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European regulators and other government bodies have become obsessed in recent months with using every legal tool at their disposal to harm American technology companies like Facebook, Apple and, above all, Google.
It goes beyond protectionism and beyond anti-Americanism. Ultimately it’s a war against the Internet itself. And it’s hurting Europe.
One strange element of Europe’s relentless attacks on Google is that in fact Europe doesn’t oppose Google—only European politicians and regulators do. In fact, Europe is one of the most pro-Google regions in the world.
For example, while Google’s search market share is about 67 percent in the United States, it’s north of 93 percent in Europe. And in the countries where action against Google is most aggressive, it’s even higher than that—for example, about 95 percent in France and about 96 percent in Spain.
European critics of Google will tell you that this “dominance” is the problem, but it bears a reminder that Google’s search market share isn’t about Google “taking” share. It’s about the people exercising their choice and preference.
While European critics of Google would say that such dominance is a big part of the problem, I see a massive disconnect between European citizens who overwhelmingly prefer Google as it is, to a massive bureaucracy (influenced by industry) that disagrees with the European public on the Google question.
Let’s take a look at European elites’ war on Silicon Valley, starting with…
The Financial Times reported on April 14 that the European Commission’s Competition Office is set to formally charge Google with abusing its dominance of Internet search in Europe.
This is an old charge against Google and one that has been mostly dismissed outside of Europe.
Nevertheless, EU’s Competition Commissioner Margrethe Vestager will announce plans to serve Google with a formal “statement of objections” listing the complaints against it by various companies in the EU, the Times and several news services said, quoting conversations with unnamed sources.
Germany’s Hamburg Commissioner for Data Protection and Freedom of Information last week ordered Google to change user privacy by the end of the year. The order requires Google to get explicit consent from users to combine data from different Google services and also be more transparent with what Google does with that user data.
Google was also fined in France and Spain over related concerns, and agreed to comply with privacy policy changes in the UK and Italy. In a nutshell, Google is saying that all Google services covered under a single password sign-on are one product—that Google is the product. European regulators’ position is that they’re separate “products” or services and therefore must be treated as such.
And, of course, Europe’s right-to-be-forgotten laws mostly target Google, although technically they also go after Yahoo Search and Microsoft Bing, as well as other search engines. In a nutshell, Google and other search engine companies are required by European law to allow citizens to petition to have certain links removed from search results when the search involves the name of the person. For example, if someone was involved in some past scandal, citizens can request that Google remove links to newspaper articles reporting about it.
Let’s be very clear that the right-to-be-forgotten is censorship. And censorship is mostly unacceptable in Europe when it comes to books, newspapers and magazines. There seems to be a bizarre consensus among governments and elites in Europe that new things, such as Google search, are invalid and can be meddled with because they don’t really count as legitimate “speech.” Old things, on the other hand, such as books, magazines and newspapers do count, and therefore cannot be censored because they represent legitimate speech.
Why Europe’s Regulatory War Against Silicon Valley Will Backfire
In the U.S., on the other hand, three separate court cases have ruled that search results count as speech and are therefore protected by the First Amendment to the Constitution, just as books and periodicals are.
Speaking of speech, Google closed the Google News site in Spain because that country passed a law requiring Google to pay newspapers for the privilege of driving traffic to their sites. The site is still offline.
The Spanish example is merely the most recent (and most damaging to newspapers) case where European governments tried to get Google to pay for using headlines and snippets from newspapers in search results. Another case in Germany gave newspapers the option to opt out of Google News. News publishing giant Axel Springer tried opting out. The results were financially damaging, so they opted back in.
You might think that this case proves that Google provides a huge benefit to newspapers without charging them. But Axel Springer concluded that it proves Google’s unfair dominance and excess power.
The most insane development in the right-to-be-forgotten rules happened when Europe’s data protection chief, Isabelle Falque-Pierrotin, decided late last year that Google must censor the results globally, not just in Europe. Earlier this year, Google refused and the issue has not been resolved.
The implications of the establishment of a precedent where a governmental organization in one country or region can censor the Internet globally are staggering. China will want all mention of Tibet and Tiananmen Square erased globally. Saudi Arabia might insist that any criticism of Islam be purged everywhere. It’s a disaster.
European politicians ignore this concern, believing that global censorship based on European values is good and right and global censorship outside Europe based on non-European values is bad and wrong. Google and other companies are expected to simply accept and implement European censorship and reject calls for censorship outside Europe. Or perhaps they believe that every government censoring globally wouldn’t wreck the Internet and that the destruction of the Internet—and the power of Internet companies—would be a good thing.
(This speculation sounds extreme, but if anyone has a rational defense of Europe’s call to censor globally, I have not found it.)
Facebook is also facing a tsunami of investigations in Europe over its privacy practices. Privacy watchdogs in the Netherlands, Germany, Belgium, Spain, France and Italy have begun looking into the social network’s privacy policies and controls. Specifically, they’re concerned about Facebook combining user data from WhatsApp, Instagram, Facebook Messenger and Facebook itself. They’re also concerned about Like button tracking.
Apple
European regulators are also preemptively probing Apple’s streaming music service, which hasn’t even launched yet. They’re probably responding to a complaint from a competitor, which is probably Sweden’s Spotify. And they’re concerned that Apple is throwing its weight and cash around to make what it believes are unfair deals with music labels for the rights to stream music.
The launch of the Apple Watch has also been conspicuously delayed in the luxury wristwatch capital of the world, Switzerland. A Swiss company called Leonard Timepieces got the right in that country to use the word “Apple” and also the image of an Apple in association with a wristwatch 30 years ago. So now Apple must reportedly wait until that trademark expires in December before releasing the Apple Watch. (The Apple Watch ships April 24th.)
Amazon
The European Commission announced last month an investigation into whether e-commerce companies engage in anti-competitive practices by restricting the buying and selling of goods and services across European borders. The announcement of the probe was broad, but it’s clear from speeches made by EU commissioners that Amazon is a major focus of the investigation, as is Netflix.
Why Europe’s Regulatory War Against Silicon Valley Will Backfire
These are just prominent recent examples. There are many other investigations, probes, court cases and other actions in Europe targeted at U.S. tech companies.
If you compare European action against Silicon Valley companies with actions taken by the rest of the world—and if you compare Silicon Valley and the U.S. as a target for scrutiny compared with companies headquartered elsewhere—it’s clear that European bureaucrats and politicians have singled out U.S. tech companies as a special category to be most aggressively investigated, fined and meddled with all with the larger aim of knocking U.S. tech companies down a few pegs.
Every individual action against American tech companies is generally viewed in Europe as perfectly reasonable. But as Benjamin Franklin wrote: “So convenient a thing it is to be a reasonable creature, since it enables one to find or make a reason for everything one has a mind to do.”
At the core of Europe’s crusade against Silicon Valley is a vague, disquieting dislike for the enormous power and influence of a few companies—something The Guardian newspaper called Europe’s “Silicon Valley envy.”
The question is: Why?
I think there are three main reasons for Europe’s total war on Silicon Valley:
1. Genuine concern about privacy and anti-competitiveness
European governments and the European public tend toward strict privacy protections. This is in part driven by the experience of Eastern European countries (especially the former East Germany) during the cold war when Soviet-aligned countries relied heavily on total surveillance to keep the population under control. And in the balance that all nations must strike between the roles of government and business, Europe leans strongly toward government control and regulation of business.
2. Backward thinking by the political class
Europe can’t really be singled out for backward thinking regarding technology. Politics tends to attract Luddites worldwide. But in Europe, this universal phenomenon is a contributing factor where governments have so much power over companies.
3. Frustration with European failure
You barely hear the “E” word in Silicon Valley, obsessed as tech companies are there with Asian and Israeli startups and—above all—themselves. But in fact Europe has a thriving, robust entrepreneurial culture and start-up scene. Europe isn’t massively different from Silicon Valley in terms of startups. And Europe of course boasts many giant companies in the enterprise IT market, such as Germany’s Siemens.
What Europe lacks is a consumer-facing giant. There’s not a single company in the same class as Google, Facebook or Apple. Not anymore.
For years, Finland’s Nokia rules the burgeoning handset market, before being crushed by Apple and Google (two California companies less than 10 miles from each other) before it’s mobile handset division was bought by Microsoft.
Europe and especially France, has always obsessed over American cultural imperialism—what used to be called Coca-Colonialism but is not called in some French circles GAFA, which stands simply for “Google, Apple, Facebook and Amazon.”
Where big consumer tech massively influences culture, Europe is a non-player. And this irks the Europeans heavily.
The trouble with Europe’s broad attack on U.S. tech companies is that it hurts Europe above all. Europe will never be able to regulate its way to tech competitiveness. It has to come from industry, not government.
All these problems—privacy, monopoly and, above all the out-maneuvering of European companies by culture-shifting Silicon Valley companies—should be solved by European startups, innovation, entrepreneurship not meddling EU commissions, politicians and judges.
Sure, European elites can keep Europe as a bubble of privilege, protectionism and heavy-handed government intervention. But that won’t stop the future. It will merely remove Europe from being influential in guiding that future.
It’s time for Europe to end its war on Silicon Valley.