New competition rules: Google warns of trade-offs for consumers and businesses

New competition rules: Google warns of trade-offs for consumers and businesses

The ongoing debate around regulating large technology companies has intensified, with some countries moving forward with strict new competition rules focused on a small set of successful digital services.

While these laws generally aim to increase competitiveness within the tech sector, Google believes they can come with significant trade-offs that may end up hurting the very consumers and businesses they are designed to protect.

Google's Experience with the DMA

Google's concerns are rooted in their recent efforts to comply with the European Union's Digital Markets Act (DMA). The DMA designates certain tech companies as gatekeepers, subjecting them to additional regulations. According to Google, compliance has led to the removal of beneficial features within Google Search. These changes, while meant to benefit competitors, could result in a less streamlined search experience for users.

For example, searching for flights in Europe no longer produces the rich array of information about airlines, flight schedules, and real-time pricing readily available before DMA implementation. Google argues that this benefits a narrow group of travel aggregators, but hinders airlines, hotels, and smaller businesses that now have fewer avenues to connect with customers directly.

Potential Consequences: Winners and Losers

Google's perspective suggests a complex reshuffling of market dynamics due to new regulations:

  • Traffic Consolidation: Google reports that DMA-related changes have led to a concentration of web traffic favoring a few established intermediary services. Smaller businesses like independent hotels, restaurants, and airlines that previously benefited from direct visibility on Google Search now have to go through these intermediaries, often paying high commissions in the process.
  • Reduced User Experience: In adjusting how it displays Google Maps within Search results, Google cites user dissatisfaction as a trade-off of compliance. This highlights how rules targeting tech giants can alter familiar experiences in potentially negative ways for consumers.
  • Less Choice, Potentially Higher Costs: Google argues that by removing search features, users have fewer options for finding relevant information and comparing prices. They warn this could lead to consumers ultimately paying more as intermediary services gain leverage.

A Fundamental Shift in Regulatory Approach

Google views rules like the DMA as a departure from traditional competition policy. In the past, antitrust enforcement focused on identifying and preventing anti-competitive practices. The DMA takes a different approach, preemptively targeting specific companies based on their size and market share, regardless of whether they have engaged in harmful conduct.

The company suggests this shift could have unforeseen negative consequences, especially for smaller businesses who might lack the resources to navigate a more complex online marketplace dominated by a few large players.

Balancing Interests and Consumer Well-being

Google emphasizes that they have always worked to improve their products with consumers in mind. Popular features like Google Images, Google Maps, and tools for direct business connection were developed organically to address user needs. Prescriptive regulations, they argue, run counter to this type of innovation.

The company calls on other countries considering similar competition regulations to carefully weigh the potential benefits against the possible negative impacts, especially on the businesses that lack a strong voice during the regulatory process.

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