← Brussels Playbook Podcast
Brussels Playbook Podcast
Brussels is coming for Google — and the bill could be huge
00:17:19
Google could be hit with the largest fine yet under the EU’s Digital Markets Act.
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A
I'm Arch Manning.
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B
I'm Madison Skinner. I'm Eva Jovic.
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C
I'm Decoria Moore.
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A
Wanna train like a Red Bull athlete?
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B
Tell us your fitness goals this summer to enter the Red Bull Athlete Challenge. You'll get to try each of our workouts for a chance to win an ultimate Red Bull experience.
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D
Think you have what it takes?
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C
Good morning. It's Thursday, July 23rd, and this is the Brussels Playbook pod. The vibe in Brussels today is ka ching as Google waits to hear how much its latest EU tech clash could cost it. Also on the pod, EU startups commissioner Yekaterina Zakharyeva takes on an unusual mission to Bulgaria. And Portugal's exam marking disaster leaves thousands of would be students in limbo. I'm Zora Sheftalovic and with me today is our senior finance reporter, Katherine Carson. Hey, Katie.
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A
Hello, Zoya.
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C
I hear you were shaking it at Bad Bunny last night.
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A
I can can confirm. I took a trip to the Casita to visit Bonito and some ass was shaken. Not necessarily mine, I can neither confirm nor deny.
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C
But there was ass and it shook us.
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A
Exactly.
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C
Well, listen, Katie, let's get straight to it all. Brussels tech watchers are waiting for the commission to say how much money they are going to be charging Google over these two pretty big cases that are due out either today or tomorrow for the Digital Markets Act. This is this EU rule book for tech.
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A
Exactly. It's a big week for big money tech decisions. So Google, as you'll remember, is one of these companies called a gatekeeper under the EU's tech rules, DMA. So it's basically a huge platform that businesses have to go through in order to do business online in the eu. It covers things like Google Search, Google Play. There's other businesses like Amazon and TikTok that are included. And so one of the cases that the commission is looking at is about what Google shows us when we search and the other is about what app developers can tell customers when they're inside the Google Play store.
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C
Yeah, these cases have been going on for absolute yonks. It's been years since this stuff has been worked out. There have been lots of delays. People have said, look, this is really bad. We've got to get these decisions out there. But the timing could not be more troublesome because we're due to hear about these decisions either today or tomorrow. But also happening tomorrow, the tariffs that Donald Trump temporarily imposed on the EU. The 10% tariffs are due to expire and we're about to hear what he's going to do next. And I can imagine, Katie, given Trump's track record when it comes to EU fines against American big tech, that he might get a little bit irate and decide to replace those tariffs with something a little bit more painful if perhaps things don't go Google's way. And they almost certainly won't, by the way.
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A
Exactly. I'm kind of wondering whether it's awful timing or perfect timing, if you're the EU and looking at it from this way. On the one hand, they have an inbuilt tool that is perfect leverage against the US and designed to really hit them where they hurt, really hit them where they make the big money with the powers that the EU has. On the other hand, it's almost like a tool that's perfectly designed to annoy Donald Trump and cause a backlash from him. So I think we're going to have to see how it goes. Yeah.
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C
But let's talk about these two cases one by one. So, first off is the Google search case. Now, this is this thing where the EU accused Google of favoring its own hotel search boxes, its own various things at the top of the search results. So say you're looking to go somewhere, Google Maps pops up. Say you want to book a hotel room, the Google hotel booking site pops up and the commission is like, hey, listen, this is favoring your own products because you've got such a dominant position in search and they want them to stop giving their own products. This what they see as an unfair advantage.
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A
Exactly. And it's for all kinds of stuff, for shopping, for products, for flights, for other kinds of things like hotels. I mean, obviously the summer is here, we've all been booking our holidays. I think we'll all have seen this firsthand. So it's somewhere where Google clearly has a massive amount of power over the market.
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D
Yeah.
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A
And then if we look at the other one. So about the Play Store, Google's version of the App Store. If you put an app onto your phone, you've got an Android. It might be that a subscription to a certain app is cheaper on another website. Google can actually charge you more on its own App store and then pocket the difference. According to the commission. That's what they think might be happening, that Google's acting as a middleman and taking a cut of the payment. So obviously that would also be some slightly dodgy markets behaviour.
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C
Yep. And so basically what we're hearing is that these fines, particularly the search fine, is going to be potentially record breaking several hundred million euro and the legal maximum is 10% of global annual turnover. By the way, Alphabet, which is Google's parent company, made more than US$400 billion in revenue last year.
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A
So. So in a way, it's kind of a drop in the ocean for them. I mean, it's a relatively large drop in the ocean, but it's still not hitting them as much as they could. But obviously Google's not happy. They're pushing back. They're saying that they already made a lot of changes to comply with the dma, that more changes, if the Commission orders them to make changes, could make the services worse for Europeans. But they're playing nice F now they're saying they're going to keep working with the commission to find a solution.
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C
Yeah, but you know, we know about the pressure that Donald Trump is placing on the EU, but it's not just Trump, because also 25 Republican members of Congress have written to Trump basically saying that the EU is unfairly going after American companies and they want him to actually launch more trade probes, which could lead to retaliation against the eu. So they're really trying to link this whole, you know, EU action under the DMA with some sort of retribution under trade instruments that Trump has access to. So, again, very timely when we consider the fact that on Friday he's going to be announcing what happens next.
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A
And then you also have the Europeans saying the exact opposite, saying the Commission has been far too chummy with Google, has been like, cooperating too much, and actually they need to hit them harder. So over 40 companies wrote to Commission President Ursula von der Leyen, that includes European publishers, travel companies, and they basically say, you need to enforce your rulebook harder because we're suffering. And just to clarify, we're not sure if the decision is coming exactly today. It could be tomorrow. There has to be a committee meeting and then after that, the decision comes.
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C
Yeah, so this is going to be super political. When we do get the those numbers that come out, we'll see what happens. Katie, guess who's on her way to Bulgaria.
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A
Is it a Bulgarian?
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C
It is a Bulgarian. It's the startups Commissioner Yekaterina Zakaria. She is in Sofia today and it looks like it's a bit of a myth. Permission from the Commission to build bridges with the new Bulgarian government.
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A
Who is the new Bulgarian government? I mean, they're not that new. But I kind of lose track because there's been so many elections over the last few years. It feels like every two minutes we're writing about another Bulgarian election. I don't know what you're talking about
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C
eight elections in, what is it, four or five years? I don't think that's such a big deal. So she's meeting Prime Minister Ruman Radev, whom people may remember from his time as president. Ruman Radev and the current president Ilyaana Jotova, among others. And what they're going to be talking about officially is the EU's next long term budget, the Multiannual Financial Framework, MFF. But unofficially, there's quite a few things on the agenda.
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A
Yeah, and I mean, I think Zacharyeva, she's an interesting choice because she's someone with kind of one foot in Sofia, one foot in Brussels. So she obviously has a Bulgarian political background. She was Bulgaria's Foreign minister, She's been the Deputy Prime Minister at the commission. She covers startups, research and innovation. And she's also from the political opposition to Radev's party.
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C
Yeah, this is Boyka, but it's party.
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A
Exactly.
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C
So she knows Brussels, she knows Bulgarian politics. Radev only became the Prime Minister in May and this came after this huge wave of public anger over corruption allegations in Bulgaria. And look, he is a known quantity in Brussels because he has been around for a long time, but nonetheless, in this prime ministership he has been doing some things pretty differently. His progressive Bulgaria movement, their platform is anti corruption, it's all about center left positions on wages, on public spending, on equality stuff. But very socially conservative, nationalist, mildly Eurosceptic and seen as the less backing of Ukraine party in Bulgarian politics.
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A
Yeah, and I mean also kind of interesting that you can step down as a legit president and then run as an anti establishment outsider. Also for those trying to picture him, he's a former fighter pilot and an air force general who once performed aerobatics at military air shows. A big boy, some might say quite a character.
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C
Well, in any case, look, at this point what Brussels is trying to figure out is what's going to happen with him in the prime ministership because he has signalled some more Eurosceptic positions. He signaled that he's going to be more in that feet so camp, which is the kind of more Ukraine skeptic, not sending weaponry to Ukraine.
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A
Well, he's certainly got some more pro Russian positions. He said that Bulgaria should go against Russia sanctions if they hurt Bulgaria's economy. And he's argued for restoring energy links with Russia.
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C
Yeah, and he announced earlier this month that he was going to be pulling Bulgaria out of the coalition of the willing, which helps Ukraine. That's the group of countries that have said they would help secure Ukraine after the war is finished. But on the other hand, his foreign minister, the day after he said he was pulling out of the coalition of the willing, his foreign minister went and actually signed up to this statement, a declaration that was praising the same coalition in Kiev. So that was seen as like a bit of management, of messaging. So one message for the home front, one message for Brussels and Europe and the other big question during this meeting, so one question will be, you know, what does Bulgaria intend to do when it comes to Ukraine? The other big question is, what's going to happen with all of this money that Bulgaria has yet to receive from the recovery fund?
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A
Yeah. So obviously Zaharaeva is not going to untangle every political issue in a one day visit. But the first big subject that they're going to talk about, which our colleague Gerardo Fortuna is reporting in Playbook today, is that the EU budget is going to be a big discussion. So Bulgaria wants to keep the money that it's getting for poorer regions, for farmers. It's joined the Friends of Cohesion group and it says that it won't take cuts to regional funding because super important for Bulgaria, which is one of the EU's poorest countries. It really depends on that funding. And then for the recovery fund in particular. This is the post pandemic recovery money that's coming to the end of the time slot now. It was allocated 6 billion, it's received about half of that, just 3.3 billion. And it needs to do reforms to be able to unlock the rest. With the end of August as the deadline, those are things like anti corruption changes, it needs reforms to coal, it needs reforms to the energy market. So there's a big question mark over whether it's going to be able to move fast enough to unlock the rest of that money.
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C
Yeah, and that's going to be a big task for this new government and I think therein lies some of the leverage that the EU has as well. Because on the one hand the new government has been kind of quite Eurosceptic, but on the other hand, it really needs Brussels money. So we'll see what happens after this meeting. A super interesting one.
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A
Exactly. You want to understand Bulgaria, send a Bulgarian.
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C
Katie, this is a bit of a trying time, a testing time, shall we say, for a bunch of 18 year olds across Europe. Do you know, fun fact, first headline I ever wrote in a job that I did when I was 20 years old for a local newspaper was testing time for teachers.
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A
So you really had that pun in the bank for the last 20 years.
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C
Yes, I have. We can cut that swearing or beep me. Beep me, Giannis. I've recently discovered the beauty of beeping. Anyway, why are we talking about testing times for students, Katie?
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A
Because summertime is exam results time. It's university acceptance time. And Portugal is experiencing some issues around the marking of its exams, leaving lots of nervous students who are waiting to see where they're going to get in and what their grades are going to be.
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C
Yeah, so what has happened is that Portugal has this new digital system for marking final exams, and this thing was supposed to make things easier and faster and speed things up, all that great technical kind of efficiency we've been hearing about. Except things went very bloody wrong because students wrote their exams by hand. The papers were then scanned and sent to teachers digitally to mark. But they cut off a bunch of pages and answers and some things were missing and some were attached to the wrong exam. So thousands of students have received either incomplete or incorrect grades.
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A
Famously, if there's one thing EU countries do really well, it's digitalizing public services. So what's happened is that results are currently being delayed. Some of the grades have had to be changed. A lot of students are still waiting, even after university applications have opened because they don't know if they've got the right grade. They might not have their grade. So now they're requesting reviews. The Education Minister has apologized and ordered an outside audit.
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C
Yeah, so that is going to be quite a difficult time. I hear that our producer Dionis, his nephew, is actually among this cohort of 18 year olds getting their grades. How did your nephew do, Dionis?
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D
He did okay, but he's in Poland, so, you know, he can. He can apply easily. There's no problems there.
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C
No problems in Poland. But yeah, look, the government is saying in Portugal, no one's going to lose out. Applications for uni are open until August 6th, so there is still some time to get these correct grades. But there are appeals, there are reviews. It's a mess. I'm sure it's very stressful. These poor kids, they've just sat these giant exams and it must be very, very stressful.
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A
You're 18, it's a mess of hormones. You've got social media bans coming in. You've got no idea what's happening in your life. This is the last thing you need on top of the Portuguese government.
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C
Absolutely. Actually, I'd love to hear about this from our listeners. If you're one of these 18 year olds in Portugal who's affected. Or actually, if you're anywhere in Europe and you've just sat your exams, tell us how that went. I want to hear from the youth, the youth listeners of this podcast, Katie, and you are one of them.
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A
I'm the youth, but it's like, I mean, I'm always in awe of the fact that it actually works in other European countries because in the uk, the system's a mess. You apply to university before you get your grades and then if you don't get the right grades, you have to shift everything around and do different universities last minute. It's an absolute mess of a system.
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C
Wow. Sounds like maybe you guys need some digitization. Apparently. Well, Katie, that's almost it from us this week, but we do have an episode of the Weekender coming to you tomorrow morning. Sarah Wheaton is off, but Ann McAvoy is in the hot seat and she's talking about what Andy Burnham as British Prime Minister could mean for the UK's relationship with the EU. Katie, what do you think? You're a Brit.
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A
Look, all I'm going to say is Keir Starmer was like the perfect person to reset the relationship with Brussels. He was like a slightly boring, slightly over educated technocrat. And if he couldn't do it, then I don't know how much they're going to warm to a T shirt wearing Oasis fan.
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C
Well, listeners are going to hear from former French minister Sylvie Gouard and the former top British diplomat Simon Fraser on that. So we'll hear if they've got something different to say. And just before we go, you know, yesterday we were talking about the new Odyssey movie and we asked people what Hollywood tends to get wrong about their people's countries. And we got a very fun one from Alex from Sweden who wrote in to say something that Hollywood gets wrong about Sweden is that midsummer is a cult holiday filled with human sacrifices, orgies and ritual executions. Not so. He says. It's actually filled with dancing, cake and friends and maybe a little orgy because then he goes on to say that it causes a baby boom in March.
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A
I'll believe it when I see it, Zoya. By which I mean Swedish people, please invite me to your midsummer parties because they sound fun as hell. Also, we had a write in from Dara from Ireland who said Hollywood has done a number on Ireland so many times that it's hard to choose just one example. But I think I'd have to go with Wild Mountain Time. That was that Emily Blunt Jamie Dornam film that came out like last year. That Nobody watched.
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C
I feel like Ian right now because I have no idea what you're talking about.
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A
Nobody watched it. I mean, I definitely didn't see it. I saw the adverts and I think thought hard. Pass. So Dara says to make Emily Blunt look Irish, the filmmakers apparently decided to dye her hair red, give her a shawl from the famine era, and put dirt on her face.
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C
Well, that doesn't sound very convincing.
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A
Not ideal. Although I will say it's not always the worst thing in the world. As a proud Irish passport holder, the film Leap Year, full of horrible stereotypes about Irish people. Also a very good watch.
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C
Okay, I like it. I like it. A counterpoint. Counterpoint from Katie.
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A
What about the Australians? You're a Buzz Lehrman fan.
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C
I don't know about movies. I mean, I love Baz Luhrmann.
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A
Buzz Lemons. Australia.
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C
Yeah, yeah. Phenomenal. But actually, the most annoying thing for me is people who think that Australians throw shrimp on Barbies. Mainly because we don't even have shrimp. We have prawns. On that note of Australiana, folks, give us a rating. Subscribe. Although after this little shitty chat, maybe
- [16:34]
A
you don't want to anymore.
- [16:36]
C
We'll see you folks next week. Bye, Sam.