ACCC code: how will Google respond

How will Google respond to the ACCC’s code of conduct? Picture: AFP

In the wake of last week’s landmark media industry code and increased regulatory scrutiny around the world the question is, how will Google respond?

Lawyers acting for the tech giant and Facebook say the proposed competition law amendments are wide open to attack.

But litigation alone is not the only answer.

Google is floating alternatives but on some legal reading, its proposed plans would fall foul of the new code.

The Australian Competition and Consumer Commission code of conduct specifically bans discrimination against media, so closing an Australian news service would mean closing the entire news service and stopping using media in search engines.

That would present a different form of search than is presently offered and for the first time Google would be offering searches with no media content.

On August 13 the ACCC is due to decide whether to allow Google to buy Fitbit, the wearable device company, which would give it realms of new data on personal health.

A decision from the European Commission on the same transaction is due shortly.

Last month the ACCC launched Federal Court proceedings against Google, alleging it misled Australian consumers to obtain their consent to expand the scope of personal information that it could collect about consumers’ internet activity, for uses including targeted advertising.

Another earlier action is due to go before the court later this year alleging misleading behaviour over privacy warnings.

When companies become lawyers’ picnics, shareholders are not always rewarded.

Google has given no sign yet of considering any break-up plans, but longer term the issue is a real one.

The Economist has estimated Google is worth $100 billion more broken up, as it is today.

That is a big call because much of the value of its growing tentacles are in the value they provide to its basic objective, which is to hoover up consumer data to bolster its stranglehold on the digital data market.

The rule of thumb for conglomerates is that if the value of the component parts are worth more than the combined entity then it should be broken up to maximise value.

That way the conglomerate would not destroy value and in Google’s case it would allow more focus on its core purpose.

The company’s attempts at side ventures like driverless cars and drones have not exactly hit the ball out of the park just yet.

Technological developments in its core search engine in recent years are not apparent outside the company and appear to be devoted more on how to maximise revenue for its digital advertising business.

Antitrust regulators would naturally welcome any move to break up the company and so might shareholders.

But there is no evidence yet of any internally-generated split.

Instead the company is attempting to manipulate around its existing market power.

The ACCC code is important as a global first because if it is seen as having potential to work here then other jurisdictions will follow suit.

That thought has naturally enough been considered by Google while its Australian arm employs the traditional tactic of attacking the regulator.

At some point that should change.