eyes on the U.S.

A Smarter Way Europe Can Cut Google Down To Size

Yes, the Google 'monster' is too big and too powerful. But EU politicians imposing a breakup of the U.S. tech giant is not the solution. A mix of arm-twisting and open competition can do the trick.

The European Parliament's hemicycle in Strasbourg
The European Parliament's hemicycle in Strasbourg
Johannes Boie

-OpEd-

MUNICH — The European Parliament has voted to break up Google, which is about the toughest blow a company can receive. The parliament's watchword seems to be "unbundling," which could mean forbidding Google from linking its products together — for example, telling the company that a Google search could no longer bring up Google Maps. There is also talk of "expropriation."

The vote is not binding, but it does put pressure on the EU Commission, which has been investigating for years whether Google disadvantages its competitors and users, and considering just how hard to move against the company.

The distinction should be made between commission issues and parliamentary decisions, and not just for formal reasons. Commission procedure is a more or less normal bureaucratic process that has seen Google make some changes to its products both to gain ground and to calm adversaries. One example is the Google Shopping page that offers an overview of shopping opportunities: It now lists not just advertisers but also competitors of Google Shopping.

The EU Commission proceedings are still open, and no one knows when or how they will end. But the parliament is trying to force it to make an anti-Google decision before commission investigations have been completed. Emotions risk interfering with the proceedings.

In this debate, the talk is always of the Google monster, the data leech, the monopolist — in short, a company that can only be dealt with by using the harshest means. And that's Google's fault. For decades the company has lacked transparency, particularly with regard to the question of what happens to user data. At the same time, an increasing number of people use Google products because they are effective and simple to use. The otherwise fast-moving company is only slowly introducing functions that will enable its clients to have a little control over their data.

In any case, the parliament members want a quick radical solution: break Google up. But do the actions of the American company really warrant that? On reflection, what would replace the Google search engine? A publicly backed European search engine like the one Google critics are plugging? The result would be a product that doesn't work half as well as Google search, but that would draw a digital line in the transatlantic economic space, marking a step in the direction of blatant protectionism.

But it's not just Google that would suffer. Users would too. The company needs to be dealt with in another way. Commission proceedings have demonstrated that, step by step, Google's arm can be twisted enough for it to make changes. What's more, if Google continues wrecking its own image as it has been doing lately, then more competitors whose values include data protection and transparency are going to surface.

The market is already going that way. Things would be moving faster in Europe if it were as easy to create companies here as it is in the United States. That's a subject the EU could take up with a bit more energy if it really wants to weaken Google. Under pressure from new, innovative competition, other digital giants have been broken up either partially or entirely in a way nobody would have thought possible. Think Myspace and AOL. Google could end up in pieces with no EU intervention at all.

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Economy

Air Next: How A Crypto Scam Collapsed On A Single Spelling Mistake

It is today a proven fraud, nailed by the French stock market watchdog: Air Next resorted to a full range of dubious practices to raise money for a blockchain-powered e-commerce app. But the simplest of errors exposed the scam and limited the damage to investors. A cautionary tale for the crypto economy.

Sky is the crypto limit

Laurence Boisseau

PARIS — Air Next promised to use blockchain technology to revolutionize passenger transport. Should we have read something into its name? In fact, the company was talking a lot of hot air from the start. Air Next turned out to be a scam, with a fake website, false identities, fake criminal records, counterfeited bank certificates, aggressive marketing … real crooks. Thirty-five employees recruited over the summer ranked among its victims, not to mention the few investors who put money in the business.

Maud (not her real name) had always dreamed of working in a start-up. In July, she spotted an ad on Linkedin and was interviewed by videoconference — hardly unusual in the era of COVID and teleworking. She was hired very quickly and signed a permanent work contract. She resigned from her old job, happy to get started on a new adventure.


Others like Maud fell for the bait. At least ten senior managers, coming from major airlines, airports, large French and American corporations, a former police officer … all firmly believed in this project. Some quit their jobs to join; some French expats even made their way back to France.

Share capital of one billion 

The story began last February, when Air Next registered with the Paris Commercial Court. The new company stated it was developing an application that would allow the purchase of airline tickets by using cryptocurrency, at unbeatable prices and with an automatic guarantee in case of cancellation or delay, via a "smart contract" system (a computer protocol that facilitates, verifies and oversees the handling of a contract).

The firm declared a share capital of one billion euros, with offices under construction at 50, Avenue des Champs Elysées, and a president, Philippe Vincent ... which was probably a usurped identity.

Last summer, Air Next started recruiting. The company also wanted to raise money to have the assets on hand to allow passenger compensation. It organized a fundraiser using an ICO, or "Initial Coin Offering", via the issuance of digital tokens, transacted in cryptocurrencies through the blockchain.

While nothing obliged him to do so, the company owner went as far as setting up a file with the AMF, France's stock market regulator which oversees this type of transaction. Seeking the market regulator stamp is optional, but when issued, it gives guarantees to those buying tokens.

screenshot of the typo that revealed the Air Next scam

The infamous typo that brought the Air Next scam down

compta online

Raising Initial Coin Offering 

Then, on Sept. 30, the AMF issued an alert, by way of a press release, on the risks of fraud associated with the ICO, as it suspected some documents to be forgeries. A few hours before that, Air Next had just brought forward by several days the date of its tokens pre-sale.

For employees of the new company, it was a brutal wake-up call. They quickly understood that they had been duped, that they'd bet on the proverbial house of cards. On the investor side, the CEO didn't get beyond an initial fundraising of 150,000 euros. He was hoping to raise millions, but despite his failure, he didn't lose confidence. Challenged by one of his employees on Telegram, he admitted that "many documents provided were false", that "an error cost the life of this project."

What was the "error" he was referring to? A typo in the name of the would-be bank backing the startup. A very small one, at the bottom of the page of the false bank certificate, where the name "Edmond de Rothschild" is misspelled "Edemond".

Finding culprits 

Before the AMF's public alert, websites specializing in crypto-assets had already noted certain inconsistencies. The company had declared a share capital of 1 billion euros, which is an enormous amount. Air Next's CEO also boasted about having discovered bitcoin at a time when only a few geeks knew about cryptocurrency.

Employees and investors filed a complaint. Failing to find the general manager, Julien Leclerc — which might also be a fake name — they started looking for other culprits. They believe that if the Paris Commercial Court hadn't registered the company, no one would have been defrauded.

Beyond the handful of victims, this case is a plea for the implementation of more secure procedures, in an increasingly digital world, particularly following the pandemic. The much touted ICO market is itself a victim, and may find it hard to recover.

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