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EU vs. Google: When Goliath Pretends to be David

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The European Commission has opened a formal investigation into Google to ascertain whether or not the company’s operating system, applications, and services have breached EU anti-trust rules.

The Commission is seeking to figure out if Google has engaged in anti-competitive activities in its business philosophy and has tried to abuse what is a dominant commercial position in the European market. This formal inquiry actually goes back five years, when the EU was concerned primarily with Google’s dominance over the advertising search market (at the time it controlled 95% of the EU). The current incarnation of the inquiry now focuses on three main points:

  1. Whether Google has illegally hindered the development and access of rival mobile applications.
  2. Whether Google has prevented smartphone and tablet manufacturers from developing and marketing modified and potentially competing versions of Android.
  3. Whether Google has illegally hindered the development of rival applications and services by tying or bundling certain applications and services with other exclusively Google interfaces.

Google has always refuted such charges, its chief executive boldly declaring things like it is ‘not the gateway to the internet’ and that it was not true that Google would ‘promote its own products at the expense of its competitors.’ It is this last aspect which brings a bit of the surreal into the situation and should leave any sane thinkers of commercial activity in Europe shaking their collective heads. It is truly a farce majeure where two Goliaths desperately want the public to believe they both are in fact Davids.

Companies built upon the prevalence and popularity of the internet have always benefited from what I consider to be a bit of false praise. Whether you want to call them social media platforms, internet service providers, mobile application purveyors or any other semi-technical fancy phrase, the one simple reality of all such entities like Google is this: they are and always will be a BUSINESS first and foremost. The point of business is to be successful. The best success is one that is maximized and leveraged. This by default means earning a dominant position in which there may be rivals and competition, but such challenges must never amount to severe problems or damage to the company’s bottom line or market share. This is the great confusion of people in Western states: the conflation of capitalist rules with democratic principles. It is true the West has done an admirable job of instilling both systems into their societies. But it is not true that capitalism and democracy are two perfectly mirrored sides of the same coin. This is just the naïve mistake of those not bothering to understand how their relationship has always been a tethered and tense one, usually to the benefit of all, but not ever absent discord and disagreement.

Which brings us back to Google: ‘internet companies’ have helped themselves over the years by creating a brand image that emphasizes freedom, access, information, and connectivity. Indeed, in America we often call this process ‘drinking the company Kool-Aid,’ which means buying into your own propaganda. Companies like Google and Microsoft have always been quite enthusiastic about drinking their own Kool-Aid, believing they are somehow not just businesses, but something more: something more valuable and more productive for the overall growth and functioning of free societies all over the globe. It is indeed a wonderful brand image to develop. It also happens to be exaggerated. As long as Google or Microsoft dominate their respective markets, it is easy for them to focus on and proclaim how much ‘more than a business’ they are. Inquiries like the present EU investigation, however, call this mythology into question.

First instinct in the face of accusation is to of course always deny. But let’s examine the statements made by Google more objectively: Google, an ‘internet company’ that specializes in being the first portal for consumers to think of when it comes to net access, does not want to be ‘the gateway to the internet?’ Of course it does. It is almost ridiculous to consider the alternative. Second, as Google begins to grow and diversify its holdings, services, products, and applications, it doesn’t want to promote such products and services over other competitors? Again, of course it does. Why? Simply because it is a capitalist business operating in a global capitalist system. Because if what the Google chairman said was true it would mean Google is literally acting against the fundamental axiom of basic business, indeed of capitalism itself: we create not just to sell but to sell more than anyone else. Which subsequently means Google is acting against Google if it is not remaining faithful to this mission. Which version of reality seems more likely to any rational consumer: Google acting against itself or acting against rivals and competition? A more rhetorical question has never been asked.

The EU’s probe into this leads to a fascinating philosophical question that gets to the very heart of commercial activism and has different answers across the globe: WHO EXACTLY is responsible to guarantee greater competition and access to choice in the market? Should that competition be ‘facilitated’ by government watchdog agencies because businesses inherently cannot be trusted to engender honest competition and consumer choice? Or should it be a much more ‘organic’ process, Darwinian even, where only the best ideas, products, and organizations survive the competition, with the consumers’ actions themselves deciding everyone’s business fate? America has often prided itself on being in the latter school of thought (though anyone who looks closely at American economic policy and economic history knows this is not entirely true) while Europe more staunchly likes to position itself as the champion of the former (again, also not entirely true). These are the dual dilemmas secretly hidden under the layers of the EU inquiry into Google. On the one hand, Google is trying to maintain and secure its brand image as the benevolent and benign Goliath. Not a marauder inflicting damage to the market and consumers, but rather a friendly giant that should be appreciated and left alone. On the other hand, the EU is trying to stand on its own brand image as the Goliath that protects the people and guarantees true commercial freedom. Not an overly meddlesome bureaucracy whose good intentions only end up causing market regression, but rather the sole legitimate power able to stand up for the people against major multinational behemoths like Google.

The irony of ironies is that in this battle between two Goliaths, one commercial and the other political, BOTH try so earnestly to portray themselves as David fighting against injustice. Be wary, Europeans, whenever actors with pockets deeper than the ocean depths both cry ‘woe is me’ and seek to earn your sympathy party. In such cases the only woe is usually your own and the only true sympathy needed is for the consumers of the EU itself. In the end, the decision-making of any Goliath tends to be suspect.

Dr. Matthew Crosston is Executive Vice Chairman of ModernDiplomacy.eu and chief analytical strategist of I3, a strategic intelligence consulting company. All inquiries regarding speaking engagements and consulting needs can be referred to his website: https://profmatthewcrosston.academia.edu/

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Economy

Bregret Reigns Britain: Blaming Brexit over Economic Exigency?

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Sometimes I blunder that the UK is still a part of the European Union (EU). Whether when discussing a unified policy stance on sanctions targeting Russia or a common polity on sustainable energy strategies for a resilient future of Europe. Brexit may be a figment of the recent past, but its tremors are certainly not bygone. And the European cohesion, which should’ve been envied at a time when Russia is wreaking havoc on its energy security, seems ephemeral as Britain’s vexed relationship with the EU refuses to recede. However, amid the boiling economic crisis in Britain and the rest of Europe, public sentiments betray an inherent admission: Britain’s exit from the Union might have been a mistake. But the connotation of this public rhetoric is just as awry as the Brexit chatter leading up to the 2016 referendum.

The opinion of Britons has been notoriously fickle throughout history. But the outcome of the Brexit referendum was razor-thin at inception. Now, a stagnant economy; a revolving-door political leadership; and decades-high inflation are turning the tide against the championed narrative of the Conservatives. According to a recent opinion poll by YouGov – a leading market research and data analytics firm headquartered in Britain – 56% of the Britons surveyed concurred that leaving the EU had been a mistake. Only 32% believed that Brexit was a good idea. However, while many Brexit critics would jump onto this opportunity to bash the Tories, this perception is misguided, a product of frustration of an irate populace looking to blame something for their woes. And Brexit has been a notable feature of the ruling government.

Britain installed its fourth prime minister since 2016 last month. But the damage was already done a few months back. Britons were already reeling from soaring energy prices and acute food shortages. The economic slowdown was heralding an unfamiliar era of high-interest rates and unemployment. Then entered Liz Truss, the former prime minister who eschewed economic orthodoxy with her trickle-down tax-cut plans. Her disastrous stint in office – that barely lasted 50 days – tipped the pound into a free fall, sparked a liquidity crisis for pension funds, and sent government borrowing costs spiraling to harrowing levels. While the incumbent Prime Minister Rishi Sunak has managed to calm the turbulent economy, the wreckage is still visible in the mortgage market.

Earlier this year, mortgage rates in Britain typically remained below 2.5%. Since October, however, the average two-year fixed rate mortgage is hovering around 6.25% – slightly down from the peak of 6.65% on Oct. 20. The lowest two and three-year fixed rates are still above the 5% mark, according to Moneyfacts Group, a financial information company. Unlike the United States, British mortgages run for shorter terms. For instance, about 2 million mortgages in Britain would reach the end of their fixed terms by the end of next year, pushing many Britons to refinance at rates more than double their initial settlements. An estimated 1.6 million borrowers in Britain have variable mortgages, which track the central bank’s policy rate. Thus, as inflation keeps running ablaze, no respite seems on the cards. 

The annual rate of inflation in Britain has reached a multi-decade high of 11.1%. And at its last policy meeting, the Bank of England (BoE) – the central bank of Great Britain – hiked its interest rates by 75 basis points, taking the policy rate to 3% – the highest level since the financial crisis of 2008. Andrew Bailey – governor of the Bank of England – doubled down on his commitment to raising interest rates higher to deter double-digit inflation fuelled by pandemic-induced supply chain logjams and the mercurial energy prices triggered by the Russian retaliation against Western sanctions. While the logistics backlogs seem to be improving, the Russian dilemma shows no sign of resolution. And as the Western coalition prepares to implement a price cap on Russian energy supplies, economic difficulties would only worsen for the British citizenry.

According to the Office for Budget Responsibility (OBR), a fiscal watchdog group in Britain, inflation-adjusted disposable income is projected to slump by circa 7% over the next two years under the government’s new budget plan. Introduced as the “autumn statement,” the 55 billion pound ($65.4 billion) budget virtually reversed every plan by Ms. Truss. Mr. Jeremy Hunt – the new chancellor of the Exchequer – has frozen the annual taxable income threshold until April 2028 rather than having those bands adjust to the inflation rate. Consequently, the top tax rate of 45% would now be applicable on earnings starting from £125,140 instead of the current level of £150,000. The government has also raised the windfall tax rate on energy firms from 25% to 35% until March 2028. Hence, economists believe that aggressive rate hikes coupled with such steep tax increments could trigger a brutal recession – perhaps the most debilitating since the 1930s.

So blaming Brexit for the economic turmoil battering Britain is not an accurate depiction of the public sentiment regarding Brexit. And it is chiefly because the throes of the British economy are tricky to quantify under a defining rubric. 

True, the UK is struggling with labor shortages. But this issue is not entirely driven by Britain’s inability to replace workers from Europe, who left after Brexit. A substantial portion of workers are Britons, who left during the pandemic and never returned to the labor force. Many started their own businesses; some settled into the groove of remote work. 

Admittedly, Britain’s sluggish growth further worsened when investments diverted to other epicenters of commerce in Europe after Brexit. Britain is the only member of the Group of Seven (G-7) advanced economies with an economy smaller than its pre-pandemic level. Recently, India replaced Britain as the world’s fifth-largest economy; Paris supplanted London as Europe’s highest-valued stock market, according to data published by Bloomberg. But Britain’s productivity has been in decline since 2009; public funding has been in the dumps ever since austerity policies were implemented in the aftermath of the 2007 financial collapse. High-interest rates are visibly hurting the domestic outlook of the British economy. But it is mainly because people were so conditioned to the ultra-low interest rates over the past decade that their perspective is dovishly askew.

Nonetheless, the British government has the incentive to structure a trade mechanism with the EU. While the hardliner Conservative MPs who voted Sunak into the office would definitely resent (and veto) an intimate relationship – like that enjoyed by Switzerland and Norway – with the single market, a settlement of disputes revolving around the hybrid trade status of Northern Ireland is imperative to Britain’s economic revival. Yet, if the Labour Party manages to topple the Tories in the next general elections, a closer alignment with Brussels should be in the vanguard. Because while Britain’s economic debacle might not be entirely Brexit’s unraveling, the UK cannot resurface without improving relations with Europe in an openly hostile neighborhood with a bleak future.

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Global Recovery: Mobilize SME, Digitize Economies and Commercialize Exportability

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Like an open book, all such deployment ideas are already available for last many years to allow immediate mobilization of any national small medium business economy. On the world stage, as a recovery, nations can digitize on fast tracks any selected sectors of economies and get ready to dance on global digital platforms. Nations can become examples on creating superior exportable goods and services while commercializing innovative ideas on the global stage. There are no secrets on how to achieve all this, but there are huge secrets why it is still not being done despite all the economical struggles?

How to capture opportunity losses; the biggest tragedy of any disconnected economic progress is watching the world ‘continuously’ advancing, consuming and growing, while nations ‘persistently’ despite extraordinary resources abandoned, talented citizenry only herded and left as spectators, trade associations, chambers and government agencies remain disconnected. Therefore, needed are precise world-class goals, as national symbols of unity, diversity and tolerance. So, what are the top missing rules to mobilize a nation on economic development fronts and what is stopping?

How to grow economic development? The fastest way is via right meaningful collaborations, alliances and brokering of deals, the fears of communications must be eliminated, the trepidations of opening global markets is just a mindset issue but not having bold open dialogue on fast track vibrant programs is a killer. Establish, define and articulate a long term agenda and drive like a formula car.

National mobilization of SME entrepreneurialism is a step by step methodology, if there is still no progress after a decade, which only raises serious questions about available skills to lead such a charge. Similarly, 50% mobilization of the qualified SME if allowed to dance on global digital platforms creates productivity, performance and profitability and therefore brings foreign exchange to improve national grassroots prosperity. If local economic development teams do not openly engage, adapt and utilize available blueprints and related mobilization expertise little or nothing will happen.

This is not about good or bad management; this is about core competency to move national economies towards pragmatic progress, particularly, when national mobilization of entrepreneurialism is already an entrepreneurial movement. This is far apart from the traditional bureaucratic procedural paperwork and especially in most cases not necessarily new funding dependent rather execution hungry and deployment starved. In most cases, the lack of knowledge on the global age demands and transformation of digital platforms, that leaves the SME behind. Study more why will population-rich-nations lead knowledge-rich-nations?

Matter of choice: Unless immediately exercised the required departmental tests and measure capabilities matching right mindset and speedy execution requirements, just piling up degree-holders and highly preferred staffing without precision is in reality what is destroying economic development.  So, choose economic progress or choose bad HR, the economic recovery has no time to waste. Explore new options on how to acquire mastery on such affairs. What level of efficiency is required to become a productive nation to cope with the consumption hungry world?

Furthermore, to play in global commerce, the global age speed of communication acts as a power of progress rate. There is no room for departmental responses to take days, weeks and months, but must face global age demands as a thriving 24x7x365 living world waiting for immediate response. What will it take to create a LIVE economic development recovery program of highly integrated departments? What levels of expertise are required to start deployments of such thinking? Better understand how other nations are doing, study a new world of G20 and national mobilization of small medium business economies

Capitalism is not failing; it is economic development. Unless mandated differently, the circus will go on. The skills gaps are not about lack of degrees; rather, global age experiences to understand how the pyramid of global consumption works, how to open new markets and how to produce real value to stand up to the global age of competitiveness. Skills are not about degrees, but now translated into global age skills as art of communication, presentation and global age level understanding of diversity, tolerance and entrepreneurial mindsets.

Why blind leading blinds; why high priced and fancy studies on SME always select ‘access to finance’ as the mother lode problem but they critically lack centricity of entrepreneurialism as such studies are academic driven. Hence the biggest disconnect, SME founders are not interested in loans but sales. Sales are more about value creation and globally accepted production standards to cope with global age competitiveness, where they do not require consultants rather developed skills to become better executives and better producers. They need help but not the loans, they need skills and knowledge and not the procedural and conflict resolution compliances. They know too well what to do but need to know how to do it better. Cookie cutter complex forms and rubber stamping will never do the trick, they need entrepreneurial dialogue, but not from academia but real entrepreneurs. They strive for meritocracy and not bureaucracies.

No, this is not an academic study but an entrepreneurial response to grand economic failures by the majority of nations on up-skilling SME and re-skilling manufacturers at national digitized levels. Furthermore, failing to understand the difference between the job seeker and job creator mindsets is the first step to get eliminated from any serious dialogue on the subject of SME economic recovery. Failing to articulate on the national mobilization of entrepreneurialism is the second step to get eliminated from any economic development activity as a whole. Study more on Google.

Proof is mandatory; when it takes 10 days to debate, strategies and finalize a national mobilization programs, and when it takes 100 days or organize digital platforms to deploy 10% to 50% selected SME on digital platforms and 1000 days to turn around small medium business economies so why still there is no show after last 5 or 10 years. If there is nothing wrong, why are the restless citizens marching in protest? Why are economies openly collapsing and what is stopping them to correct the course and how much it has to do with core competencies at the source of economic development? Is it possibly now a time for the first industrial revolution of the mind

Next key steps: What can current teams learn and what can they deploy within 90 days in any sector or any national economic realignment. How can they be framed as a customized national mobilization of entrepreneurialism model? How can they select and identify 5K to 50K SME and get them ready for a digital platform? How can they start intense programs to up skill and re-skill all layers of the economic departments to become a global age expert and start thinking of future applications and methodologies of economic growth? What does it take to acquire mastery on national mobilization of entrepreneurialism within a specific SME sector or across the nation? The rest is easy.  

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Why the burden on business women to ‘do it all’ must stop

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Glorifying multi-tasking by women is something we are all guilty of – across the globe we celebrate women who have responsibility piled on their shoulders. For those running their own businesses, the burden can be even greater. And why? Because of outdated expectations. It’s time for us all to shake up our thinking and act, so female entrepreneurs can thrive.

The expectation that a woman should be the primary childcare giver and that the man should be the breadwinner are views so ingrained they remain consistently unchallenged. New research from CARE’s Ignite program confirms that women entrepreneurs worldwide are so bound by these norms, it is stunting their business success – meaning less income for the household and less employment for the community.

  • In Vietnam, 80% of men and 60% of women agreed that businesswomen should be the main childcare giver, despite the pressure of running a business.
  • In Peru, 80% of women interviewed say they are bound by traditional gender roles and the expectations and pressures from the family and society as caregivers.
  • In Pakistan, 76% of respondents felt that family members will disapprove if a woman entrepreneur’s earnings surpass her husband’s.

One of the most alarming findings was that when women entrepreneurs start to succeed, they can face sabotage by their male family members, sometimes even violence or sexual harassment. In Pakistan, women told us that if they start earning more than their male family members, they are overburdened with household responsibilities to the point that they are forced to cut down on, or even discontinue, their business. Furthermore, women entrepreneurs who leave the house for business without a male family member are considered less moral and may be subject to harassment or sexual requests in return for work-related agreements.  In Peru, 100% of the women entrepreneurs interviewed had either seen or heard about a case of violence in their close environment. And broader research shows that 70% of women owners of formal small businesses have experienced violence by their partner including physical and economic violence. It is estimated that due to gender-based violence, women micro-entrepreneurs lose around $ 9,000 USD each year, causing a loss of 5.72% of GDP in Peru.

Revealingly, it is not just men who are piling expectations on women – it is also women themselves and their female family members. In Vietnam, mothers-in-law were revealed as the staunch enforcers of the norm related to childcare, the ones who would most disapprove if the man does more childcare than the woman.  In Pakistan, it is predominantly the husband’s mother and his sisters who load pressure onto women to be at home taking care of the children and the household, and for the man to be the main breadwinner.

It is clear that little is being done to shift these norms and the time to act is now. Having worked in financial inclusion for 15 years, I have seen many fantastic initiatives focused on helping women gain better access to finance so that they can grow their businesses. But very few initiatives try to understand or address the deeply entrenched gender norms that are holding women entrepreneurs back. Time poverty is one of the biggest challenges facing women, a condition deeply intertwined with childcare and household duties. Admittedly, shifting gender norms is not an easy task, as it requires longer-term commitment and won’t necessarily provide a short-term return. But that shouldn’t stop us. At CARE we know that engaging directly with families can be transformational, increasing both the time women can spend on their business and their decision-making power.

I recently met with Thu in Vietnam who runs an organic farming network, as well as her own food business.  She told me that she was really struggling with a lack of support from her husband which was affecting her marriage and her business. Following an event that we ran for women entrepreneurs and their families that promoted shared responsibility at home, she told me she had seen a transformation, she said: “On that day, for the first time, he acknowledged my work and my contribution to society and the community. Since then he is really helping out with the children and the household chores.  Now I can travel much more for work.”

Through a combination of far-reaching social media campaigns and in-person workshops, CARE is beginning to see small changes. Media campaigns in all three countries, with male and female role models, have showcased shared responsibility in the home and are normalizing the growth and success of women entrepreneurs, with the campaigns generating a widespread appreciation for female entrepreneurs.

We know that by giving women increased opportunities and time, it allows them to focus on growing their own businesses so that they can further contribute to their local economies. We also know that women employ women and invest their incomes in their families and their communities. The benefits are indisputable.

My message to NGOs and financial institutions working in financial inclusion is clear:

  • Design holistic programming for women entrepreneurs that includes addressing restrictive gender norms.
  • Design programs that promote the benefits of shared responsibility in the household and the economic contributions of women entrepreneurs.
  • Collect data related to perceptions and expectations around gendered roles and how these present barriers for the growth of women-led enterprises.
  • Advocate for policies that respond to the specific challenges that women entrepreneurs face.
  • Investing in women will always provide a return.

Having conducted this research, we are also making changes to our programming. We are developing new training, not just for women and their families, but also for our financial partners. We will also continue our campaigns and outreach activities which promote and normalize shared responsibility and women’s financial and digital independence.

By studying the barriers that are holding women entrepreneurs back, and then working closely with local partners to break down those barriers, CARE is building new opportunities for women entrepreneurs wanting to grow their businesses.

Despite the Ignite program launching in the midst of the pandemic, the program has unlocked 115 million USD in loan capital for women entrepreneurs, a twenty-two-fold uplift of the original program funding provided by the Mastercard Center for Inclusive Growth. 83% of Ignite participants tell us that the program has contributed to an increase in their business sales, helping to build their financial resilience.

By working together with women and their support networks we want everyone to recognize the importance of shared responsibility at home, and to value the enormous contribution women entrepreneurs are making to their families, communities and economies.

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