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The WSJ is reporting that Google may be fined a whopping and record setting $9+B.  That is unprecedented but it was also expected.  What comes around really does go around.  Back when Google was founded they were one of the companies aggressively pushing the EU to fine Microsoft for monopolist behavior.  Like many companies have learned using any government in this fashion is a dual edged sword because the next company in line for this treatment may be the firm that gleefully started the process.  Oracle, which also was pushing for Microsoft to be punished already had their Sun acquisition massively delayed by EU interference effectively destroying the acquisition in the process and now Google faces the mother of all fines partially as a result of getting the EU to take a stronger position on US tech companies

Let’s talk a bit about how we got here and why this doesn’t bode well for Google in particular.

Google’s Problem

I’ve seen this happen to companies ranging from IBM to Microsoft over the years.  The firm, once in power, basically becomes fluid with regard to ethics and what the firm has the power to do starts falling into the bucket of things that are ethical to do.  Things that would have been obviously wrong to the company facing others doing those things become acceptable when the firm is itself in power.

Google reached that point some years back and apparently recognized the risk embedding employees in the Obama administration and putting their then CEO and eventual Chairman in the position of close presidential advisor effectively preventing major US objection to their apparently growing misuse of power.  But they didn’t have that influence on the EU and have largely lost that influence in the US with their last major appointment vacating her job this year.

This means that where the protective layer didn’t exist, the EU, things are ramping to unprecedented fines and the US is likely to reconsider going after Google if the fines remain in place much like the EU was emboldened to go after Microsoft after Microsoft was similarly curtailed in the US.  Recall that back then the States individually went after Microsoft as well which is also likely with Google

It is this cascading effect that creates the biggest risk for Google because they represent a huge pool of potentially accessible funds to strapped State and Federal Agencies in increasingly desperate need of them internationally.  If Google’s parent, Alphabet, doesn’t get their arms around this the potential cascade could consume all of their profits and much of their reserves taking what is an incredibly successful firm and very quickly dropping it into the category of firms on life support.