Why Europe's Regulatory War Against Silicon Valley Will Backfire

By Mike Elgan  |  Posted 2015-04-14 Print this article Print
EU Regulatory War

These are just prominent recent examples. There are many other investigations, probes, court cases and other actions in Europe targeted at U.S. tech companies.

If you compare European action against Silicon Valley companies with actions taken by the rest of the world—and if you compare Silicon Valley and the U.S. as a target for scrutiny compared with companies headquartered elsewhere—it's clear that European bureaucrats and politicians have singled out U.S. tech companies as a special category to be most aggressively investigated, fined and meddled with all with the larger aim of knocking U.S. tech companies down a few pegs.

Every individual action against American tech companies is generally viewed in Europe as perfectly reasonable. But as Benjamin Franklin wrote: "So convenient a thing it is to be a reasonable creature, since it enables one to find or make a reason for everything one has a mind to do."

At the core of Europe's crusade against Silicon Valley is a vague, disquieting dislike for the enormous power and influence of a few companies—something The Guardian newspaper called Europe's "Silicon Valley envy."

The question is: Why?

I think there are three main reasons for Europe's total war on Silicon Valley:

1. Genuine concern about privacy and anti-competitiveness

European governments and the European public tend toward strict privacy protections. This is in part driven by the experience of Eastern European countries (especially the former East Germany) during the cold war when Soviet-aligned countries relied heavily on total surveillance to keep the population under control. And in the balance that all nations must strike between the roles of government and business, Europe leans strongly toward government control and regulation of business.

2. Backward thinking by the political class

Europe can't really be singled out for backward thinking regarding technology. Politics tends to attract Luddites worldwide. But in Europe, this universal phenomenon is a contributing factor where governments have so much power over companies.

3. Frustration with European failure

You barely hear the "E" word in Silicon Valley, obsessed as tech companies are there with Asian and Israeli startups and—above all—themselves. But in fact Europe has a thriving, robust entrepreneurial culture and start-up scene. Europe isn't massively different from Silicon Valley in terms of startups. And Europe of course boasts many giant companies in the enterprise IT market, such as Germany's Siemens.

What Europe lacks is a consumer-facing giant. There's not a single company in the same class as Google, Facebook or Apple. Not anymore.

For years, Finland's Nokia rules the burgeoning handset market, before being crushed by Apple and Google (two California companies less than 10 miles from each other) before it's mobile handset division was bought by Microsoft.

Europe and especially France, has always obsessed over American cultural imperialism—what used to be called Coca-Colonialism but is not called in some French circles GAFA, which stands simply for "Google, Apple, Facebook and Amazon."

Where big consumer tech massively influences culture, Europe is a non-player. And this irks the Europeans heavily.

The trouble with Europe's broad attack on U.S. tech companies is that it hurts Europe above all. Europe will never be able to regulate its way to tech competitiveness. It has to come from industry, not government.

All these problems—privacy, monopoly and, above all the out-maneuvering of European companies by culture-shifting Silicon Valley companies—should be solved by European startups, innovation, entrepreneurship not meddling EU commissions, politicians and judges.

Sure, European elites can keep Europe as a bubble of privilege, protectionism and heavy-handed government intervention. But that won't stop the future. It will merely remove Europe from being influential in guiding that future.

It's time for Europe to end its war on Silicon Valley.


Submit a Comment

Loading Comments...
Manage your Newsletters: Login   Register My Newsletters

Rocket Fuel