Europe’s Plan to Compete with Silicon Valley

By Mrugesh Dave ’18

DigitalSingleMarketWith recent reports attributing the success of the stock market largely to tech giants like Facebook, Google, Apple, etc., there is no denying the prosperity of Silicon Valley. The European Union (EU), while acknowledging Silicon Valley’s dominance, seeks to rival these tech giants and end their perceived monopoly. Despite denying its regulatory crackdown on Silicon Valley, the EU has plans to put pressure on these companies to break up their monopoly and allow for technological expansion in Europe. With regards to this situation, Andrus Ansip, commissioner of the EU, declared, “nobody has a right to abuse its dominant position.”

How exactly have these massive Silicon Valley companies caused so much unrest in Europe? Of the 30 antitrust decisions made by the EU in 2010-2014, 48% of the total fines were imposed to US companies. The main issues facing these US companies are as follows: fair tax paying, abuse of a dominant market position, and protection of European privacy rights. Formal antitrust charges have already been filed against Microsoft in the past and Google currently. These allegations stand against Google for tampering with search results to favor its own services. Additionally, the EU is investigating what Facebook does with the privacy information it collects on its 300 million European users while simultaneously looking into taxes paid by Apple and Amazon. These investigations seem likely to culminate in legal proceedings and fines for the aforementioned tech giants in hopes that they discontinue “the abuse of their dominant position.”

Along with the regulations, the EU has a plan to bolster technological and digital growth in Europe. On May 6th, the EU announced its digital agenda titled “Digital Single Market,” that is a top ten political priority. It is built upon three main “pillars”: improving online access to digital goods/services, creating an environment where digital networks and startups can thrive, and optimizing the potential growth of the digital economy. In short, the plan seeks to create a “level playing field” in Europe by unifying the laws of the 28 member nations addressing tax, copyright, and data protection across the EU. This ensures that, for instance, telecommunication firms and online messengers like WhatsApp (part of Facebook) fall under the same law. Another major tenet includes the reformed approach to corporate taxation to ensure no monopolies utilize tax loopholes. Additionally, the plan reduces the cross-border shipping costs to allow for startups to more easily operate across Europe. European officials hope that this digital strategy fosters Europe’s economic recovery and propels Europe’s main industries into the technological age, especially providing unbounded horizons for tech startups that currently cannot compete with the giants. As EU ambassador to the US asserts, the Digital Single Market “would greatly benefit small- and medium-size companies trying to set up online businesses.” The plan is already in motion and set to deliver on 16 initiatives by the end of 2016.

Although Mr. Ansip claims that this policy “in no way” limits the growth of US tech giants in Europe, it seems these tech firms will have impending legal battles and a hostile market to face. The EU hopes that tech firms will end their unfair practices, discriminating search results, and targeted advertising as a result of this drastic move to allow for European companies to better compete against the likes of Google, Amazon, and Facebook. Despite this entire ordeal, only time will tell if Europe succeeds in building its Silicon Valley or gets consumed by the Silicon Valley giants of today.

Sources:

http://techcrunch.com/2014/01/18/why-silicon-valley-cant-find-europe/

http://blogs.wsj.com/digits/2015/04/23/europe-were-not-targeting-silicon-valley-and-heres-data-to-prove-it/?mod=ST1

http://blogs.wsj.com/digits/2015/04/22/europes-plan-to-compete-with-silicon-valley/?mod=ST1

http://www.bloomberg.com/news/articles/2015-04-22/eu-official-starts-her-job-picking-fights-with-google-and-putin

http://www.sciencetimes.com/articles/5411/20150403/european-union-putting-pressure-silicon-valley-giants.htm

http://qz.com/389905/these-documents-reveal-the-eus-thoughts-on-regulating-google-facebook-and-other-platforms/

https://ec.europa.eu/digital-agenda/en/digital-single-market

http://www.fastcompany.com/3048630/how-europe-is-finally-taking-on-silicon-valley

Photos:

http://www.scaleit.us/1404-2/

http://ec.europa.eu/priorities/digital-single-market/

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