EU seeks new powers to penalize tech giants
arstechnica.com
arstechnica.com
This is a step in the right direction however. It's not possible to create a tech sector when all your data passes through USA, NSA and other 3 letter entities. China did it, Russia partly did it. The US is doing it now. I hope the EU acts swiftly to build a moat to stop haemorraging human and capital resources to the US. There is plenty of talent to support a thriving euro- and world-class tech ecosystem, but it needs to be strategically protected, the same way the US has done to date
The language barrier is a HUGE problem for EU businesses. It's the main reason why online services grow 100x slower in the "European Union" compared to the same service being offered in the US, where a "state's language" makes no difference, because it's the same everywhere.
Because there isn't such "high scalability potential" as it is in the US, due to the language barrier, you also don't see as many investors throwing millions of euro at "ideas with potential".
b) The EU has exactly as much power as their member states (which are sovereign, see Brexit) give her. And the members have decided to not give her that particular ability.
Despite what you might read on the Internet the EU is NOT the United States of Europe. It (or a successor) may be one day, but that day is at least a century away.
Other European countries don't have that history.
That aside, there's a much bigger problem: sovereignty. How many Europeans would just accept a foreign language being made mandatory in their country? Eastern Europe still remembers Russification. We also have the example of French and its spread in France. I'm afraid that this kind of a rule would threaten the entire European Union project.
Some countries are way, way better than others at teaching English. You can check https://en.wikipedia.org/wiki/EF_English_Proficiency_Index.
Netherlands, Sweden, and Norway are at the top with very high proficiency. France is 31st and is famously terrible at teaching English. Spain is 35th, Italy 36th. So it seems to be possible to have good English from school when done correctly.
> How many Europeans would just accept a foreign language being made mandatory in their country?
Yep, almost nobody would accept this, that's for sure. People in France are already angry toward Ursula von der Leyen because she didn't speak enough French during the recent State of the Union... I personally don't care that much about my own native language and would love to see English be used instead, but that's clearly not the way others see it.
That's my personal experience at least.
There are however many things the EU could work on that would help: - common market for financial financial services (why does a FinTech company have to register in every country it wants to do business in?) - common market for media rights (why do I have different rules to license a song or movie in different countries? We don’t need 27 iTunes Stores) - common market for telecommunication (ISPs and mobile operators still function independently even if they share a brand) - common labor market - make it easier to hire across borders (my employer is having a tough time hiring regional employees as we have to get set up in every country with a legal entity and register for taxes, social security)
It’s also important to acknowledge how far Europe has gotten. The common Customs area, the Euro, SEPA, Schengen all help make doing business in Europe across countries a lot easier. The also help make talent more mobile as it’s easier to move across borders.
Most educated Europeans already speak English as a second (or third, fourth, …) language, but many still prefer to be spoken to in their first language (historically often because they don’t speak English that well, but that already has been slowly changing for decades)
(Current EU VAT rules definitely suck for small multi-nation startups, but the rule as I understand it is “pay VAT where you customers are” which brings me back to the nations themselves rather than the supernational trading block).
You are in the UK. You create knitting patterns that you sell online. Somebody from Latvia wants to purchase your knitting pattern. However, you don't have any other customers from Latvia. You're better off not selling to that customer to avoid the paperwork for VAT to Latvia. This is a digital product that can be copied at nearly no cost.
Politicians saw the light at some point and implemented a minimum threshold for VAT for these kinds of payments. I still cannot understand why this took years.
From 2015: https://euobserver.com/opinion/129961
Sorry, but I'm still salty about it.
Examples? The only thing you might argue is privacy laws and there we could be thankful to the EU for being the only trading block that's made some (perhaps futile) effort to protect their civilians rights.
First, why can't you "create a tech sector when all your data passes through USA..."? What does one have to do with the other? Are you talking about espionage? If so, is there any evidence that the EU tech sector has been stifled because of US government espionage?
Also, this article is about data collection and disinformation. What does that have to do with "build[ing] a moat to stop haemorraging human and capital resources to the US" ?? And, anyways, what exactly has the US done, at a policy / regulatory level to "strategically protect" this?
Other sectors have been, and there's no reason tech would be immune to this. Also, it's only logical that attempts to create an EU tech sector, therefore threatening the US dominance, would be met with attempts to stiffle it similar to the ones below.
>In 1999, Enercon, a German company and leading manufacturer of wind energy equipment, developed a breakthrough generator for wind turbines. After applying for a US patent, it had learned that Kenetech, an American rival, had submitted an almost identical patent application shortly before. By the statement of a former NSA employee, it was later discovered that the NSA had secretly intercepted and monitored Enercon's data communications and conference calls and passed information regarding the new generator to Kenetech.
>In the early 1990s, the US National Security Agency intercepted the communications between the European aerospace company Airbus and the Saudi Arabian national airline. In 1994, Airbus lost a $6 billion contract with Saudi Arabia after the NSA, acting as a whistleblower, reported that Airbus officials had been bribing Saudi officials to secure the contract.[65] As a result, the American aerospace company McDonnell Douglas (now part of Boeing) won the multibillion-dollar contract instead of Airbus.
>The American defense contractor Raytheon won a US$1.3 billion contract with the Government of Brazil to monitor the Amazon rainforest after the US Central Intelligence Agency (CIA), acting as a whistleblower, reported that Raytheon's French competitor Thomson-Alcatel had been paying bribes to get the contract.
>In order to boost America's position in trade negotiations with the then Japanese Trade Minister Ryutaro Hashimoto, in 1995 the CIA eavesdropped on the conversations between Japanese bureaucrats and executives of car manufacturers Toyota and Nissan.
Source: https://en.wikipedia.org/wiki/ECHELON
You can argue that the bribing cases make the US government the "good guy", but I can safely say that the NSA/CIA would not leverage it's espionage capabilites to subvert a US companies deals/operations.
And remember, these are only the cases that we know about.
That means US companies are orders of magnitude easier to scale up to behemoths. In fact, if an EU tech company wants to grow really big, it is better off trying to conquer the US (like spotify).
There is no fix for this. Even if the EU managed to take away the many regulatory differences between member nations and created a funding source equal to silicon valley, and managed to keep the US tech giants at bay, the EU tech industry will never rival that of the US.
IMHO this is a good thing. Megacorporations are an economic antipattern. It is better to have a million small businesses serving their local market than a few giants covering the continent.
It's not as if europeans learn about europe when they are on US social media anyway. Most of what they hear is about US and Trump, not their local stuff. That hasn't prevented Twitter and FB or ebay or whatever to become huge in europe. Besides far too many europeans do their work in English, hell even Brussels operates in english apart from some public appearances. I ve certainly never used another language in any EU project i joined.
Russian government had no part in this. It's just the fact that US companies didn't consider Russia a worthy market back then. So, naturally, we've had our own companies like VKontakte and Yandex copy what the US counterparts had to offer, and when Facebook and Google noticed Russia and tried expanding into it, it was too late.
There were competing social networks in europe and UK as well, big names. Why are those in the graveyard though?
We still have local competition to Amazon but I guess days are numbered as they just filled for IPO.
I don't think this can all be reduced to "The US tech companies are able to make more money by stealing your data!" as the tech industry is and has been so much more than ad tech.
It's working. Brexit probably made this easier than ever. Being negative about the EU when it comes to regulation to "protect people's rights" is often simply dismissed.
I'm dismayed at the future of the EU when it comes to computing. Not because the situation is dismal right now, but because it doesn't seem to be improving. People don't seem to care in Europe.
I believe that the hostility of EU countries towards foreigners plays also a big role in all this. If you're a non-EU citizen trying to setup a startup in an EU country, you're out of luck. For me as a non-EU citizen living in an EU country, it's just much simpler to start a startup somewhere else than here.
So this is set to escalate all round and the EU would be silly not to be prepared.
The Tiktok affair is a change of the rules, and the EU generally operates within sight of what is considered reasonable in the US.
The gap between China & the US's take on such issues was shrunk remarkably. EU politicians may or may not have the same reasons, but whatever the reasons, it is now OK to break up or force the sale of a tech/media giant and treat it differently because it's foreign.
I'm not sure that's true - that Europe is losing talent to the US. COVID-19 has the US on blacklists for most of Europe. And before that Trump policies towards foreigners are not exactly encouraging to migrant workers. Meanwhile 70k Euros (82K USD) ignores that you're getting cheap, high quality healthcare, you don't have much student debt (or none at all e.g. Germany). Meanwhile Google, Facebook et al. have been opening engineering offices around Europe, presumably because it's hard to get talent over to the US / cheaper in Europe.
> you have to jump through hoops with HR and management in Europe
What hoops are these?
In the life of a big-tech worker this is a rounding error.
Do you have any numbers to support that claim ? Afaik h1b visa is only given to 150K people a year, sizeable proportion of them are people from Asia. Even if European developers really wanted to move to the U.S it doesn't seem that easy for them to make the move.
Might become Canada rather than USA. Better quality of life there, and doesn't seem to have the "treat foreigners like a*holes" mentality.
Also, the US losing talent to Canada for the same reasons.
A lot of EE politicians are genuinely alarmed by the power of these companies. They (as politicians) are also personally aware of it. They're elected on Facebook, essentially. The public shares the negative sentiment.
If there were some powerful EU competitors that could immediately benefit, I'd suspect the protectionism more.
FWIW, IDK if there are many of those embarrassing questions thrown at EU politicians regularly. I would wager that's very far down on their list of "questions I don't want to be asked." It just isn't a live political issue that most people care about, to my knowledge... regardless of whether or not it is a big issue.
While it can't be, the EU's ambitions on data protection are quite old; the DPD, the GDPR's ancestor, was adopted in 1995, before the consumer internet was a big deal, and ultimately derives from OECD guidelines from _1980_. Similarly, the EU has been interested in competition issues around things like supermarkets for decades; a lot of effort was put into preventing any one chain becoming the Amazon of supermarkets, so it's perhaps not unexpected that Amazon being the Amazon of, er, Amazons would be viewed with suspicion.
The stuff mentioned in the article seems to be mostly data protection (as mentioned, something the EU has been interested in for the last 30 years at least) and making it easier for people to move services (again, the EU has had an interest in this for a while, notably with telecoms and more recently banks, as well as long-standing rules around bundling).
Honestly, I think the headline is a bit alarmist.
Is this just the latest form of trade protectionism? That the EU is unhappy about being the clear non-leader in tech so they're attempting to raise trade barriers such that the American leaders are forced out or become uncompetitive in the EU?
The EU has found some 'actual power' in their legislative ability, and the anger among the elite particularly over taxation is being expressed here.
It's one thing the elite can agree on 'we need to get back at those bad American companies'.
But it's ultimately a losers hand, and the 'real problem' is their own ability to compete in these areas.
All of that said - the EU has actually made some decent legislation and some of these actions may very well be rational and welcome. So paradox there.
Rather than breaking up the US companies, a more realistic approach would be to require that users on US social networks be able to friend/follow people on competing social networks, using open standards (i.e. the Fediverse).
If necessary, the regulation could be limited to just EU-based user accounts on US social networks, and any account on an EU-based and registered competing social network. That would go some way towards addressing the security/spam concerns that US social networks might raise, as well as adding an onerous bureaucratic process which incumbents can capture, and give the EU politicians the sense of media control that they want.
I think this attacks the problem from the wrong perspective. I think a more realistic approach would be to require institutions which use public funds (government entities, community groups, schools, libraries, et cetera) to adopt these open standards themselves and to bootstrap their necessary infrastructure to broadcast messages into this new platform.
Everyone in the public sector has a Twitter account, a Facebook account, an Instagram account, ad infinitum, these public organizations need to be mandated to build out their own social infra (or to buy from a competent provider exposing these services in the same way they'd buy email and web hosting).
On the bright side maybe this kind of thing will help tech giants to understand that they must disrupt the harmful bureaucracy that infects governments all over the world. We already have technology to make direct/liquid democracy possible [1] [2], and a small push from a company like Facebook or Telegram can help to fundamentally change the way politics works, and the type of people it attracts.
[1] https://github.com/voteflux [2] https://en.wikipedia.org/wiki/Liquid_democracy
Europe doesn't have that much of a directly competing industry. Also, since we're not unified in terms of political culture, most people outside of (eg) Poland wouldn't consider a Polish company to be any more local than and American one. The EU is protectionist in some regards (especially agrifood), but these are structural and foundational.
I think it's motivated by anti tech-monopoly sentiment, which has been growing everywhere in the West.
In the sense that it's protectionist, I think the "TikTok affair" is a low-key tidal shift. It essentially the US taking a position similar to China's. An Chinese entrant into US media is seen as a political and intelligence threat, like China sees western media. Also, "*why should we allow their stuff when they don't allow ours."
The EU still operates within the US' "Overton Window." It doesn't do things outside the pale of US policy norms. That window now allows social media to be treated differently.
That's because there's nobody to lobby for IT, which is ... well chicken and egg problem. EU should allow member-states to create a stable , easy framework for tech companies to operate in EU (like ireland , cyprus, increasingly bulgaria and other countries try to do) the same way Delaware does that for the US. IT is inherently a virtual sector, and it needs this kind of constructs, not Kafkaeque VAT rules and constant charges and arbitrary taxation. This is what turns away people to greener, or just more stable pastures
> EU still operates within the US' "Overton Window.
Sort of. the north does, but eastern / southernn countries have done significant openings to china because they needed investment. They are also the countries who host the cheapest and most dynamic tech workers (who are sadly often forced to work remotely for the US)
The EU kind of started as a single agricultural market. Instead of the weird (complicated, and corrupt) protectionist arms race that existed before was gradually replaced with a single agricultural policy with protection from competition outside the block. Fishing is also a big deal, even though it is economically tiny.
Also, all the countries have an agri-food industry. Not many are likely to benefit from decreased competition vis-a-vis facebook.
Brexit/Banking stuff has been an eye-opener. On the face of it, a big chunk of the London financial market is up for grabs. It has not been a negotiating priority though. The Netherlands, and to some extent Belgium and Germany would be the likely benefactors barriers, but for most countries it would just be a minor inconvenience.
"Because more profits and taxes in Amsterdam" just isn't an operative reason for EU decisions, at least currently. I'm not sure if this is good or bad.
Regardless of dealings with China, European regulations don't tend to incorporate things that would be inconceivable in the US... at least thus far.
Breaking up or forcing the sale of a foreign media company was, until recently, out of the question. Now it's not.
Totally agree to that. I think a lot of people who supported the ban here have no idea of what Pandora's box they opened.
IT was not as important until recently. At this point some things are almost as important as food. If your military infrastructure depends on some network equipment, you need to think what will happen when you'll be at war with a country that makes that equipment.
Of course it's not possible to build all equipment from sand to CPU in the country, unless that's a huge country like Russia or China. So there will be compromises. That's not the case for the food, though.
Facebook is not important. If US will be in war with EU and shuts down Facebook access, nobody will care.
> t as important until recently
This Recently is 20 years ago. It is arguably THE sector for growth and we all know it. Let alone that it's a security issue as well, and EU could learn a lot from Israel.
1) Europeans realised US corporations and special services won't stop spying on their allies and they will just ignore law and order
2) As the biggest single market on earth the EU has a strong leaver. A leaver which might be to the benifit of other smaller nations as well, so they feel morally obliged to use it
3) Contrary to a common image in the anglosphere the EU is not soley a economic pact, but there is a strong precence of shared values. So human rights, privacy rights of individuals, all that jazz. Not saying this is perfect or even at the level it should be, but it is more than a purely economical pact.
The idea that the EU was purely an economical alliance was a misconception that bit the UK as well during the Brexit negotiations. The UK negotiators couldn't get that there are ideas the EU isn't willing to sacrifice on the altars of commerce and capital.
It's hard to know though. The way EU political culture works currently doesn't have "domestic politics" norms... which makes motivations hard to understand. That said, there is far more political attention on corporations spying or manipulating us than foreign countries spying or manipulating us.
In terms of the EU being powerful... I agree on paper. But, political culture isn't there atm. See the EU's handling of border issues: Ukraine and Belarus. There has been exactly zero "great power" MO on these. Imagine either of these if it was the US, China or Russia(1) border.
(1)You need to imagine Russia on both sides.
For good or ill, the EU doesn't have this kind of a political culture in 2020. Maybe it will. The material conditions exist. Currently though, it's a totally different beast to the US or China politically.
Well that's a very Brussels-centric picture that you paint, i.e., the glorious, righteous warriors of the EU leadership bravely defending Europe's morality against the terrible, beastly greed of perfidious Albion. However, from where I'm sitting it looks more like a demented quest for vengeance from an EU political leadership driven insane by the personal humiliation of losing one of the biggest members of the EU despite their best efforts and the stunning repudiation to their megalomaniacal globalist wet dream.
Tackling social media tech certainly seems important when some post recommendation algorithm can probably decide elections. It's not like social media make information spread freely. It's directed by some algorithms for a looong time already.
I wouldn't mind EU forcing more transparency into these things.
EU's GDP per capita is roughly half of that of the US. Not exactly super wealthy by any standard. Considering the slow growth all throughout the EU it's not coping too well at all.
1. Much of the gap is due to former Eastern-bloc countries
2. 50 million of Americans live in horrid poverty
I guess it's hard to get the full picture when you get a cushy six-figure tech job in the Bay area.
Seriously, do you think everyone would be up in arms if facebook microsoft and amazon pulled out? No, people would just shrug and move on to something else.
And ironically out of these three Germany has the highest per capita and they're the only one to have merged with an Eastern block country.
Portugal has already fallen behind Slovenia.
The only EU countries to have anything approaching or surpassing US per capita numbers have tiny populations. In which case one might mention NY state has a per capita gdp of $85k with over 8M people.
Alabama: https://www.census.gov/quickfacts/fact/table/AL/BZA210218
EU: https://en.wikipedia.org/wiki/Median_income#Median_equivalen...
The rate that these economies are diverging is the problem. Its to the point that the 50 million americans in horrid proverty are richer than the middle class in countries like spain, italy, greece.
Median household income is a better metric to get a feeling for the live of the actual, average citizen. Median personal income in the EU grew 18.5% from 2008 to 2018 and 8.7% in the US. (It grew more in 2019 but I couldn't find the corresponding EU data for 2019).
The divergence from GDP per capita means most people didn't receive the growth in productivity.
US: https://fred.stlouisfed.org/series/MEPAINUSA672N
EU: https://appsso.eurostat.ec.europa.eu/nui/submitViewTableActi...
But if you actually look at disposable income germany has nearly 10k less than the US. Thats not even to mention places like greece, Portugal, and spain.
https://en.wikipedia.org/wiki/Disposable_household_and_per_c...
My overall point was that GDP per capita growth does not relate to income of actual people, though.
The difference between both metrics means that mostly only inequality grew in the US from 2008 to 2018.
I think you looked at mean income in the wikipedia table, not median income. Median income is "only" 7k less in Germany than the US. The difference between mean and median essentially tells the same story: GDP growths only landed in the upper few percent housholds.
The other reason this is being considered is the deep distrust of US tech companies. For the average literate European citizen, US tech companies probably look just as bad as Chinese companies look for the average literate US citizen. Again this is indirectly supported by US reacting in the exact same way towards the party they distrust.
This being said I don't think this will pass and it certainly won't be put to use any time soon. There are still to many strings attached from the US to European countries, economies, and people. The purpose of all that spying and infiltrating everyone is to keep both allies and enemies in check. But recent US moves and changing of times have created some very obvious cracks that won't get mended too easily.
Hilarious!
Lol do people really believe that?
Also, please don't create accounts to break HN's guidelines with. Doing that will eventually get your main account banned as well. If you wouldn't mind reviewing https://news.ycombinator.com/newsguidelines.html and sticking to the rules when posting here, we'd be grateful.
While it may be true that initially a break up would reduce the offering of giant tech companies and give consumers less choice of some product, in the long term they might benefit as a whole person a lot more than the little cost that has been added just to the consumer role itself.
The replacement companies might pay more tax, the might be better regulation to stop fake news or other damaging content circulating, law makers might have more influence in sanctioning companies who do not behave in an ethical way, children might get sucked less into addictive habits where their behaviour and data is being further exploited into sucking them into more damaging habits, etc.
So yes, possibly a consumer might miss out on some addictive and damaging products which initially might seem a loss, but the human as a whole is probably going to benefit magnitudes more than what they lost.
Ironic.
Though silicon valley has an extreme appeal, it is the de facto location for tech and this has become so cultural that EU will have to provide a serious incentive to stay in the EU because business wise there is 0 resons to not go to USA.