Europe has the motivation, but not the means, to break up Big Tech. For the U.S., the inverse is true. That’s bad news for anyone hoping for a full regulatory reckoning with Silicon Valley’s and Seattle’s giants over their monopolistic tendencies.
Washington lawmakers see their job as protecting the consumer first and foremost, while Brussels wants to make sure other companies are allowed to compete with the incumbents. Sadly for Europe, the Americans have all the power but their approach is unlikely to produce radical change (as my Opinion colleague Tara Lachapelle wrote this week).
That isn’t to say the European Union is wasting its time in leading the charge against Big Tech. Congress’s grilling last week of the chief executives of Apple Inc., Amazon.com Inc., Google parent Alphabet Inc. and Facebook Inc. showed that the “Brussels Effect” is in full force. The EU plays an outsized role when it comes to regulation because other regions — even the Americans — tend to follow its lead. Up to a point, at least.
As U.S. lawmakers made the case against the West Coast giants, time and again their arguments echoed efforts already well underway in Europe. When the Democratic Representative David Cicilline tackled the way Google displays news snippets in search results without reimbursing the publishers, he evoked new copyright laws proposed by the EU last year.
For two years Brussels has been looking at whether Amazon uses its marketplace data to compete unfairly with the sellers on its website; that’s now a hot topic on Capitol Hill too. The market power of Apple’s App Store and of virtual assistants such as Siri and Alexa, both of which are the subject of new EU investigations, were also on Congress’s agenda.
When people ask Margrethe Vestager and other European trustbusters what power they really have to moderate the behavior of trillion dollar U.S. companies, this is often their answer: When Brussels uncovers bad corporate behavior, it lays out a road map for Washington D.C. to follow.
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Tackling companies with combined annual revenue of $782 billion, more than the gross domestic product of Switzerland, is a huge challenge, meaning competition authorities benefit from the work that’s already been done elsewhere. Even the British Competition and Markets Authority’s study of the digital-advertising market got a shout out from Rep. Pramila Jayapal, who cited the agency’s findings on Google’s dominant market share.
The European Commission does have the legal authority to try to break companies up, but no one thinks it would ever try this on a U.S. company. The political blowback would be too severe. The Americans could themselves seek breakups, and would have the power to do so, but their antitrust regime has different priorities. While the problems — and the levels of exasperation at the cavalier behavior of the companies — might be the same, the types of punishment that lawmakers have in mind are different, according to Nicolas Petit, the joint chair in competition law at the European University Institute.
That’s because American antitrust law focuses on the interests of the consumer — primarily around pricing — while Europe considers the broader market dynamics and effect on competition. While Vestager probably wants to foster the creation of a company that could counterbalance Google and Facebook’s might in search and social media, her U.S. peers only worry if the impact of their dominance is detrimental to consumers.
That narrower American focus limits the likelihood of far-reaching action, says Tommaso Valletti, the head of Imperial College London’s Department of Economics and Public Policy, and a former chief competition economist at the European Commission. “The U.S. has, de facto, abdicated any enforcement for 20 years in this area,” he told me.
In her submission to the House of Representatives’ antitrust subcommittee, Vestager called for “common” policy responses, according to a document obtained by the website Euractiv. It’s an admirable goal and should be the logical conclusion of investigations tackling many of the same topics. It’s also a pipe dream.- Bloomberg
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