Europe Attacking Our Tech Companies

european unionIt’s clear that the European Union is attacking American technology companies. Evidence is everywhere. Consider the following examples or recent crackdowns against US technology in Europe:

  • Last year stringent rules were imposed on Google and other search engines to allow people to remove negative things from searches – these rules are being called the “right to be forgotten”.
  • The European Union is getting ready to file a massive anti-trust case against Google for the way that it favors its own search engine over others. The estimates are that the fines they are seeking could be as high as $6 billion.
  • Last year the EU voted in favor of making Google divest into multiple companies.
  • Numerous countries in Europe have blocked services from Uber.
  • The EU is going after Apple’s fledgling music business saying that they have the market power to persuade labels to abandon ad-sponsored sites like Spotify.
  • A decade ago there were several major antitrust cases filed against Microsoft.

There are numerous reasons for the antipathy that Europe seems to have towards American companies. President Obama said in an interview last month that the negativity was largely driven by economic competition and that Europe wants to find a way to support its own burgeoning tech companies over the behemoth tech companies like Google, Facebook, and Microsoft. He thinks a lot of the complaints by the EU are due to lobbying by European tech companies. He said that “oftentimes what is portrayed as high-minded positions on issues sometimes is designed to carve out their (European) commercial interests.”

But the president also admitted that some of the reaction to American tech companies is in reaction to the European history of suppression of freedom by dictators. For example, Germany just spent decades merging with East Germany and their history of oppression from the Stasi, the secret police. This makes some of these countries very sensitive to the recent revelations of the extent of the spying by the NSA. This one revelation might eventually be the beginning of the end of the open Internet as numerous countries are now building countrywide firewalls to shield them from such spying. It’s natural that this mistrust carries over to companies like Google and Facebook, which clearly have a business model based upon profiling people.

Another reason for going after American companies is tax revenues. The American tech companies have become adroit at claiming revenues in jurisdictions where they pay little or no taxes. Of course, this means that they avoid claiming profits in European countries which have fairly high tax rates. (This also means they avoid paying taxes in the US as well).

Finally, there might be an even more fundamental reason for the apparent European distrust and dislike of American technology. In this article published by Business Insider UK there is a look at the fundamental differences between the way that Europeans and Americans view entrepreneurship, technology, and uncertainty avoidance. The article shows the results of a survey and study done by the European Commission looking at how citizens in various countries look at certain issues. I think there has been a natural assumption that since both places are democratic and share a lot of first world values that we naturally think the same about technology. But the study shows some major differences between Europe as a whole and the US. Interestingly, England is very similar to the US in attitudes and perhaps our Yankee ingenuity and willingness to take risks is really part of our British heritage.

Here are some of the findings of that study:

  • Over 90% of Americans think that individualism is more important than compliance with expected social values. In Europe only a little less than 60% of people value individuality first. And in some places like Russia and Denmark less than 30% valued individualism more than compliance with social expectations.
  • When asked to agree or disagree with the statement, “entrepreneurs exploit other people’s work”, only 28% of Americans agreed with that statement (and the American dream is largely to own your own business), while the results in Europe spanned from only 40% agreeing in France, to 50% in the Netherlands, and over 70% in parts of southern and eastern Europe.
  • The US has a much lower threshold of uncertainty avoidance (unwillingness to take a chance on new ideas and new technologies). In the US only a little over 40% of people view themselves as risk adverse while in Europe it’s over 70%.

This means that to some extent the European Union is representing the will of its people when they crack down on US technology firms, which are viewed negatively as entrepreneurial and high risk. These kind of cultural gaps are very hard to bridge and US companies might have problems in Europe for decades – if they’re even resolvable at all.

3 thoughts on “Europe Attacking Our Tech Companies

  1. Here is an interesting book on the subject of what makes up some of the different culture perspectives on risk by people here in the US vs. the other countries we came from.
    http://books.simonandschuster.com/The-Hypomanic-Edge/John-D-Gartner/9780743243452

    On issues of basic mistrust of a friendly nation spying on corporations, as an aerospace engineer my dad had to travel in Europe for his company in the 70s and 80s. The company had a standing policy of no company information on designs, business plans, customer list, vendor list and bidding proposals on contracts could be carried by employees if they were flying with Air France or passing through French customs. The DGSE acted as if it was a research arm for French government owned businesses.

    I would not have described iTunes as “Apple’s fledgling music business” they do provide the company with close to 20 billion a year in revenue and half of this amount is bottom line income. After the revenue split with rights holders Apple has effectively zero cost or risk producing the product sold. We should all be blessed with a “fledgling business” of this kind. LOL

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    • The fledgling Apple music product is the new streaming service they are getting ready to launch that is going to compete with and eventually supplant iTunes. This would be a for-pay streaming business and Apple is out today trying to sign exclusive deals with big name musicians. Apple recognizes that it’s all going to streaming and they want to corner a lot of exclusive music that won’t be available on the free services like Spotify or on other paid services.

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