Friday, April 17, 2015

Importance of the EU-Google case


As described in this article, "The European Union's competition commissioner filed a "statement of objections" on Wednesday that brings Google a step closer to facing legal sanctions under European law. The European Commission's specific allegation is a relatively narrow one — that the search giant has broken the law by giving Google Shopping a more favourable position in search results than other comparison shopping services — but the underlying policy issue is much broader. Following the logic of the EU complaint would require a massive transformation of Google's search product. The key point is that Google doesn't just give prime real estate to Google Shopping results. It unapologetically does it for products like Google Images, Google Maps, and Google News — all of which regularly show up in special boxes near the top of Google search results."

I recently wrote this article describing how the inter-network between humans and firms/institutions is becoming more and more centralised and few humans, firms and institutions are having increasingly disproportionate and unfair influence over the daily lives of the rest of humanity. Technology increases the ability of few to "serve" (and in effect control) the many. This is the real issue in the EU-Google case. As I pleaded in my article, humanity urgently needs to change democracy and markets to prevent small portions of humanity from dominating the rest using technology.

In a way, this goes into the fundamentals of our civilization as it stands today. Higher weightage in global wealth distribution has moved from physical property to intellectual property over the years. The limitations applicable to this intellectual property are different. In this article, I ask where should one draw the line between individual property, community property and humanity's property? Should'nt intellectual property which gives significant market power be managed differently from mundane intellectual property? How does one decide what rules should apply to which type of intellectual property?

John Stuart Mill has warned all who are interested in the maintenance of democracy, namely, not "to lay their liberties at the feet of even a great man, or to trust him with powers which enable him to subvert their institutions." There is nothing wrong in being grateful to great men who have rendered life-long services to the country. But there are limits to gratefulness. Similarly Irish Patriot Daniel O'Connel has said that no man can be grateful at the cost of his honour, no woman can be grateful at the cost of her chastity and no nation can be grateful at the cost of its liberty.

Democracy and markets are modes of association between humans and the above guidance applies to both in the context of gratefulness to Google for the benefits it's intellectual property has already generated and can generate for humanity. While Googles intellectual property's benefit to humanity is significant, surrendering significant market power to it cannot be justified. It is a threat to liberty and fair market competition. Any person, firm, institution which subverts the optimality of "aggregate social choice" happening through markets is just as dangerous as a great man entrusted with power to subvert the institutions of democracy.

The phenomena of SIB (systemically important Banks), SII (Systemically important insurers), the phenomenon of "too big to fail" corporates and its collateral phenomenon of "differential rewards to the guilty" are also caused by the increasing centralisation of the internetwork of humans and firms. Adam Smith's  "invisible hand" allocating resources to its uses generates reasonable outcomes for humanity here and now at small scale, but does not necessarily generate good outcomes far, later and large scale. Increasing centralisation of the network makes few visible hands uncontrolled by democratic forces dangerous for the survival and prosperity of humanity.

I predict that we should see more and more of such cases arising, since humanity is riding the technology tiger and the tiger is running fast into a deep, dark and dense jungle.


Pratap Tambay

17 April 2015
Post a Comment