Business News

CCTV Script 07/06/18

— This is the script of CNBC's news report for China's CCTV on June 7, 2018, Thursday.

EU has taken anti-monopoly probe to Alphabet, Google's parent company. According to recent news, EU will have the authority to fine Alphabet up to 11 billion dollars over one of the penalties. This time, the penalty imposed by the European Union is that Google abused its dominance on Android operation system. We know that promoting android system to today's position is one of Google's core strategies in the past decade: set its search engine as a default engine on smartphones by levying the mobile operation system as platform, plus pre-download its App store.

EU commission launched the investigation over the Android's potential antitrust from 2015. The news shows that in Google's contract with mobile phone manufacturers, Google asked the later to pre-download the specific folders, which includes 11 apps that will automatically appear on mobile homepage. The data shows that more than 80% of smartphones worldwide uses Android operating system. With more and more users do searching on mobile devices; EU said that Google's illegal provision imposed on Android manufacturers harm the competition, making the customers have less choices. The exact penalty amount is unclear though, the commission has the authority to impose a fine of up to $11 billion that is almost equivalent to 10% global turnover of Google's parent company. And that will be the most significant regulatory intervention for Google's business model.

Generally, the final fine amount is usually at a low level within this range; however, judging from the EU's attitude and strength in penalizing science and technology companies, this fine marks the escalation of the struggle between the European Commission and Google. And this problem also becomes a hot topic in markets: should we worry the tech giants' monopoly position? Currently, the anti-monopoly critics suggest splitting the tech giants such as Google, Amazon and Facebook. The data shows that the 5 tech giants, like Google, Amazon and Apple, have conducted more than 400 mergers and acquisitions during the past decade, with more than 130 billion dollars in total amount. The market share of these technology companies is increasingly concentrated, but there is little interference from regulatory agencies.

Antitrusters think that the tech giants should be split as AT&T, the US operating giant, or make some business of Google search and that of YouTube become supervised monopolies like power and water companies. However, Silicon Valley supporters who oppose this view believe that forced split technology companies will cause the loss in innovation and entrepreneurial spirit, as well as the decline in consumer satisfaction. And then, during the growing of tech companies, they cut the average service price by competition and they even offer a lot free service. So even there are some worries about monopoly, more of these worries should come from regulatory authority, rather than the users and consumers.

At the market front, Alphabet's stock price fell with turbulence by 0.35% and a 0.17% decrease was seen at after-hours session.

At the same time, Alphabet faces the 3rd investigation from EU, regarding if Google takes unfair measures to forbid competitors login the website that use Google search and ads, and this investigation is ongoing now, we will keep an eye on the final fine amount of this investigation that is about abusing android system.