Europe has led the global charge against big tech. But does it require a new approach?

Liberals eager to keep markets open and alive – including this newspaper – applaud Ms Vestager and her tough approach. Vigorous enforcement of competition rules meant lower prices for European consumers purchasing flights, phone calls, etc. Meanwhile Americans were billed by firms allowed to consolidate As long as there was some competition. Perhaps unsurprisingly, Europe has also taken down powerful tech giants, imposing multi-billion-euro fines on the likes of Google and, at times, forcing changes to tech business models. A sweeping new set of rules known as the Digital Markets Act (DMA) came into effect this year, giving the EU more powers over big tech firms. As the Biden administration seeks to reverse decades of lax antitrust enforcement in the US from 2021, its watchdogs have borrowed many of their ideas from Ms. Vestager.

Europe can be happy with such an imitation. Yet it must now ask itself whether its strong arm approach is still correct. Even though its regulatory rationale has remained the same, the corporate environment in which it is being implemented has changed. At least when it comes to big tech — antitrust’s toughest problem — things haven’t turned out the way Europe thought it would. There should be a fresh look at how to regulate online champions.

Ms. Vestager’s regulatory approach is based on the idea that consumer tech markets tend toward a winner-take-all outcome: companies that gain an early advantage move in to secure an unavailable niche. Once you’ve told Facebook who all your friends are, it’s nearly impossible to switch to a rival network, even if the site offers a terrific experience. Google fine-tunes its services using troves of data, including years of its users’ search and browsing history. This strengthens its market power. By forcing only tech incumbents to open up – for example by forcing Google to hand over data to potential rivals to help them train their offerings – the playing field could be leveled somewhat.

That was the principle. But recent events show that the technology is far more attractive than Ms. Vestager. Facebook is struggling now To keep existing users engaged, let alone attract young ones. teenagers have got off on tiktok, a zippy short-video app from China. For the first time in two decades of dominance, Google is facing a challenge to the search engine eroding its profits. Advances in artificial intelligence (AI) are powering a new generation of adversaries. Microsoft’s Bing, which has been around for a long time, is the latest sensation. The monopolies of the future such as Uber and Netflix are believed to have flagged. Tech companies in Silicon Valley are now laying off employees. Share prices of the largest firms have plummeted, as investors who yesterday envisioned limitless monopoly profits now recognize that competition will erode margins.

Is Big Tech’s loosening grip on consumers a sign that Europe’s approach is working? opposite of this. It wasn’t regulatory action that prompted the rivals: both Bing and TikTok have relied on ingenuity rather than help from the state. The greed to capture the huge profit pool for the benefit of consumers drives innovation. This is what America’s hands-off school of antitrust said—and Europe’s perception could not be.

Charlemagne recently brought up the matter in Ms. Vestager’s Brussels office. Commendably for a regulator, he is open to those wondering whether the assumptions behind the approach that has made him a star among Trustbusters may be obsolete. The Den has taken note of Tech’s recent difficulties. But she still looks at life with her old stern outlook. “It may be over time that digital monopolies end,” she says, “but time is not something you have if you want to unlock the full potential of innovation.” There’s a lot of market power to be abused in the years it takes to come up with a better search engine or social-media platform. She adds that AI’s power to disrupt monopolies may prove illusory. Mass layoffs and sagging share prices are signs of deflationary propaganda following a pandemic-induced boom, not thriving competition.

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Ms. Vestager’s record in keeping competition alive in Old World industries is credible. Much of what he’s done to hem in big tech — in addition to banning takeovers of potential future rivals by big incumbents, for example — still looks sensible. But now he is being prodded to do more to rein in the Titans. With a new generation of gung-ho trustbusters now in charge in America, there is no time for the hands-off model once favored there. They are restricting competition rules to the limit, often for ideological reasons, to bring the big companies to heel. Thanks to the DMA, Europe will gain huge new powers to police big “gatekeeper” firms like Amazon and Apple, therefore stopping anti-competitive behavior before it happens. The haters of Silicon Valley are hoping that Europe will once again become the tech clobberer-in-chief. ,

This challenge need not be accepted by Ms. Vestager. Perhaps new evidence will emerge that the noose of mistrust really needs to be tightened. But a regulator of his competence must be mindful of the possibility that the opposite may be required. Europe made decisions based on facts; If those facts change, there’s no shame in adjusting your approach. Watchdogs should aim to be as nimble as the businesses they regulate. It can mean being brave enough to bin ideas and adapt to a new reality.

Read more from Charlemagne, our columnist on European politics:

Germany is letting a domestic strife pollute Europe’s green ambitions (March 9)

After seven years of Brexit negotiations, Europe has emerged as the clear winner (2 March)

Why Vladimir Putin will never stand trial at The Hague (23 February)

Also: How Charlemagne’s Column got its name

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