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Will the European Commission miss the real path to growth?

By / 7.16.2018

While we wait for the European Commission to announce the outcome of its antitrust case against Google, let us consider what’s at stake. Each year since 2016 we have estimated the number of App Economy jobs in Europe. These are workers who develop, maintain, and support mobile apps. Our latest figures show almost 1.7 million jobs in the Android ecosystem in Europe, led by the United Kingdom, France, and Germany.

These jobs—which didn’t exist 10 years ago–are fueled by inexpensive smartphones running on the Android operating system. Moreover, Google’s apps are good for society as well. Consider Google Maps, one of the most useful programs ever created. The first Android version of Google Maps came out in 2008, along with the first commercial Android phone. Suddenly if you wanted to know where you were, you no longer had to pay hundreds of dollars for a GPS receiver. It was the democratization of location and navigation.

But accurate mapping doesn’t come for free. In a physical world that’s always changing, there’s no way to know about new buildings, different road signs and closed bridges without actually sending someone out to check.

Maintaining the world’s largest library of video information isn’t cheap either. Want to watch a video that shows you how to build a house? It’s on YouTube. Want to audit a Stanford course on artificial intelligence. It’s on YouTube also, for free.

YouTube users download 1 billion hours of video a day, somewhat more than the number of hours of television that American watch daily. Some of those hours are cat videos, for sure, but even those count as entertainment time with value to the watcher. And the whole system of storage and delivery is expensive to maintain, especially given the amount of bandwidth.

Economists have labored for years trying to estimate the value of unprecedented online sources of information such as Google Maps and YouTube. But the truth is that we’ve barely scratched the surface of the economic gains from the massive stores of information curated and maintained by Google.

These Android jobs and widely-beneficial apps are based on a business model that provides a free operating system to smartphone manufacturers in exchange for app distribution. It’s a well-functioning model that provides benefits for everyone—App Economy workers, consumers, smartphone manufacturers, app developers who have a stable environment to aim for.

The European Commission’s objections to this model run the risk of hurting jobs and economic growth. Depending on the nature of the penalty that the Commission imposes, Google might need to start charging for Android, driving up phone prices and hurting the app ecosystem.

The Commission is focusing on the wrong end of the stick. Rather than restricting Internet business models and forcing Google to charge licensing fees,we need to start teaching people how to best navigate and use these unprecedented stores of information. That’s the road to limitless growth.