The outgoing European Commission came into office planning to treat tech as an opportunity — it ended up tackling it as a problem.
When President Jean-Claude Juncker’s team of commissioners disbands in the fall, they will leave a digital legacy focused on reining in the excesses of social media, internet services and the rapidly growing information economy.
The Juncker Commission kicked off its term in 2014 with a promise to harness the digital transformation to kickstart the European economy — at a time when countries were still struggling to recover from the financial and European debt crises.
The EU executive “brought digital regulation into this era,” said Cecilia Bonefeld-Dahl, chief lobbyist of DigitalEurope, the technology sector’s association in Brussels. “It was not a discussion before.”
But over the past five years, as the Commission attempted to roll out its strategy for the creation of a digital single market, a series of scandals wracked the tech industry.
Giants like Google, Apple and Amazon faced accusations of tax avoidance and abuse of their dominant place in the digital ecosystem.
Social media companies like Facebook, Twitter and Google’s YouTube came under fire for loose privacy protections, weak approaches to illegal content, including online terrorist propaganda, and for allowing their platforms to be weaponized by foreign actors to interfere in the 2016 Brexit referendum and, that same year, the U.S. presidential election.
The protagonists of the “sharing” and “gig” economies, Uber and Airbnb — once lauded by EU lawmakers for injecting competition into sleepy, rigid industries — were accused of distorting local markets and undermining labor protections.
Over the last five years, “there has been a change in tone,” said Johan Bjerkem, a policy analyst at the European Policy Center. The Commission “has become more cautious and aware of the challenges raised by technology.”
Soon enough, EU countries and other European institutions started demanding stricter rules for Big Tech. The industry’s most prolific leader, Facebook’s Mark Zuckerberg, was summoned to explain himself before EU lawmakers as well as the U.S. Congress. France and Germany started adopting their own national legislation to deal with the failings of technology companies, putting pressure on Brussels to draft EU-wide plans and avoid a patchwork of rules.
An era of laissez-faire policymaking on tech came to an end.
“As the past few years of data breaches, hacks, and electoral sabotage make clear, the West urgently needs to develop a new model of digital governance,” Guy Verhofstadt, a former Belgian prime minister and leader of the liberal bloc in the European Parliament, wrote in August 2018 in an opinion called “taming the tech monster.” His was just one prominent voice calling on Europe to rein in Big Tech.
As the Commission’s term comes to a close, POLITICO presents its digital report card — rating the EU executive body on its tech efforts during a mandate in which the focus shifted from boosterism to a more punitive approach.
Wrestling with Big Tech
The Commission’s competition czar Margrethe Vestager took the battle to Silicon Valley with a series of landmark rulings. Dubbed “the tax lady” by U.S. President Donald Trump, Vestager became Big Tech’s bête noire as she unveiled a series of landmark rulings. These include ordering Apple to pay €13 billion in back taxes and slapping Google with a series of fines for antitrust violations.
There’s no sign the Commission plans to ease up the pressure. This week, Vestager opened a formal competition investigation into Amazon’s use of sensitive data from independent retailers who sell on its marketplace. The tech giant has been accused of abusing its position as one of the world’s largest retailers in offering its own products on its website. In March, the Swedish music-streaming app Spotify filed an official complaint to the Commission about Apple, complaining its role as a seller of apps gives it an unfair advantage in the music streaming business. Vestager’s office said it would take the allegation “seriously.”
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One area where the Commission fell flat: A proposal for an EU-wide digital tax failed to overcome objections from national governments such as Denmark, Sweden, Finland and Ireland.
Still, there’s no denying the Commission has turned the tide on Big Tech. U.S. lawmakers have cried foul over the EU’s interventions into the tech sector since the Commission first stepped into the arena in 2004 with a record-breaking antitrust fine against Microsoft. Today, however, calls to do more are ringing out on both sides of the Atlantic.
Exporting privacy standards
Under Juncker, the Commission has emerged as the world’s most powerful, and most aggressive, tech regulator. The 2016 General Data Protection Regulation — a massive overhaul of the EU’s privacy rules for the era of the internet — sent ripples far beyond the bloc’s borders, as firms and governments scrambled to adapt.
The legislation was well timed, coming into effect just as the Facebook-Cambridge Analytica data scandal fanned privacy concerns into a fever pitch. “About a hundred countries around the world last year got their first data protection rules, and those rules are very similar to our General Data Protection Regulation,” said Andrus Ansip, a member of the European Parliament who was vice president of the Juncker Commission responsible for digital policy until early July.
The size of the EU provides companies and countries further incentive to fall in line — or risk being shut out of a market of 500 million consumers. The new privacy rules punish violations with fines of up to 4 percent of a company’s annual global turnover. In January, Japan, the world’s third largest economy, adapted its privacy laws to match GDPR, a move that complemented a trade agreement Tokyo recently signed with Brussels.
The Irish data protection authority, responsible for ensuring Google, Facebook and Apple comply with the new rules, has taken its time to finish investigations. But regulators said the period of relative tolerance following the introduction of the privacy overhaul is now over.
The Commission’s efforts to combat illegal content and “fake news” on platforms like Facebook, Twitter and YouTube were less successful.
Despite growing concern over hate speech, terrorist propaganda by the Islamic State and attempts by Russia to interfere in elections in the U.S. and Europe, the Commission decided not to reopen outdated legislation protecting tech companies from being held liable for the content on their platforms.
The Commission tightened rules regarding the online use of copyrighted material, but when it comes to hate speech it relied on voluntary measures. Critics argued it outsourced judicial tasks to platforms with a tainted record of corporate responsibility.
Eager to prevent electoral interference by Russia during the European Parliament election, the Commission obtained a commitment from Google, Facebook and Twitter of monthly reports on actions taken on political advertising transparency and cooperation with fact-checkers. The results were mixed. There’s no evidence that the Kremlin managed to swing any votes, but it wasn’t for lack of trying. Russian groups carried out a series of disinformation campaigns aimed at influencing the outcome of the election, according to the Commission and the European Union’s diplomatic service.
Enabling the economy
With policymakers focused on reining in Big Tech, the effort to create a digital single market to boost digital industries got overshadowed. “The objective was a good one, but it wasn’t followed up by the regulation,” said the director general of telecoms lobby ETNO, Lisa Fuhr, about Juncker’s attempts to revamp industrial policy. “You had a good goal but didn’t set out how you get there.”
Halfway through his term, in September 2017, Juncker relaunched the effort, calling for a new industrial policy strategy. But for all the talk of 5G, robotics and digital manufacturing there have been limited tangible effects on the ground so far.
The next Commission is expected to take a more assertive approach regarding tech and the economy, tweaking competition rules, ramping up innovation funding and strengthening protective trade defense measures to help European companies compete against foreign firms. It is also expected to put a greater emphasis on artificial intelligence.
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