Ursula von der Leyen is licensed under Creative Commons.
The European Commission has launched a new investigation targeting Google’s anti-spam policies under its ever-present Digital Markets Act (DMA). The DMA, which designates large companies as “systemically relevant” to subject them to greater regulatory scrutiny, has been consistently used by European regulators to profit off the innovation of American tech companies. The EU’s latest investigation into Google represents only one of the many ongoing abuses of the EU’s regulatory power.
The European Union’s current investigation centers around Google’s efforts to prevent abuse of its search algorithms. For years European publishers attempted to manipulate Google’s search ranking signals by hosting third party pages on high-authority “search engine optimization” sites (SEOs) in a practice known as “parasitic SEO.” Due to these sites’ established domains, they appear more frequently in search results. Using their privileged position in the search algorithm, publishers have found a lucrative source of revenue by renting out their sites to low-quality commercial and affiliate content.
Google maintains that the practice is an abuse of its services, lowering search quality and flooding users with spam and irrelevant search results. In 2024 Google cracked down on websites, demoting the SEO authority of these sites. The European Commission has since stepped in to protect the ill-gotten gains of European publishers, claiming that parasitic SEO practices are an entirely legitimate source of revenue, despite their detrimental effects on consumers.
This is hardly the first time European regulators have abused DMA provisions to target American tech companies. Google previously faced a €2.95 billion ($3.45 billion) fine over alleged self-preferencing. The fine sparked immediate outrage from American leadership including U.S. president Trump who decried the act as a blatant attack on American business. Altogether the provisions of the DMA and their associated penalties are estimated to cost American tech companies $1 billion annually, but if European regulators continue to escalate their fines, costs associated with the DMA will only continue to skyrocket.
Despite the investigation only just starting, other regulatory authorities throughout Europe have already taken the investigation as a signal to launch their own discriminatory punitive actions. Less than a day after the European Commission announced their investigation, a German court ordered Google to pay €572 million ($663.4 million) to two German companies offering price comparison services. The fines, originating from both the EU and local jurisdictions, demonstrate the discriminatory targeting of American companies, as regulators at all levels of governance scramble to extract their share of American profits.
This targeting comes despite the significant contributions of American companies to the European economy. Google recently announced that by 2029, the company planned to invest €5.5 billion ($6.4 billion) in German AI infrastructure. This investment will undoubtedly bring numerous economic benefits to Germany, boosting growth and employing workers in well-paying high-tech manufacturing roles.
Germany’s targeting of Google, despite Google’s significant investment in the German economy, risks fracturing the mutually prosperous relationship between the American and European private sectors. In 2024 alone U.S. foreign direct investment (FDI) in Europe reached an astronomical $3.95 trillion. Regulatory barriers decrease the profitability of investments in Europe and subsequently the attractiveness of investment. Between 2023 and 2024, FDI into Europe fell 8.4%, adding to a near 30% decline since 2022. The EU in its efforts to raise funds through fines only stands to crucial its largest source of investment and growth potential.
Without continued opposition from U.S. leadership and European businesses stifled by overregulation, the EU will continue to extort companies through aggressive enforcement, sacrificing the consumer experience and innovation for short term profit. The EU is expected to release a proposal to curtail the power of its regulators on November 19th. For the sake of American enterprise, European consumers, and global innovation, efforts to oppose the European Union’s discriminatory regulatory architecture must succeed.
