Europe Vs. Silicon Valley: How The Continent Is Responding To Big Tech’s Growing Power

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Eric Lieberman Managing Editor
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As the power of U.S. tech companies grows both respectively and collectively, so too does the clamping down of such firms from governing bodies in Europe.

Through regulations, investigations and penalties, the European Union, as well as several member states, have either voiced their displeasure or imposed substantial punishments for these massive firms.

“I think the biggest challenge to answer is not how, but who has the right to regulate a global internet in this way,” Danny O’Brien, international director at the Electronic Frontier Foundation, told The Daily Caller News Foundation. “Different states have different ideas on what controls (or not) should be placed on speech, or surveillance and profiling online.”

Germany’s Federal Cartel Office, for example, very recently accused Facebook of abusing its dominant stature in the market by, among other things, collecting data on users via third-parties. Bundeskartellamt, the competition watchdog agency, presented its findings from a probe lasting nearly two years, according to Reuters, and ruled that Facebook is violating the country’s rules when it gains access to massive amounts of data — even if the data is from WhatsApp and Instagram, two highly popular apps owned by the tech giant.

Facebook called the report “inaccurate” in a blog post directly responding to the allegations titled “Popularity Does Not Equal Dominance.”

Not all complaints or charges are primarily due to privacy; some are centered around antitrust concerns.

France officially filed a complaint against U.S. commercial powerhouse Amazon for allegedly exploiting its dominance over that of suppliers. Specifically, after concluding a two-year long investigation, the French government says Amazon single-handedly and unfairly altered the terms of pre-established contracts with partner vendors in order to get a leg up. Unlike Germany, France’s Economy Ministry is seeking a 10 million euro ($11.8 million USD) fine.

“Amazon is confident that our agreements with sellers are legal,” an Amazon executive based in Luxembourg told TheDCNF. “We look forward to demonstrating this to the DGCCRF as we cooperate fully.”

It’s not just Amazon that has been the target of Europe’s ire. The EU has battled with U.S. companies — including, through proxy, associated countries — before in order to retrieve certain fees.

There are a number of cases related to alleged tax evasion, or the purportedly cunning use of certain European countries as tax havens. Luxembourg is reportedly refusing to acquiesce to the European Commission’s demands to collect $295 million in back taxes from Amazon. And Ireland, which is generally proud of its tax structure, appears to be dragging its feet in fetching roughly $13 billion euros ($15.3 billion USD) from Apple, while the European Commission (part of the EU) keeps putting the country’s proverbial feet to the fire with threats of court proceedings. Ireland and Luxembourg are exceptions, while the EU figuratively and literally embodies the majority of the member states, which are evidently also pushing forward with its policing of U.S. tech companies.

And none of these confrontations even touch upon the perpetually-growing threats from the European Commission to crack down on online hate speech and terrorism propagation, or be forced to feel the ostensible wrath of forceful legislation.

Overall, there are many more examples, like the EU’s antitrust regulatory arm’s record $2.71 billion fine of Google, which stems from a ruling that the tech giant abused its dominance to favor some of its price-comparison search results over those of its rivals. (RELATED: Google Is Lawyering Up In Europe After Record Fines)

“When you use Google to search for products, we try to give you what you’re looking for,” Kent Walker, senior vice president and general counsel for Google, wrote in a blog post indirectly responding to the findings.

In stark comparison, the U.S. and its regulatory bodies haven’t wrought oversight of its domestic-based tech companies with as shiny or firm of an iron fist.

The Federal Trade Commission (FTC) ruled in 2015 that Google’s search practices were not “on balance, demonstrably anticompetitive.”

“We conclude that Google’s display of its own content could plausibly be viewed as an improvement in the overall quality of Google’s search product,” the FTC concluded in a 2013 report on an investigation. “Similarly, we have not found sufficient evidence that Google manipulates its search algorithms to unfairly disadvantage vertical websites that compete with Google-owned vertical properties.”

While surely circumstances, especially one particular to a certain case, can change, there is still critical variance in interpretations between Europe’s regulatory agencies and America’s.

Due to this difference, the characterization of Europe’s antitrust and consumer protection laws are often perceived as aggressive, often overly so. But Joe Kane, technology policy analyst at the think tank R Street, doesn’t necessarily agree that its because of deep contrast in law. Rather, “they’re just applying different standards.”

“The FTC has conducted investigations of companies like Google for the same conduct they were fined for in Europe, we just have a stricter standard for showing that there has actually been harm,” Kane told TheDCNF. “The European approach sometimes seems a bit more like ‘get them because they’re big.'”

And perhaps it’s not just the size of the companies, but where they come from.

“It’s not just coincidental that Europe is going after U.S. companies. That is there stated goal,” Roslyn Layton, a visiting scholar at the American Enterprise Institute and professor at Denmark’s Aalborg University, told TheDCNF. “There is no doubt Europeans are self-interested and want to promote European companies. The sad part is that rather than do it through their own innovation, they want to do it through regulating American firms.”

A key example, according to Layton, is Google, which in her mind shows that the U.S. “takes a consumer welfare standard when we look at antitrust, and the Europeans are looking for what’s good for European companies.”

Consider the fact that in its probe of Google’s practices and arguably anti-competitive behavior, the EU didn’t include Amazon as a competitor to Google Shopping, which yields an “absurd market definition,” according to Kane.

This could conceivably prove that its not so much competition in general that’s lacking on the continent, but instead homegrown European competition that is struggling.

“As always, the goal should be to protect competition, not competitors,” Kane continued. “In a lot of cases, the big companies win not because they’re evil but because they have better products at lower prices, and that is good for consumers.”

Nevertheless, Margrethe Vestager, the EU commissioner for competition, said the $2.7 billion antitrust Google fine will help drive innovation in the country and will ultimately be good for competition.

Google declined to directly provide comment to TheDCNF, but referenced the aforementioned blog post, as well as others addressing its practices online.

Setting side antitrust concerns, what about privacy?

“I think, with exceptions, broadly speaking the greater European vigilance towards the power of these companies is a good thing,” Jay Stanley, senior policy analyst for the ACLU’s Speech, Privacy and Technology Project, told TheDCNF. “The United States should be much more vigilant in protecting our privacy from these very powerful companies and when it comes to the private sector. We have seen an ongoing struggle really since 9/11 in which the United States — the American companies and government — have been pressuring the Europeans to weaken their privacy standards, when what should be happening is we should be strengthening ours.”

Many companies in all likelihood want uniformity of rules as to rid of the confusion that comes from inconsistent enforcement of their products, services, and features.

“We need to strengthen ours up to the European level, we shouldn’t be pushing the Europeans to weaken their’s down to our level,” Stanley asserted.

Some other analysts, like Daniel Castro and Nick Wallace of Information Technology & Innovation Foundation (ITIF), say too harsh of rules can “further chill the development of artificial intelligence (AI) in the EU,” potentially rendering the continent even more of an arid economic climate than it already seems to be when it comes to certain sectors of the economy.

“They [European governing entities] all think they can outsmart the marketplace by regulating better, instead of trying to make better technologies,” said Layton. “Their whole view now is if they make this privacy regulation, everybody will switch to the EU standard, which could be the case. But I don’t think any new European firms will come out as a results of the GDPR [General Data Protection Regulation],” a regulation intended to strengthen privacy protections.

Rather, it will “simply entrench the power of existing firms, because Google and Facebook and so on, if they have to change their privacy standards,” and abide by the GDPR, for example, “they can afford to do it,” according to Layton. She says it’s the new, small firms that won’t be able to adapt to the high compliance requirements.

In other words, privacy regulations, in Layton’s perspective, can essentially act as antitrust regulations, particularly in their potential effect to stifle competition, not foster it.

American officials, in comparison, have always appeared far more wary of cracking down on companies, whether through imposing regulatory rules on a stricter basis, or formulating and introducing (perhaps concocting) legislation.

The influence and size of U.S. tech companies seems to have become unpalatable, however, for some U.S. lawmakers and portions of their constituents. Both sides of the aisle have started to constantly question if Facebook, Google, Amazon and others have crossed the precipice of a booming company that are now effective monopolies, each in their own respect. (RELATED: Facebook Removed This Small Town Business’s Ads For American Flags Because It Sells Guns)

The general reticence from legislators or other officials may soon end, as the U.S. tech giants’ power swells practically and publicly. But Europe’s many battles with the firms may not serve as a sign of success, but rather a cautionary tale in the making.

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