In an era where personal information has been monetized by a variety of private companies, the question of “who can you trust” is increasingly fraught. In the wake of a succession of political scandals linked to corporate misdeeds, trust in traditional institutions is eroding, a phenomenon seen as a main driver behind the surge of right-wing populism around the world. The European Union (EU) is no stranger to this phenomenon, as public authorities have been criticized for cozying up to US technology companies.
Europeans more broadly, however, are increasingly anxious about the outsized role US tech companies play in society. A regulation-friendly mindset, combined with a sense of being invaded by American tech companies, has led 70 percent of Europeans to believe that technology companies will cause more harm than good if not properly controlled. A failure to respond to this perception increases the appeal of right-wing populist politicians peddling conspiracy theories, and claiming to act against an established and self-serving elite dominated by politicians and corporate executives. This would be disastrous for US tech companies’ future in Europe, as it could lead to even more support for politicians seeking to roll back the EU.
The EU’s outgoing chief regulator, Competition Commissioner Margrethe Vestager, has been aggressive in her attempts to rein in an ever-innovating tech sector. Under her leadership, the EU’s Directorate General for Competition levied a historic $5.1 billion fine against Google in July 2018 for using its ownership of Android to further the reach of its own search engine. Amazon is currently being investigated for abusing its role as a platform to favor the sales of its own goods. Facebook was fined $122 million in 2017 for providing “misleading information” in the run up to its acquisition of the messaging service WhatsApp, and may face additional scrutiny after Germany’s competition regulator banned the company’s practice of combining data across its platforms in February 2019.
Unsurprisingly, Vestager’s actions have made her the most popular of all 28 outgoing members of the European Commission. Yet her scrutiny of tech companies’ alleged anti-competitive behavior goes beyond a simple belief in healthy market regulation: it aims to restore public trust in the belief that free markets can work fairly, and to correct what is perceived as US tech companies’ unbalanced domination of the European market.
These landmark efforts have attracted their share of criticism, with President Trump claiming multiple times that Vestager “hates” the United States. Though hyperbolic, Trump’s remarks reflect a sense on this side of the Atlantic that the EU’s aggressive approach may be adversarial, anti-business, and perhaps rooted in jealousy.
But Vestager’s influence will likely continue to grow. She was one of the stronger candidates to become the next Commission President in November, and the results of the May 2019 elections for the European Parliament revealed that Vestager’s outlook on tech regulation is increasingly shared, as several newly elected members seek to take up her mantle regulating US tech companies. The popularity of this approach is also reflected in the push for a “digital tax,” enacted in France in July and under consideration by six other EU member states, in an attempt to address the perception that US tech companies in particular have unfairly taken advantage of the lack of a unified EU tax regime at the expense of the public.
For their part, the behavior of US tech companies reinforces the positions of illiberal populists like Hungarian Prime Minister Viktor Orbán or Italian Interior Minister Matteo Salvini, unintentionally substantiating their claims of representing the common citizen against a corrupt elite.
The perception held by lawmakers and the public that tech companies are attempting to skirt European regulations will eventually force a stark choice for the tech world: greater short-term profits – potentially at the expense of future EU market share – or acknowledging the European political environment and cultivating a more constructive – and in the long term, potentially more profitable – partnership with European regulators.
Observers have written that American tech companies ought to fear the EU and its aggressive drive towards “cracking the big-tech puzzle” through regulation. But given the public distrust created by elite political scandals and the success of the far right, maybe “big tech” should actually be thankful. The better business decision might just be to accept some limits to their power and profitability to help preserve Europe’s long-term stability.
Written by Sam Denney
Author : YPFP