iWar: the battle between big tech and big government

Google’s €2.4bn fine by the EU should leave nobody in any doubt that the carefree days of the big tech companies are numbered, says Merryn Somerset Webb.


EU competition commissioner Margrethe Vestager: introducing genuine business risk
(Image credit: This content is subject to copyright.)

We've written here a few times that the carefree days of the big tech companies are numbered they have too much power and too much money for the world's governments to just leave them be. Anyone still in any doubt on this one need only look at last week's judgment against Google from the EU.

We look at it in detail in this week's issue of MoneyWeek (out on Thursday for subscribers), but in a nutshell, the EU competition commissioner has fined Google €2.4bn for abusing its market dominance by directing customers to its own price comparison business above all others. It has also encouraged other price comparison sites the ones that lost out to sue for compensation. Probably more distressing for Google (which is not short of cash), it has also laid out strict rules about how Google can comply in future, something that introduces genuine business risk into the deal.

There is more of this to come the commissioner is pursuing two more anti-trust investigations against Google. The tide is clearly turning here and not in Big Tech's favour.

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This wouldn't be so bad for the firms if there were any sense that they grasped and were prepared to work with the change in the political climate. They aren't. Tech insiders, says Rana Foroohar in the FT, reckon that it is politicians who "don't get it", not them (note the article on the matter in the Observer this weekend headlined "Europe is an insufferable brake on US tech innovation"). They believe that they are the good guys making the world "more free, more open" even as everyone else begins to think that "social media has eroded democracy and predatory algorithims are targeting the poor and vulnerable."

The distressing truth is that Silicon Valley currently lives in the same kind of "cognitive bubble" the bankers were in before2008 one that is quite likely to end up being popped.

A month ago I disagreed with one of our top writers, Rupert Foster, on the matter of the FANGs (Facebook Amazon Netflix and Google). He's a buyer on the basis that they have both the stunning monopoly style positions and the cash they need to increase their market breath and depth. I'm a seller for now on the basis that sovereign statesfind it intolerable that they can control neither the finances nor the products of the big tech firms. And when states go to war with corporations, states usually win.

Foroohar quotes one new piece of research on the matter one that pretty firmly takes my side of the argument. "Big Tech and Silicon Valley have been among the most politically insulated sectors in the S&P 500 while financials and energy have been among the most scrutinised," says Strategas Research. "Investors would be well advised to think about how these rolesmay be reversed in the current administration."Quite.

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.