can ripple far beyond the borders of the country imposing the new rule, creating natural experiments that regulators in other countries might emulate. The fact that Google and Facebook have acquiesced to Australia’s media bargaining code, for example, might accelerate similar efforts in other countries, including Taiwan, Canada, and even the US. Luther Lowe, who as Yelp’s senior vice president of public policy has spent more than a decade lobbying for antitrust action against Google, refers to this phenomenon, approvingly, as “remedy creep.”
In other cases, the companies being forced to change their business model abroad might decide to adopt the shift globally before they’re forced to. After settling an investigation by Japan’s Fair Trade Commission, Apple decided to implement the solution—allowing audio, video, and reading apps to link to their own websites to accept payment—globally.
“Sometimes it’s the market driving it: The companies decide it’s too costly to make different compliance strategies in different markets,” said Anu Bradford, a professor of international and antitrust law at Columbia University. “Or, sometimes, it’s in anticipation of copycat regulation: They know it’s out there, and they’re not going wait for the Russians or Turkish to do their own case.”
While it hasn’t gotten quite the same level of media attention as Australia and South Korea, the case in Turkey could end up being the biggest deal. That’s because it cuts to the heart of how Google uses its power as the gatekeeper for most internet traffic.
The case is about what’s called local search, like when you look for “restaurants near me” or “hardware store.” This is a huge category of search traffic—nearly half of all Google searches, according to some analysts. Google’s critics and competitors have long complained that Google unfairly uses its dominance to steer local search results to its own offerings, even when that might not be the most helpful result. Think about how, if you search on Google for “Chinese restaurant,” the top of the results page will probably feature a widget that Google calls the OneBox. It will include section of Google Maps and a few Google reviews of Chinese restaurants near you. You’ll have to scroll down to find the top organic results, which may be from Yelp or TripAdvisor.
This dynamic has exasperated Google critics and competitors for years. One of those aggrieved competitors, Yelp, initiated the case in Turkey by lodging a complaint with the country’s competition authority. Google argues that its local search results are designed to be maximally helpful for users, not to pad its own bottom line. But the Turkish regulators disagreed, concluding that Google “has violated Article 6 of the Turkish Competition Law by abusing its dominant position in the general search services market to promote its local search and accommodation price comparison services in a way to exclude its competitors.” (I’m quoting a translation provided by a Turkish lawyer.) In April they imposed a fine of about $36 million. That’s less than Google earned every two hours, on average, in 2020. But while the fine was trivial, the rest of the decision was not. The authority issued a preliminary ruling ordering Google to come up with a way of displaying local search results that doesn’t favor itself over competitors.