Friday, October 7, 2016

Doing Business in Europe: Google vs. Microsoft

A couple of interesting stories came out on Monday that I thought highlighted two different strategies companies may take when doing business in Europe. They show a wizened Microsoft deftly navigating the European market, meanwhile Google is the juvenile pup still pushing to find its limits.
First was a Reuters article that reiterated the EU's antitrust ruling against Google for pre-installing software (Google Search and Chrome browser) on its Android operating system.
Alphabet's Google has been given until the end of October, the fourth extension, to rebut EU antitrust charges that it uses its dominant Android mobile operating system to block competitors, the European Commission said on Monday.
The Commission in April said the U.S. technology giant's demand that mobile phone makers pre-install Google Search and the Google Chrome browser on their smartphones to access other Google apps harms consumers and competition.
Oddly enough, the same justification was used against Microsoft and their practice of installing the Explorer browser on all Windows machines in both the EU and the United States.
Which brings me to the other article which detailed Microsoft's $3 billion investment in Europe to promote its cloud services.
Microsoft Corp. has spent more than $3 billion building up its cloud infrastructure in Europe, including $1 billion in the past year, part of Chief Executive Officer Satya Nadella’s push to win customers over rivals such as Inc. and Google.
Next year the software maker will open data centers in France as the company continues its investment, Nadella said in an interview Sunday. Microsoft already has more than doubled its computing capacity to deliver Internet-based services in the region, including a network of centers in various European countries to address laws and preferences for keeping data stored locally.
I wanted to highlight these two cases because I think it is amusing that Google is running into the same fundamental problems Microsoft did, but is not learning from their mistakes. As was the case when Microsoft was at its height and 90% of the PC market was Windows, Google expects to leverage the popularity of its Android operating system and muscle its way through. Conversely, having learned its lesson, Microsoft is now localizing its business to appease the EU and play by its rules.
I generally do not agree with the EU's overzealous antitrust crusading but, as I believe companies should be allowed to install programs of their choice on their products, the EU is free to govern as they wish. Regardless of your opinion, the fact is that companies doing business in the Eurozone must comply with their laws.
However, as Microsoft is proving, this can be mutually beneficial for both parties. The EU gets compliance with its laws and grows its local economies. Microsoft gets to develop its business and, I'm sure, receives some preferential treatment or tax credits.

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