Europe cools internet monopoly rhetoric

Almost every politician around the world is currently using Silicon Valley as a metaphoric punching bag, but the European Commission will not be drawn into the monopolies debate.

While 2020 Presidential hopeful Elizabeth Warren has painted a target on the backs on the internet giants, Europe has once again proven it will not be drawn into making such short-sighted and shallow promises. Warren is effectively warming up for the world’s biggest popularity contest, and perhaps hasn’t considered the long-term realities of the dismantling of companies such as Facebook and Google.

Speaking at the South by Southwest festival in Austin (thank you Recode for the transcript), Margrethe Vestager, the European Commissioner for Competition, made a very reasonable and measured statement.

“We’re dealing with private property, businesses that are built and invested in and become successful because of their innovation,” said Vestager.

“So, to break up a company, to break up private property, would be very far-reaching. And you would need to have a very strong case that it would produce better results for consumers in the marketplace than what you could do with sort of more mainstream tools.”

Vestager’s point is simple. Don’t punish a company because of its success. Don’t make rash decisions unless there is evidence the outcome will be better than the status quo. While the fence is proving to be very comfortable, it is a logical place to sit now.

Following up with the European Commission press team, Telecoms.com was told the Commission does not have an official position when it comes to breaking up the internet monopolies. Vestager’s comments are representative of the Commission, and it will evaluate each case on its own merit. Effectively, the breaking up the monopolies is a last resort, and will only be done so in extreme circumstances.

This position is supported by a recent report, put together for HM Treasury in the UK by former Chief Economist to President Obama, Professor Jason Furman. Furman suggests new rules and departments need to be created for digital society, but monopolies, when regulated and governed appropriately, can be good for the progression of products, services and the economy overall.

This will of course be an unpopular opinion, but it makes sense. Sometimes there simply isn’t the wealth to share around. Monopolies are perhaps needed to create efficiencies and economies of scale to ensure progress is made at a suitable pace. However, the right regulatory framework needs to be in place to ensure this dominant position is not abused. A catch-all position should not be welcomed.

This is where the European Commission has been playing a notable role. Numerous times over the last few years, technology giants have been punished for creating and abusing dominant market positions, take Google as an example with Android antitrust violations last June, though it has not gone as far as breaking up these empires. The key here is creating a framework which encourages growth across the board but does not punish success.

Some would argue success in the pursuit of this delicately balanced equation has been incredibly varied, but this should not form the foundation of rash decisions and potential irreversible actions. Big is not necessarily bad.

This is the marquee promise of Senator Elizabeth Warren. In attempting to woo the green-eyed contradictory wannabee capitalists of Middle America, the Presidential contender has promised to split up the internet giants. The complexities and realities of this promise do not seem to have been thoroughly thought out, and it does seem to be a shallow attempt to lure the favour of those who seek fortunes but are unable to congratulate those who have found them.

That said, there are Presidential candidates who are suggesting good ideas. Senator Amy Klobuchar has suggested companies who monetize data through relationships with third-parties should be taxed. This is somewhat of a radical idea, but we do quite like the sound of it.

Firstly, for those companies who say they are collecting data to ‘improve customer experience’, there would be no impact. If the data is being used to enhance current or create new services, and therefore kept in-house, then fair enough. However, if the company is moving data around the digital ecosystem, monetizing personal information, why not place a levy on this type of activity. It might just encourage these companies to be more responsible when more scrutiny is being placed on these transactions.

This is the challenge we are all facing nowadays; the digital economy is a different beast and needs to be tamed using different techniques, regulations and practices. We all know this, but we haven’t actually figured out how to do it.

This is why we kind of like the non-committal, hands-off approach from the European Commission. For an organization which usually likes to run wild with the red-tape, this seems to be a much more sensible approach. Over regulating nowadays could create a patch-work from hell which would only have to be undone. It might seem like a cop-out, but governments should let business be business, while casting a watchful eye over developments.

When no-one really knows how the future is going to evolve, regulation is needed to hold companies accountable and protections are needed to safeguard the consumer. But rash decisions and ridiculous promises are the last thing anyone wants.