Opinion by Preston Gralla

Europe’s war against U.S. tech is wrongheaded

The European tech sector won’t catch up to the U.S. by having bureaucrats fight its battles

Opinion by Preston Gralla

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What do Facebook, Apple, Google, Amazon and Netflix have in common? In addition to being U.S. tech giants, they’re in the crosshairs of European regulators and may face big fines and stiff rules reining in the way they operate on the continent.

They’re not alone. Microsoft has already been fined a cumulative $3.4 billion by the European Commission over 10 years for what the regulators deemed to be antitrust violations. Intel has been fined $1.44 billion for what the European Union claimed was anti-competitive behavior. Uber faces regulatory hurdles across the continent, and the Netherlands recently launched a criminal investigation against it.

This European war against U.S. tech is wrongheaded, and it may well backfire and leave the continent even further behind the U.S. in tech. Overregulation and big fines may play well to the protectionists and anti-Americans in European capitals. But it will only reinforce the kinds of attitudes that led to Europe ceding the tech lead to the U.S. in the first place.

Europe’s most recent target is Google. In mid-April, the European Commission filed an antitrust case against Google for abusing its search dominance. The European Commission has also launched an antitrust investigation into Google’s mobility presence via Android.

The last few months have seen many other investigations of U.S. tech companies. In late March, the commission announced that it was launching a yearlong investigation into whether Amazon, Netflix and other e-commerce giants impede the ability of companies and consumers to buy and sell goods and services across European borders. And even though Apple hasn’t even launched its streaming-music service yet, European investigators have already begun a probe into whether the new service may be anti-competitive. Is it a coincidence that the world’s most successful streaming-music service, Spotify, is based in Sweden, which is part of the European Union? I think not.

As for Facebook, regulators in France, Spain, Italy, the Netherlands, Germany and Belgium have been targeting it for a variety of reasons, primarily for privacy violations.

Don’t think for a moment that these are all disconnected probes. They’re all a result of the long-standing European belief that what they see as the U.S.’s cultural imperialism and business dominance needs to be stopped. In simpler times, the symbols of that dominance were Coca-Cola and Disney. Today it’s tech, so much so that in France, officials openly refer to their fear of Les Gafa, an acronym for Google-Apple-Facebook-Amazon.

If Europeans don’t like the success of U.S. companies, there’s a much better solution than trying to regulate them down to size: Start innovating. That, not armies of red-tape-wielding bureaucrats, is the best way the continent can make it in tech. As long as Europe focuses on fines and regulations to fight U.S. tech, rather than building a risk-taking, entrepreneurial culture, it will never catch up. The U.S. tech sector is a bare-knuckles, sharp-elbowed arena, and there are plenty of failures along the way. But that’s good, not bad. It’s one reason why there’s more innovation in the U.S. than in the more genteel European Union.

A tech CEO who settled in the U.S. and has spent significant time in Europe once told me that in Europe if you fail at a startup, you’re branded a failure for the rest of your life, but in the U.S. you’re lauded for your risk-taking and for trying something innovative.

Consider this: The French elites have long scorned all things Disney. Yet according to the French public-radio service RFI (Radio France Internationale), Disneyland Paris is Europe’s most popular tourist destination. In 2011, 15.5 million people visited it, half a million more visitors than the Eiffel Tower (6.6 million) and the Louvre (8.4 million) received, combined.

Europe should learn something from that: Give people what they want, and they’ll flock to it. That’s true whether you’re talking about Coca-Cola, Disneyland or U.S. tech. And all the regulations in the world won’t change it.

Copyright © 2015 IDG Communications, Inc.

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