Google and Apple Should Give Thanks to Brussels
One U.S. tech superpower after another has found itself in the cross-hairs of European corporate cops over taxes, monopoly power and misuse of consumer data. To some, this reeks of overreach by an Old Continent jealous of Silicon Valley.
Yet on closer examination, the tough medicine prescribed by Brussels watchdogs such as antitrust boss Margrethe Vestager may end up doing some good for Amazon, Google, Facebook and Apple. It won't feel that way, but Vestager and co. may spur them to improve business practices and curb some impulses that might ultimately end up self-defeating. The U.S. is meant to hold these giants to account too, but national pride, a laissez-faire regulatory culture, and political influence has blunted it.
Here are three areas where the U.S. tech powers could benefit from the bashing by Brussels:
Vestager's creative application of competition law to get Ireland to collect at least 13 billion euros ($14.6 billion) in unpaid tax from Apple will surely force U.S. tech companies and other multinationals to re-examine their aggressive avoidance tactics. Apple can't forever cook up convoluted ways to route much of its profit through Bermuda and elsewhere. Eventually someone will force it to change, and the European crackdown could spur Apple and others to move more quickly to a sustainable tax structure. Vestager can't take all the credit since the OECD and G20 were working on this already. But her bully pulpit is powerful.
Digital Data Rules and Privacy
Edward Snowden's revelations on online U.S. surveillance led some European governments to demand that more data is stored in the region. Although few laws were passed, the risk of a clampdown led Amazon, Microsoft, and IBM to double their number of EU data centers providing cloud services to European companies. Result: their European cloud computing business trounced most local providers.
Elsewhere, European politicians, regulators and consumers have a healthy suspicion of how Silicon Valley uses all our information. Facebook doesn't like being questioned about this, but it's sometimes outed gay youngsters to their parents, identified psychiatric patients and gone back on its word about how it uses telephone numbers and other data. Repeated misuse of our most personal details proves these companies need some checks on their power, and only Europe has shown much interest. Sure, Europe's fines against Google in this area have been paltry. But they'll go up under new rules, with Vestager taking a keen interest in how competition law and personal data overlaps.
Alphabet and Facebook might not like pesky European ideas such as the right to kill erroneous Google searches or your old Facebook account, but customers would prefer to retain that power and ultimately, that's what business is here for, right? To serve the consumer.
Vestager has filed charges against Google's alleged favoring of its own services over rivals in search results, and is working on a separate Android inquiry. These lumbering cases may have limited impact given the pace of technology change and ubiquity of Google. Yet Vestager's attentions should encourage the search giant to avoid the pitfall that derailed earlier cousins, namely focusing too much on old-tech dominance. Take Microsoft and Intel. A decade ago, they were embroiled in long antitrust cases in Europe. Their effort to protect their old cash cows helps explain why they missed out on the biggest change to computing in a generation: the shift to mobile.
Of course, Europe still does dumb stuff. On Wednesday, the Commission proposed some unworkable copyright reforms, including giving news publishers the right to demand payment from websites who display snippets of stories. Such measures have failed in countries where they've been tried and won't fix publishers' flawed online strategies.
Perhaps, though, Silicon Valley will one day thank (or at least tolerate) Europe for its activism. It's easy to sniff at the social mission behind some of Brussels' actions. But there are business benefits hidden here too, which would ultimately be good for the web giants. Just like eating one's vegetables.
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