The editor’s diary on regulatory theatre and the diminishing shock value of large numbers
The editor’s diary on regulatory theatre and the diminishing shock value of large numbers
The European Commission has fined Google again, this time to the tune of eight hundred and ninety million euros, a figure large enough to make a genuinely impressive headline and small enough, relative to the company’s overall revenue, that I doubt anyone in Mountain View lost meaningful sleep over it.
The Fine
According to the report on the EU’s eight hundred and ninety million euro fine against Google, Brussels has once again exercised its considerable regulatory muscle against a company that has, by this point, absorbed enough of these fines to treat them as something closer to a predictable operating cost than a genuine deterrent. I have watched this pattern repeat itself across multiple regulatory cycles now, and the number, however large it looks in a headline, rarely changes underlying corporate behaviour in any way that shows up in the following quarter’s results.
My economics correspondent, who has covered three previous rounds of this same essential story under three different commissioners, tells me the calculation from the company’s side is straightforward enough. The fine is a known, bounded cost. The alternative, actually restructuring core business practices to avoid future fines entirely, carries considerably less certain costs and considerably less certain benefits, and companies, being rational actors in the narrow economic sense, tend to choose the option they can model with confidence.
What Regulation Actually Achieves
I do not say any of this to dismiss the value of regulatory action entirely. Fines of this scale do establish precedent, do generate genuine legal exposure over time, and do, cumulatively, shift the calculus for smaller companies watching from the sidelines who cannot absorb the same costs as easily. But the headline framing, another large fine for the tech giant, tends to obscure this slower, more structural story in favour of a number that sounds satisfying without necessarily reflecting genuine deterrence.
I read our coverage of OpenAI’s recent safety test celebration shortly after finishing the Google piece, and the juxtaposition struck me as worth noting, one major technology company facing punitive regulatory action for past practices, another actively promoting its own voluntary safety milestones in the same news cycle. Whether either story tells us more about genuine industry behaviour or genuine industry public relations remains, in my professional opinion, an open question worth returning to.
A Longer Pattern
I asked our archive desk for the running total of EU fines against major technology companies over the past ten years, and the figure, once you add it all up, is substantial enough that it should, in theory, function as a genuine deterrent. That it apparently has not, at least not in any way visible in subsequent corporate behaviour, tells us something important about the gap between headline enforcement numbers and actual structural change within the companies being fined. Several competition lawyers I have spoken with over the years describe this gap as an open secret within the industry, acknowledged privately far more readily than it is acknowledged in any public statement from the companies involved.
Further Reading
I also had a look at the coverage of TactAI’s UK launch, mostly because the technology desk has been busy this month and I wanted to see how the framing compared across separate stories covering the same broad industry. The tone varies considerably depending on which company is being discussed, which is its own small lesson in how coverage of this sector tends to shift based on who is doing the announcing.
We will continue tracking the cumulative figure in our end of year review, and I expect it will make for sobering reading once placed alongside the relatively modest changes in corporate behaviour observed over the same period.
The Consumer Question
One angle our economics desk flagged that deserves more attention than it typically receives is whether fines of this size ultimately get passed on to consumers in some indirect form, through pricing decisions or reduced investment elsewhere in the business. This is genuinely difficult to prove empirically, and I am wary of asserting it without stronger evidence than we currently have, but it strikes me as exactly the kind of follow up question serious business journalism ought to be asking rather than simply reporting the headline fine figure and moving on to the next story.
I have asked the economics desk to begin building a longer feature examining this specific question over the coming weeks, drawing on whatever pricing data we can reasonably obtain, and I expect it to be a considerably more useful piece of journalism than another single fine headline, however large the number attached to it happens to be.
Editor’s Note to the Desk
I have asked our regulatory correspondent to track the cumulative total of fines levied against major technology companies over the past decade for our end of year review, on the theory that the running total, rather than any single fine in isolation, tells the more honest story about whether any of this is actually working as intended. We will publish whatever we find, whether or not it confirms the hypothesis, since an honest negative result is worth considerably more to our readers than a confirmed suspicion we cannot actually support with evidence.