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Flags of the European Union in front of the Berlaymont building for a mural with the words Future – Europe in Brussels, 15 December.

Photo:

Gert Vanden Weingaert/Bloomberg News

Don’t ask why Europe no longer regulates digital businesses. Ask why Europe does not have its own digital companies to regulate. This is an issue that Brussels should have taken into account when drawing up the new technical rules presented by the European Commission on Tuesday.

The bureaucratic branch of the EU is nothing, if not ambitious. These proposals would create new mechanisms to regulate issues such as violence or hate speech. They would formalise the rules governing the relationship between platform companies and external software developers, which the Commission has already sought to enforce through antitrust procedures. They will demand new transparency about how they run their own business, for example in the area of advertising targeting. And the commission wants to impose draconian sanctions for violations, including fines of 10% of annual world income, or reduce the technological giants.

The rules don’t say they’re for American companies. But the proposals are so scary that it is mainly very large American companies that fall within their reach. Few social media platforms reach at least 10% of the EU’s 450 million consumers, which is the threshold for some of the strictest new rules.

We don’t have a specific briefing for U.S. technology companies, and our parent company executives are confused with companies like Google for their sometimes casual approach to intellectual property. American companies can put as much pressure on Brussels as they want. It is to be expected that the new EU proposals will only become law after years of debate, if at all.

One has to wonder why European competitors have not sued the American giants. The Commission and its designers claim that the new rules will create a level playing field for local high-tech entrepreneurs. But rules such as the Commission’s proposal usually have the opposite effect.

As threatening as the possible fines seem.

Facebook

or Google, the biggest threat will always be European start-ups struggling with compliance costs as they grow. Whether they like them or hate them, today’s technological giants have the means to comply with the new rules and are hiring lawyers to fight against Brussels in the years to come. Can European entrepreneurs say the same?

US companies have done far less to slow down the development of a single digital market in the EU than, for example, the different excise regimes that confuse the ranks of small businesses wishing to do business across national borders. Europe could have more technological champions if the taxation of risk capital were less criminal, if labour law were less onerous for start-ups, if the enforcement of antitrust law for mobile services was less fickle, and so on.

The EU’s technology proposals would be added to the list of measures against industry. Whatever regulatory regime the technology giants demand and deserve, no one should think that they will be bigger losers than the European newcomers.

Newspaper editors: The best and worst week of Kim Strassel, Bill McGurn, Ellisia Finley and Dan Henninger. Images : Zuma Press/AP / Composite Images : Mark Kelly

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Published in the printed edition of 16. December 2020.

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