Why Does Europe Hate Tech Giants?

Business | March 27, 2019, Wednesday // 15:51|  views

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Statistics show that 19 out of 20 Europeans use Google when they search for something on the web. EU Commissioner for Competition Margareta Vestager, however, is not among them. She uses the competing search engine Qwant, which claims that does not collect personal data from users for a commercial purpose.

She does not use Google Maps, Gmail, or any other Alphabet product because she believes there are other alternatives that "do not violate her personal space.''

She also said that people do not realize the price they pay by using the services of big internet companies.

"You may not pay in cash when you like a picture or ask Alexa how much a glass of oil weighs, but actually for the so-called" free "services you use, you pay with your personal life," she says.

It is not the only one that concerns suspicion about major technology companies such as Alphabet, Apple, Amazon and Facebook.

Their growing influence and the huge database they are working on has led governments on both sides of the Atlantic to tighten regulation over the past few years.

There is another problem in Europe - the administration thinks that US giants do not pay enough taxes on the Old Continent.

Concerns also exist about content control, as was the case with the distribution of the video of the terrorist attack in Christchurch. Many people think that social networks should have tools to restrict such messages.

Critics are of the opinion that technology giants are giving consumers a rigorous insight into their rights and, by definition, guaranteeing the privacy of their personal data, but in practice, it is not always the case.

If this issue is tied to anti-trust legislation and regulators get the opportunity to impose larger financial penalties, internet companies will be motivated to do better. That is what officials at Brussels think.

"European legislation explicitly forbids the use of personal data to secure market dominance," says the head of the German antimonopoly commission, Andreas Mundt.

In February, he and his colleagues published a 300-page analysis that claimed Facebook was using its dominant position among other social networks to collect personal data from users.

According to the traditional definition of a dominant market position, if the company has the opportunity to raise prices without losing customers, regulators have reason to intervene. But Facebook is free to use and this measure can not be valid.

According to Andreas Mundt, however, the fact that the social platform has the potential to "deeper" into the privacy of consumers  can also be seen as a sign of a dominant market position.

As a result, Germany takes additional measures and tightens the rules for the use of user data. Facebook, for example, will no longer be able to process statistics from all of its applications at the same time (for example, Instagram and WhatsApp), and restrictions will also be imposed on the data it collects for visits to external sites that reach users through the social network.

The second logical move by regulators, after restricting companies' access to personal data, is the demand for financial compensation. If technology giants dominate the market because of their data, the antimonopoly authorities may consider it necessary to share them with either the users (who generate them) or the other market participants.

This would seriously impact the market valuation of these companies - first, because Europe is one of their largest markets and secondly, because of the possibility of such regulations being "copied" elsewhere in the world.

Europe can not boast of any significant presence in the list of global technology companies. Only SAP is present in the Top 20 list, and in Top 200 there are 8 representatives of the Old Continent. On the other hand, the regulatory burden in Europe significantly exceeds its market presence.

The explanations for this are different. On the one hand, over-regulation in the technology sector may hinder the development of local companies the way this is happening in the US. Or at least hinder the emergence of true "internet giants".

On the other hand, the worst sanctions are imposed on foreign companies such as Google, Apple and Facebook, which may also bring dividends to local political leaders.

There is another point of view. The companies that "suffer" most from the introduction of new technologies are European automobile manufacturers, telecoms and media groups - all industries that enjoy more careful "care" on the part of European governments.

New copyright laws, for example, to be voted by the European Parliament in early April, have been seriously criticized by technology experts for placing the interest of big media giants on that of online companies and consumers themselves, which may has also negatively affected the freedom of speech in the Web.

Governments in Europe and the US are thinking in a radically different way when it comes to the rules of market competition.

Over the last few decades, US anti-monopoly policy has been dominated by free market supporters from the so-called Chicago School. Her representatives are skeptical about state intervention, except in the most striking cases.

Dominant companies are often left to act freely with the assumption that their market power will sooner or later be eliminated by the market itself and the principles of free competition. Something like that happened with MySpace, for example.

In Europe, regulators are historically much more skeptical and suspicious of companies with a very large market share. And European state institutions have much more leverage than their American counterparts.

The General Privacy Act (known as the GDPR), which came into force last year, raised the issue of information security to new levels. In addition to harmonizing requirements in all EU countries, the directive has enabled consumers to choose the way their personal data are processed.

This completely changes the rules of the game in the online advertising business, which is based entirely on the statistics collected by various mobile and online applications. According to the US eMarketer consulting firm in 2018, this business has generated revenue of $ 108 billion.

One of the ideas being discussed by technology experts is to allow users to "migrate" their data (Google searches, Amazon purchases, Uber trips, etc.) between different online service providers.

Europe doesn't hate US tech companies because they're from America, but rather, because of what they stand for. Innovation is both exciting and scary, and countries where people are more risk-averse and less individualistic lean on their governments to limit it. If the example of Europe is being transferred to other parts of the world, changes can really be drastic.


Tags: US, europe, tech, giants, GDPR, companies, Internet, social media, Facebook, freedom

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