This column was first published in SvD Näringsliv, in Swedish, on March 25th, 2021.
The EU and the US are currently getting ready to regulate the digital world. But Apple’s latest giant reform shows that the tech giants still rule almost unrestricted in their market, writes Björn Jeffery.
Those who waited to hear about the EU and the “game of the digital economy” received an unusually quiet introduction.
The microphone did not work for the European Commission’s Deputy Head in Sweden, Annika Wäppling Korzinek, who was welcoming everyone. You could not hear much other than the rustling of a sound engineer.
The context was a webcast seminar this week on the EU’s major new digitization initiative for 2030. The first two points were “a digitally competent population” and a “secure, high-performance and sustainable digital infrastructure”.
It is a good thing that we have nine more years left before these goals are to be met.
The main guest at the seminar was Margrethe Vestager from Denmark, Executive Vice President of the European Commission and a familiar critic of all tech giants from her previous role as Competition Commissioner. She sat with a blurry webcam, EU flag in the background, and spoke about how 670 billion SEK would be distributed to achieve these new goals.
Even more interesting was what Vestager only mentioned in passing, an equally important issue for politics and probably the next headache for companies such as Apple, Google and Facebook.
These are the EU’s new legislative proposals – the Digital Markets Act (DMA) and the Digital Services Act (DSA). The proposals are a remake of how the EU should be able to regulate the use of data and curb monopolistic behavior.
“There is a dark side to all digital“, as Vestager announced.
The proposals include a ban on the exclusive right of app stores and fines for violations of up to 10 percent of the companies’ revenues.
The question, however, is whether it is too little and too late. Already today, fundamental restructuring of the digital economy is taking place – without political impact. Instead, it is run by the tech giants who have acted on what is an almost unregulated playing field for over 20 years.
An example is Apple and its crusade against ad data. As SvD has written about before, there is currently a minor revolution around how advertising on the internet should work. Apple – which has not made any money from advertising since 2016 – has decided that it will not be allowed to track user behavior between sites and apps on their products. Not without the person in question having approved it at least, which will happen when Apple updates its operating system shortly.
The change is bigger than it sounds. It overturns entire categories of companies that have relied on this type of advertising. Many will not be able to change and will thus be relegated to history.
A necessary evil to get people’s data and privacy back on the internet? Possibly. But having an individual company – Apple in this case – make these decisions on their own is a very particular way of conducting policy. There is no possibility of further examination, and there are no appeals.
The question is how to catch up politically. Initially, new blood is needed. President Joe Biden has appointed two well-known tech critics to his administration – Lina Khan, as commissioner of the Federal Trade Commission, and Tim Wu of the National Economic Council.
But Biden’s new line-up has a difficult task. Not only must they ensure a fair game plan for all tech companies, they must also ensure that they do not cement the imbalances that already exists. Too little regulation leads to a lawless country. Too much regulation can lead to the companies that are large today being able to hinder new competitors from entering the market. Following regulations requires resources and that naturally benefits capital-strong players.
In addition, they need to find a more international consensus on how this type of regulation affects global tech companies. Margrethe Vestager has flirted with Joe Biden several times by using his campaign slogan – “build back better”. Neither the EU nor the US will probably be able to do this on their own.
Apple’s latest maneuver shows with great clarity that the giants are still dominant when it comes to rules and policy in the digital world. The political actors need to be sharper and faster in order not to be run over.
Sweden’s Minister for Digitization, Anders Ygeman, also did not talk about regulation at the seminar, but about the expansion of broadband in Sweden. His and Sweden’s ability to influence these issues is also limited. Part of the DMA proposal is that no single EU country can enact stricter laws than what has been proposed.
The minister also had microphone problems. The sound went out in the broadcast, but not to the participating panel.
– What, I have no sound? Ygeman asked.
This column was first published in SvD Näringsliv, in Swedish, on March 25th, 2021.