Europe is in danger of regulating its tech market out of existence
Tech companies, including Apple, Meta, and Nvidia, face challenges in Europe due to strict regulations like the EU's Digital Markets Act, risking innovation and investment in the region's tech landscape.
Read original articleis facing significant challenges due to stringent regulations. Companies like Apple have opted not to release new products in Europe, citing compliance with the EU's Digital Markets Act (DMA) as a barrier. This decision reflects a broader trend where poorly designed regulations are prompting tech firms to withdraw from the European market. The EU's regulatory environment has led to instances where major companies, including Meta and Nvidia, face legal challenges that threaten their business models. For example, Meta's personalized advertising strategy has been deemed illegal under EU rules, while Nvidia is being investigated for anti-competitive practices related to its CUDA software. These actions highlight a pattern of regulatory overreach that not only targets successful foreign tech companies but also imposes heavy fines that could deter them from operating in Europe altogether. The EU's approach often lacks clarity, placing the onus on companies to interpret vague regulations, which can lead to arbitrary enforcement. As a result, Europe risks creating a fragmented tech landscape, potentially driving away innovation and investment. The continent's focus on regulation over fostering a competitive tech environment raises concerns about its future in the global technology sector. Without a shift in strategy, Europe may find itself increasingly isolated from the advancements and opportunities that define the modern tech industry.
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European Union regulators accuse Apple of breaching the bloc's tech rules
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Now, large tech companies haven't wholesale killed people (unlike say tobacco, or talc powder, 3M and half of their solvents, weed killer, most car makers, etc etc)
but they have been trying desperately to stop all competition.
They've also been trying to extract as much personal info as possible for profit. Because regulators in the USA are hamstrung, they are used to being able to basically doing stuff that would be illegal if it were in physical stores/pre-existing industries.
There's zero reason to think that this will mean the EU won't have a tech market. It just won't have one that includes Apple products which refuse to follow the law. Seems like a massive win for the EU, and because Apple is the one deciding to pull their products rather than follow the law they can't really complain either, so win/win I guess.
Sounds like a paradise. More healthy lifestyle. For most people much of this stuff is unnecessary. If one wants to live life "online", glued a screen digesting garbage and propaganda 24/7, then one can relocate to some country where that's what people do. Chances are, tourists from such countries will want to visit Europe even more.
We are all living in an "online backwater" in case the author hasn't noticed. The web is a sewer of surveillance, marketing and ads. Despite the information access possibilities the internet presents, the distribution of factual information seems to be at an all-time low, at least in the lifetime I am living. I have never seen people who were so detached from commonly shared reality as a result of "search engines and social media sites". To access facual information, cf. marketing and propaganda, worthless opinions, and "AI" generated garbage, one did not and does not need the latest "phone" or "high-performance computer chips". This stuff is not making people smarter. Is it is not making society better.
I would be willing to bet the countries that have the populations that are most reliant on "search engines and social media sites" and "high performance computer chips" are going to have the highest rates of mental illness and other complications that arise from too much screen time, and the lowest test scores. These will be dumbed down, whacked out societies. They will have the worst quality of life.
I was listening to an interview with Jonathan Kanter recently and the interviewer tried to get him to comment on Europe's approach to regulation of "Big Tech". He was hesitant to accept any comparison. But I am confident there are plenty of folks, generally _not people who comment on HN_, who are envious of the direction Europe is taking.
The idea that regulating Apple and Meta, companies that exploit people commercially as they use computers, e.g., as data collection sources and ad targets, is going to contribute to cause "poverty" or deprive Europe of useful networking and computer technology, e.g., the type used for national defense, is absurd.
If tech companies cannot provide us a means to control our personal information, and require us to be locked into their gatekeep-y, nanny-state, walled gardens and submit to using locked-down devices that don't actually obey what we want them to do, then those tech companies should not exist.
I've gotten a little bit of a taste of some of this stuff in the form of the CCPA/CPRA, and it's delightful. Getting to tell companies they're not allowed to sell any of my information to third parties is wonderful. I just wish that was the default and I didn't have to opt out.
Big tech is far, far under-regulated, even in Europe, too, and that needs to change.
That really hurts a startup's ability to initially launch in the market, especially one with less VC money. (Certain BigCo new products can be thought of as a startup too, with limited budgets.)
This doesn't just affect social media companies, it affects almost any product where a user can upload data, or any product with a social feature, no matter how peripheral the feature is.
Turns out that's a wide swathe of technology, and that social features are fairly valuable.
Of course the big companies will eventually get around to launching in Europe anyway, it will just trail behind the rest of the world.
This is a not-so-thinly veiled argument for deregulation and rolling back consumer protections, pretty much like the US. It's common to use scare tactics when it comes to regulations and taxes. "Companies will leave". "You're killing companies".
As long as the EU has 400+ million consumers and they have spending power a market will exist and companies will adapt.
Take the example from the article of CUDA being a monopoly. Well, NVidia obviously isn't a European company but it will comply if the EU forces them to open CUDA because the alternative is to close themselves off to Europe. That's never going to happen.
Stop believing this "companies will leave" propaganda.
What if what Europe does is a good idea for the people but just inconvenient for companies?
Europe is one of the power houses of the world but with low self-esteem I am afraid. In the long term what matters is the people's quality of life and diversity.
Take China or the US: if a lot of people don't have purchasing power and leisure who are then buying stuff for themselves as end users?
Sure at the moment the amount of inner European Innovation in digital technologies is low, but local companies have to fight against foreign behemoths that simply disregard local regulations, or just buy the likes of Luxemburg or Ireland to get their own special law zones inside the single market.
Let the big US companies leave, the vacuum left behind will foster competition and local solutions.
The article makes a number of questionable assertions such as "Non-personalized ads cannot economically sustain Meta’s services". I do not know whether that is true or not. Apple has a history of malicious so. I think there are multiple reasons the US dominates tech, and I do not believe "the EU’s rules all but ensure there are no comparably successful European companies". There are many successful European tech companies, as the article mentions later on (it links to a list of the largest that is clearly out of date - for example that omits ARM).
I also disagree with its analysis of why. If you look at their list of large tech companies, and there are a lot of Chinese ones which largely exist because China was protectionist and favoured domestic over US companies. I would argue, if anything, the EU (and other European companies) have not regulated American companies enough, to produce their own competitors. In particular they rarely block takeovers by established players of potential future competitors.
I agree the EU's approach to regulation is often badly flawed, but the DMA seems to be a reasonable approach - as other comments have said it only targets businesses with a lot of market power.
IMHO attention to privacy and privacy regulations will help make Europe the leader in privacy-respecting services.
Why not let the users decide in whole-sale, if they wish? like with this extension - https://chromewebstore.google.com/detail/accept-all-cookies/...
The sole way we can fill the gap is MANDATE FLOSS, publicly funding existing FLOSS projects and offering them all the infra through public universities and research bodies to create an EU-FLOSS ecosystem because that's the future we need, where once spread everywhere (desktops, smartphones, cars, domestic IoT etc) will allow private sector to pick and evolve individual ideas. This is the European way and we know it works, IF DONE. Unfortunately most fails to understand IT at all so it's not done, simply. As a result no digital sovereignty is possible on scale.
Subtitle says "Poorly designed laws are forcing global firms to leave." I didn't see anything in the article that elaborates on the "poorly designed" part or any company that is forced to leave. Instead, the article uses a number of totally irrelevant examples to argue... nothing. I am really confused.
x=https://foreignpolicy.com/2024/07/26/europe-tech-regulation-apple-meta-google-competition/
tnftp -4o"|(echo '<meta charset=utf-8>';grep -o '<p>.*</p>')" $x > 1.htm
firefox ./1.htm
links -force-html 1.htm
or links $x
It's interesting to me how the article looks great in a browser that does not auto-load resources or process CSS. But in a so-called "modern" browser, the kind worshipped by developers, the annoyance is so bad, the article is so difficult to read, that the forum moderator directs readers to use a different website. Others might not find it interesting but I do.EU regulators think their enemy is big American tech companies, but they are hurting their domestic advertisers and domestic economies even more.
I am saying this as someone who hates seeing ads and uses adblock, but I greatly appreciate the societal value.
We should be making laws that foster competition and safety. I struggle to see how cross-site tracking and personalized advertising by itself is anti-competitive or unsafe. The bigger issues that need to be solved on these platforms are gatekeeper monopolies, social division, and mental health.
If the average user is fine with their data being sold in exchange for a service, then why not let them?
I’m personally not okay with it and I keep my data footprint as low as I can, but I know lots of people who just do not care if they get a service in return, and are fully understanding of what that means.
The best part, for me, is while they flail and scream about the big bad EU, Japan and India are following suit with similar laws and regulations. It's only a matter of time until more and more countries start adopting these laws, and the tears from the techbros is going to be delicious.
The website the "article" (aka paid propaganda piece) is hosted on has over 700 partners that they'd like me to consent to having my data shared with. It also completely shits itself thanks to uBlock, meaning it's made so terribly that blocking the privacy-invasive trackers they have breaks the whole site.
If this is their idea of innovation, they can keep it and shove it where the sun don't shine.
Current stuff (other mentions): Germany's state of digitalisation and bureaucracy, investments.
So this guy clearly gives an lousy tech lobbyist .
Giving his initiative DMA is certainly pro market oriented. Why does he have a problem with it?
Much as I dislike Vestager, that is not an accurate description. This appears to be the original source:
https://www.youtube.com/live/GmQ5SsMFbsU?si=IgTi-ezhulsCl6Gp...
That is not someone "shocked" or "outraged" at Apple not bringing the AI features to EU markets. Vestager doesn't give a fuck about whether iOS ships with AI features or not. She is just saying that by citing the DMA as the reason, Apple are pretty much admitting that the features as implemented are anti-competitive. And she is stunned that Apple would be stupid enough to make that admission.
Like, you'd at least expect the Apple C-suite to pretend it's because of some technical reason, or because the cost structure isn't viable to support in Europe, or something other than that it's breaking competition laws.
"This company was caught tracking which users visited each page" Yes, for targeted ads.
"Cambridge Analytica was" Yes, for targeted ads.
"3rd party" Yes, targeted ads.
It's all targeted ads. They want to serve you targeted ads. Any attempt to paint "data privacy" as something other than this is irresponsible fearmongering.
This is similar. EU is trying to protect the rights of its citizens for good, but there are also places like US where rights are less protected, or not at all. (and frankly, a sizeable amount of people there don't even give a crap about rights that seem ephemeral for them, like privacy). So naturally businesses go to those places.
It's not poorly designed laws, or at least not just it. It's also a tragedy of commons in a global economy, moving too fast vs too slow, and many other things.
Imagine you come out with a secure boot product for the pi. Currently this is considered beta at the moment. In any case it’s quite possible that it could change, making it impossible to provide an update.
So under this regulation do you think anyone will offer any extended warranties ? The small amount of extra money will not be worth the massive extra risk.
15 million euros fine or 2% of your income doesn’t make for a very attractive incentive on platforms where it’s complex and risky to perform low level upgrades for example.
So expect increasingly shorter product lifetimes going forward and more and more products that just won’t be released in Europe, I expect even ones developed by European companies. And what do you think about small players who can’t even afford one court care for example ?
Tech needs to slow down; neither society has caught up, nor quality controls.
2. Comply to play (regulation)
These are big markets with massive winnings even with regulation and tax. Corps can either step aside and let someone else profit or comply and play.
What’s really being destroyed by the DMA is Europe’s access to new technologies and services. It’s almost like a self-embargo on the AI building blocks of their future economy.
When Nvidia GPUs are supply constrained do you really think it matters to Nvidia if they need to redirect the small chunk of their supply constrained volume that they were previously selling into France? Who is harmed in this picture? The only EU AI player of note, Mistral, and other EU businesses.
Does it really harm Apple if the DMA forces them to withhold new AI features in Europe? They still earn their device and services revenues. Who is harmed in this picture? EU consumers and businesses.
We’ve now seen within just a couple months, Apple withhold AI features and Meta withhold multimodal AI models from the EU. Expect this cutting off of the EU from new features to become a recurring event over the next year.
DMA-supporting voices are under a serious misapprehension of what the effect of the DMA is and will be over the next few years. It’s cutting off European access (consumer, business & government) to critical technologies which are all being developed outside the bloc.
The DMA violates a number of longstanding principles of good legislation - it is vague, it’s written to enable arbitrary enforcement, it’s penalties are not designed to be proportionate to damages, or even require actual damages in order to be applied, the regulator’s actions stray into actual takings of property (European Commission opinion that Facebook cannot charge a subscription fee for its ad-free offering… so it must operate as a charity? This is a taking of property. European Commission opinion that Apple cannot charge a platform fee for use of its IP? This is a taking of property).
Let me go find the thinnest violin, to match this thinly veiled tantrum.
Then ask yourself how exactly the architects were self-medicating.
I am an avid reader of Show HNs. And I remember many that became successful businesses. But not a single European one.
All the "startups" that I see here in Europe are very classical businesses. They build software tools for local enterprises.
It seems nobody in Europe is building something for the open web. Maybe because nobody here understands all the regulations that come with it. The GDPR alone is 100 pages of legal mumbo jumbo.
Then I started thinking of this through the lens of B2B SaaS software I use in small business every day. The outside of the box makes promises. Sales reps make promises. Demos abound. Contracts are signed. Setup fees are paid. Setup manhours are invested. And then you start using these services and products. Support issues go unresolved--not supported at this time--and go on the 'wish list' void. What you thought of as a solution to your business needs turns to questions of sunk cost. Total frustration resulting from the obviously profit seeking economizing decisions not described on the box--devil is in the details. Who is the more naive? Businesses for having purchased these products or the companies who develop and market them as industry solutions (vs. just another product with hidden cost-benefit determinations)?
Now think of the B2C environment the article is talking about where there are known deceptive practices working to profit on user's personal privacy. I have to laugh. Seems fitting to read about naive regulation against the decisions of manufacturers and developers making abhorrent conditions in the consumer market. I see the same frustrated naive decisions of business owners trying to get out of contracts for bad products and services they have chosen.
Spotify would not be compliant under the DMA for the same reason why the EU has charged Meta with non-compliance:
>Under Article 5(2) of the DMA, gatekeepers must seek users’ consent for combining their personal data between designated core platform services and other services, and if a user refuses such consent, they should have access to a less personalised but equivalent alternative. Gatekeepers cannot make use of the service or certain functionalities conditional on users’ consent.
- Source: EC statement¹
However the EU doesn't deem there to be any gatekeepers for music.² YouTube has over 80 million music subscribers. To avoid this obvious conflict they label "YouTube" as a video sharing site, deliberately ignoring one of the largest drivers of youtube traffic is music videos. Something which Google themselves advertise.³
If the EU cared about privacy and user harm they'd make the DMA protections apply to every business, not just big foreign ones.
Spotify's ads website actually brags about how it targets and tracks users and the various 3rd party data companies they partner with to extend that beyond Spotify.⁴
It's clear as day that the EU doesn't care about user harm or privacy, they just want that money for themselves. A view that is buttressed by what they're trying to do to encrypted chat communications.
¹ https://ec.europa.eu/commission/presscorner/detail/en/ip_24_...
² https://digital-markets-act.ec.europa.eu/gatekeepers_en
³ https://www.youtube.com/trends/records/
⁴ https://ads.spotify.com/en-US/goals/audience-targeting/ https://ads.spotify.com/en-US/partner-directory/
When 10% of global revenue is on the line it makes adequate sense to tread carefully with EU releases until there is some legal precedent. (And 20% if the EU finds that compliance isn't being met.)
Margrethe Vestager has stated that withholding features is proof of anti-competitive behaviour. Such a statement would be hilarious if it wasn't so obviously preordained, and patently tone-deaf from the consequences of her own statements.
So what's the end game for the EU? In theory this should allow local and small competitors to fill the void since they're not beholden to the DMA. My expectation is that it'll just be the EU perpetually several steps behind the rest of the world and some types of tech involvement only available via US-based purchases/import basis.
¹ Margrethe Vestager: "I would like to have a Facebook in which I pay a fee each month, but I would have no tracking and advertising and the full benefits of privacy." https://www.euractiv.com/section/competition/interview/vesta...
² Facebook and Instagram’s ‘pay or consent’ ad model violates the DMA, says the EU https://www.theverge.com/2024/7/1/24189796/eu-meta-dma-viola...
Good luck with that, we don't care for your "intelligence".
„We & our 735 technology partners ask you to consent to the use of cookies to store and access personal data on your device.“
our colleagues in the US and China are chuckling, so we'll just move our science there.
Pretty much only thing Europe is consistently producing nowadays is new legislations (EU and national, which are enforced incoherently and at the times contradictory)
The thing is, the tech business is uniquely conducive to generating monopolies, for a handful of reasons. The biggest being we're a copyright industry. Congress made the mistake of putting software under the same legal framework as Mickey Mouse, so the monopoly tech companies have over interoperability is government granted, has little bounds on its power, and lasts forever. And when tech and creative industries got together to enforce those legal rights through software, we got DMCA 1201, an awful law that gives anyone with a valid copyright veto rights over technological progress. The only way you get shit done in the tech industry is to get acquired so that you have enough market power to license and collaborate.
Outside of copyright we have online services firms like Google and Facebook, who operate primarily through surveillance capitalism. In prior media landscapes, if you wanted to sell to New York Times readers, you had to buy inventory in the Times. Today, you ask Google and Facebook to put ads on anyone who went on nytimes.com in the past week, which is just as lucrative for the ad buyer but Google and Facebook can pay the other sites less than what an actual NYT ad would command. Targeted advertising moves money away from a diverse and distributed group of publishers towards a pair of ad networks who know exactly everything about everyone at all times.
Facebook absolutely could be 'paid for' through nontargeted ads, but it makes Facebook a far less valuable business if they can't siphon data off you and sell it to other companies. Hell, Apple already proved this: iOS 14 moved ad tracking to opt-in[0], so nobody opted in, and Facebook had a revenue hit.
Europe is not inhospitable to tech, but it is inhospitable to tech monopolization, which is predominantly how American firms operate. And to be honest, I don't think Europe is wrong to do this. In fact, I want America's government to start doing the same thing. I want a government that acts less like a rubber stamp for a handful of megacorporations and more like the villains in an Ayn Rand novel.
Do you want to see what the alternative is? Simple: the end of democracy. Trump was just a preview. Democracy is not a given, it requires distributed political power, which requires distributed wealth and economic power. If a handful of firms can centralize economic power to themselves, then they become the economy, and they can start pulling the strings politically. We already saw this with oil in the 70s, but basically every American industry works this way. The only vestige of democracy left is that sometimes industries have conflicting economic interests and that sometimes the working class hurls an orange brick through everyone's windows.
[0] Unless you're Apple, who can still track you. Related note: Google is basically being forced to keep third-party cookies in Chrome because they dragged their feet on removing them for far too long.
Or consider the recent charges the EU levied against X. Under Elon Musk’s ownership, anyone can now purchase a blue check with a paid subscription, whereas blue checks were previously reserved for notable figures. EU regulators singled out the new system for blue checks as a deceptive business practice that violates the bloc’s Digital Services Act.
What are they thinking?? The blue check mark is supposed to mean verified. They changed it to simply mean paid subscription. They took a symbol of trust and utterly ripped out the trust part. I don't care how much you publicize it, that's not acceptable.
Would he be ok with my going and purchasing a SSL certificate for www.x.com???
Throw out bozo too for the win-win...
So among non-EU-dwellers, let’s raise a glass to our fallen competitors and erstwhile comrades. Better than Nordstreaming them, or at least more subtle. Onward, toward a new vassal-state future!
edit: It appears that EU subjects are distraught, or the topic is too raw. Let me know!
Related
European Union regulators accuse Apple of breaching the bloc's tech rules
EU accuses Apple of Digital Markets Act violations for restricting App Store alternatives and charging high developer fees. New probe initiated on contractual terms. Apple defends changes, faces potential fines up to 10%.
EU Accuses Apple App Store Steering Rules of Violating DMA, Opens Investigation
The European Commission accuses Apple of Digital Markets Act violations related to App Store policies, anti-steering rules, and excessive fees. Apple claims compliance with the law. Investigation ongoing, potential fines pending.
Apple is first company charged with violating EU's DMA rules
Apple is the first company charged under the EU's Digital Markets Act for App Store policies hindering competition. Investigations focus on fees, alternative app stores, and compliance changes. EU aims to prevent anti-competitive practices.
Apple first rejected, then quickly approved, Epic's app store in Europe
Epic Games challenges Apple's rejection of its European game store launch, involving the European Commission. The dispute, part of a broader regulatory feud, centers on Apple's 30% in-app purchase cut. EU regulators investigate Apple, Google, and Meta for DMA non-compliance.
How the EU Weaponizes Regulation to Extract Billions from American Tech
The EU is imposing fines on American tech firms, including potential daily penalties on X for violating the Digital Services Act, amid broader regulatory efforts affecting companies like Meta and Amazon.