Just months after the EU fined Google $2.7 billion for antitrust activities regarding search results, Missouri Attorney General Josh Hawley today announced an investigation into the company. At question is whether Google violated the state's antitrust or consumer-protection laws.
It's another headache for Google and more regulatory danger like the congressional investigations into connections with Russia, even as the majority in Congress wants to scale back what regulations there are on businesses in general. Not long ago, tech companies would pay lawyers and make some campaign contributions (given their profit levels, probably out of petty cash) and written everything off as a business expense. No longer.
The signs have been building for a long time. Tech companies have traditionally tried to ignore or at least push back on regulatory requirements. Executives often claimed it was because old regulations could not adequately address the current state of business and needs of innovation. There is some truth in that.
But, more often, tech companies simply bridled at any hindrance to their plans. After cycles of government investigation, pleas for self-regulation, and then a lack of action, the dynamics may have finally changed. If so, not just tech giants, but startups, may feel the sting.
Google alone is a rich example of tech's approach to regulation. In 2010, for instance, the scandal was that the company recorded data from private Wi-Fi networks. Eventually that blew over. But, around the same time, the EU began to investigate claims from European companies that Google allegedly rigged search results to favor its own businesses and disadvantage competitors. After seven years of litigation, the EU won.
Similarly, for years, Uber has fought a battle over whether its drivers should be treated as independent contractors -- its preference (and the preferred approach of some portion of said drivers) -- or as employees, which another group of drivers preferred. In the U.K., the conflict has come to a head, pending an appeal, where an employment tribunal said the drivers were definitely employees. That has no effect in other countries, but is a reminder that tech firms can't do whatever they wish, citing the prevalent "ask forgiveness rather than permission" philosophy. The reported FBI probe into potential computer crimes by Uber against rival Lyft isn't over, and no one yet knows where that will go.
You could note consumer privacy issues at Facebook, tax avoidance by a number tech companies like Apple, or questions over manufacturing outsourcing and factory worker welfare for all the hardware firms. Tech repeatedly has tried to run up to the edge of regulation and push its boundaries.
Companies and industries typically go through stages of maturation. They start off young, inexperienced, and scrappy, with little regard to regulatory requirements and fine points. Eventually, they mature and learn to thread their way through complex mazes of requirements.
Except the tech industry, perhaps because investors continually turn to youthful figures for the desired next big thing, has frequently displayed signs of arrested development. A combination of insisting that rules don't apply and enormous power and money at hand fuel a sense of entitlement.
Historically, such a self-conception can last many years. (Check the steel, railroad, and petroleum industries.) Eventually, though, reality catches up. Ordinary people get disturbed enough that they start demanding politicians do something. Despite the lust for corporate campaign contributions, the ultimate fear of being voted out of office can dominate the office holder's psyche.
The question for tech firm executives and investors is whether they've pushed to the edge once too often. In the past, pulling back and issuing tepid apologies and explanations were enough to calm the regulatory beast. Such reliance on boyish charm from an industry so dominated by men may no longer work, and the new responses could catch entrepreneurs as easily as the largest industry names.