Commentary. The significance of the decision lies in the context of the push and pull between the old continent and the United States, and in the fact that at issue is a piece of software which is nominally open source, not governed by the institutional norms regarding intellectual property.

Globalization 2.0 will not be unfettered, Google learns

“Freedom of choice,” “dominant position,” “monopoly”—these are the key terms we read in the justification for the fine imposed by the European Union against Google for using Android as a means to build a monopoly in the advertising market on mobile devices.

Regulatory authorities and supranational institutions have always played an essential political role: they have regulated the market, decreeing the downfall of businesses too powerful to be contained by mere economic means. It happened in the US with AT&T, which was fragmented into several regional companies at the beginning of the neoliberal counter-revolution, opening up the field to other companies who were a better fit for the changes that the silicon revolution was introducing. Then the same happened with Microsoft, when the combined efforts of the US Department of Justice and the European Union dethroned Bill Gates’ company in order to make room for what would become the new dominant companies on the Web. In the same vein, just recently, Brussels had no qualms in attacking the business of buying and selling data laid bare in the Cambridge Analytica affair, in which Facebook was the main protagonist.

The decision taken Wednesday regarding the Google fine, however, is one that will lead to a change in the relationship between global politics and economics. It is aimed at digital platform capitalism, a habitat that has up to now ignored national borders. Since Wednesday, however, all assumptions are being questioned, and one can already see on the horizon a novel type of “digital sovereignism.” The decision to fine Google is in no way new: the EU previously fined Google for favoring its own services in Google Search. Now it’s Android, the operating system for smartphones. The first reactions to the European decision highlighted the size of the fine, €4.34 billion, the highest since the European Commission began to intervene in such matters. An astronomical figure—but no more than Google’s revenue of a few days.

The significance of the decision lies rather in the context of the push and pull between the old continent and the United States, and in the fact that at issue is a piece of software which is nominally open source, not governed by the institutional norms regarding intellectual property. The fine is not, however, a mere direct consequence of the tariffs set up by Trump against European companies, which are considered by the current occupant of the White House to be America’s “foes.” If anything, it does, however, point to the fact that once a trade war starts, there is no safe ground left for anyone.

Google has 90 days to modify Android according to the European provisions; however, even if it does so, what is certain is that Larry Page and Sergey Brin’s company will no longer have the freedom of movement that it has had so far. And given that globalization is not an inherently cordial affair, other countries might also decide to point the finger at the “bad guys” in Mountain View. Beside the fact that the President of the European Commission, the Danish Margrethe Vestager, comes from the Socialist group and has never hidden her dissatisfaction with the activities of the internet giants, this decision establishes the fact that “globalization 2.0” will see nation-states playing a much more “interventionist” role in economic activity than what has been the case during the past 30 years.

After all, the strength of the Chinese model lies in the “shepherding role” of the state in shaping the conditions for economic activity, compared to the hitherto dominant model in which national governments were expected to be mere paper-pushers, administering the realities created by the economic powers-that-be. This will not be a return to the past model of a Keynesian state directly involved in innovation, but rather the prevalence of the logic of “the larger the market, the larger the role of the State.” This will indeed be the future characteristic of global power relations as regards platform capitalism.

Moreover, Silicon Valley is looking with great concern at what is happening between the Atlantic and the Pacific. Since Donald Trump took office at the White House and Beijing announced gargantuan investments to turn China into an information society, the internet “Big Five” (Amazon, Google, Apple, Facebook and Microsoft) are adjusting their strategies to a reality in constant upheaval, as they cannot remain passive spectators to the “nationalization” of the internet.

The second important aspect of the European decision concerns the legal nature of Android itself. It is a habitat for the so-called app economy, but it is mostly an open source operating system, although it does not use any of the Creative Commons or Copyleft licenses. If anything, it involves an embedded license, as anyone who installs Android has to comply with Google’s conditions.

However, this is the first time that an open source software is shown to have been a tool used to build a monopoly. With this decision, the European Union de facto legitimizes the fact that software can be protected in other ways than through copyright laws and patents approved by national parliaments or international bodies such as the WTO, the European Union or other supranational institutions. What is on the horizon is the development of a mixed regime, i.e. proprietary and/or open source, which would be favorable to businesses—however this might fly in the face of hacker ethics.

The conjunction of these two elements—the changing role of the state and the mixed regime of intellectual property—is changing platform capitalism, giving a boost to some already existing trends, such as the entry into the risk-fraught online market of other majors players, such as China’s Alibaba, of managers of Big Data logistics and producers of software that uses artificial intelligence. Google will fight back against these newcomers, of course, but it will no longer bare its teeth, preferring to make the best of a bad situation. Much like Mark Zuckerberg did when he was made to sit in the seat of the accused in Brussels on account of the Cambridge Analytica scandal. What is certain is that the time of the online dominance of the “Big Five” is now running out.

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