EU reportedly mulling including cloud infrastructure in ‘fair contribution’ review

The European Union is getting close to having another look at whether Big Tech should subsidise the telecoms sector, which may include cloud investments.

This is according to ‘a person familiar with the matter’ (in other words probably a controlled leak from the EU designed as a trial balloon) who spoke to Reuters. Apparently the European Commission is going to ask both Big Tech and EU telcos about their cloud infrastructure plans as part of its review of the ‘fair contribution’ issue, which it has been gearing up to for months.

European operators observe that a massive proportion of all the data traffic they carry is generated by a handful of US tech companies, principally those that offer streaming video. Because they have invested in the infrastructure that delivers that data to end-users, they think it’s only fair that the Big Tech companies contribute to the cost of building and maintaining it. The counterargument is that they would have built that infrastructure regardless and that a ‘traffic tax’ violates the principles of net neutrality.

The debate has been running for over a decade but this inclusion of cloud infrastructure, as opposed to radios and cables, opens a new front. Presumably it has been opened up by the operators, in their ceaseless lobbying for a wealth transfer from Big Tech, telling the EC that cloud infrastructure comprises an increasing proportion of their outlays.

“The Commission will ask Big Tech and telecoms what they are investing in, how this will evolve and whether there is an investment gap,” the shadowy source whispered to Reuters. What is meant by ‘an investment gap’ is not detailed, but there is surely no doubt that the likes of Google and Amazon spend many times more on cloud infrastructure then the entire telecoms sector.

The question is: what, if anything, should the public sector and regulators do about this discrepancy. Nobody is forcing telcos to be in the business they are, nor to offer unmetered tariffs. This issue still feels like an opportunistic cash grab on the part of the operators, cloaked as a matter of public concern in the form of ubiquitous, high quality connectivity. If the EU wants to support its telcos there are many ways it can do so other than taxing Big Tech.

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