Google’s Schmidt to Soothe Rattled Germans in Berlin Talks

Eric Schmidt, executive chairman of Google Inc., speaks during the South By Southwest Interactive Festival in Austin, Texas, on March 7, 2014. Photographer: David Paul Morris/Bloomberg

Google Inc. (GOOGL:US) Chairman Eric Schmidt recalls how during a meeting with Angela Merkel in June, the German Chancellor pulled out her phone and asked him what U.S. spies were doing listening to her calls with her mother.

“That’s how personal this felt,” Schmidt said during a panel with U.S. Senator Ron Wyden last week. “We’re dealing with emotion and history and things well beyond our intent.”
Concern about Google’s market power and expanding reach into markets such as the automotive sector have mixed with fears of U.S. cyber espionage to make the company the focal point of mistrust among European politicians. Schmidt chaired a panel in Berlin today discussing the removal of search entries following a recent European court ruling. When he meets German Economy Minister Sigmar Gabriel this evening, Schmidt must sway his interlocutor to refrain from measures that would curb Google’s business in the region.
“One talk alone won’t solve the problems posed by Google - - they’re too multi-layered,” said Joachim Pfeiffer, the parliamentary economy spokesman of Merkel’s Christian Democrats. “Still, talking’s better than not -- we need to find a basis for mutual understanding.”

‘Oligarchical’ Dominance

German concern that Google may come to dominate what’s been dubbed “Industry 4.0,” or next-stage Internet-based industrial development, has added to the tensions between the Mountain View, California-based company and Europe’s biggest economy. Industry accounts for about 40 percent of Germany’s economic output.
“Industry 4.0 is an issue,” said Pfeiffer, citing Google’s move into home energy-consumption metering. The digitalization of production will have “revolutionary” impact, Siemens AG, Europe’s biggest engineering company, says on its website.
The German government isn’t envious of Google’s success, said Hans Michelbach, a Christian Social Union lawmaker and spokesman for the “Mittelstand,” or medium-sized companies that are the backbone of the economy. Google’s “oligarchical” position in the Web economy is squeezing fair competition, Michelbach said on the phone yesterday.

Breakup Calls

By advancing its views in Germany, Google would gain leverage in other parts of Europe as well, given the country’s economic weight and its political role in shaping rules across the European Union.
Gabriel may prove a brusque conversation partner. The head of Germany’s Social Democratic Party in May discussed the possibility of dismantling companies like Google if they’re found to abuse a dominant position in the market. Last month, he called Google, Amazon.com Inc. (AMZN:US) and Apple Inc. (AAPL:US) “anti-social” for skirting appropriate taxation.
“Germany has been a hotbed of difficulty for Google, featuring some of Google’s most vocal critics in Europe,” Greg Sterling, vice president of strategy and insights for U.S. trade group the Local Search Association, said in an e-mail. “Much is at stake as Google seeks to avoid formal antitrust proceedings, considerable potential fines and the stigma of being formally branded a monopolist.”
Merkel herself doesn’t recall making the remarks to Schmidt and generally doesn’t recount details from personal meetings, a spokesman said by e-mail. Kay Oberbeck, a spokesman for Google in Germany, said he couldn’t confirm details of the private conversation.

‘Philosophically Perplexing’

The panel on the so-called “right to be forgotten” addressed whether removals of search entries should have global effect as well as what constitutes a public person who isn’t entitled to having information removed.
Jimmy Wales, co-founder of online encyclopedia Wikipedia, told the panel he found it “philosophically perplexing” why Google should be forced to remove links to third-party websites while his own organization wouldn’t be.
The process, which became necessary following a verdict by the European Court of Justice in May, is a relative nuisance when compared with other regulatory issues that have beset the company.
Google’s plans to settle a lengthy EU antitrust probe were derailed last month by negative feedback from companies that complain the company promotes its own services in its search results. Deutsche Telekom AG, a unit of Axel Springer AG and German publishers are among companies that have filed formal complaints alleging Google broke monopoly-abuse rules.