By Sam Schechner in Paris and Natalia Drozdiak in Brussels
A deep cultural divide between the U.S. and Europe over their
approaches to Silicon Valley has thrust European officials into the
role of global tech-industry cops.
The result is that many of the most heated battles over whether
or how regulators should protect car makers, news organizations and
other industries from the disruptive effects of tech giants are
playing out first in Brussels, Paris and Berlin instead of
Washington or San Francisco.
Just Friday, Germany approved new legislation imposing EUR50
million fines on social-media companies that fail to quickly remove
hate speech and terrorist content -- over strident opposition from
Facebook Inc. and other tech companies, which advocate
self-regulation to tackle those problems. That followed the EUR2.42
billion ($2.76 billion) fine that the European Union's executive
arm levied this week against Alphabet Inc.'s Google for abusing its
dominance as a search engine.
These decisions have significant implications for the companies
in Europe, one of their most important markets with its 500 million
consumers. The rulings also influence regulators, courts and
officials globally. This week, South Korea's antitrust chief told
the Yonhap News agency he will examine how to curb the market
control of Google and Facebook.
Google said it "respectfully disagrees" with the EU decision and
will consider an appeal, and didn't immediately responded to
requests for comment on South Korea's plans. Facebook declined to
comment.
Some of these issues are coming to a head in the U.S., too,
though at a slower place. American policymakers in some cases are
rethinking policies that were designed to nurture the tech industry
in its early days now that these companies are touching every
sector of the economy.
The companies also are coming to terms with the loss of a strong
ally in the White House in former President Barack Obama. When
Republicans took charge in January, GOP lawmakers set out to roll
back several big Obama-era policies that favored tech companies.
That included the "net neutrality" regulations that prevented
broadband providers from prioritizing certain internet content, and
recent privacy rules that hit telecom companies but not tech
firms.
Up to now, though, the U.S. generally has favored a lighter
approach, driven partly by American's aversion to restrictions on
free speech. Across the Atlantic, the more tightly controlled
approach is illustrated by Europeans' war-hardened devotion to
personal privacy and restricting hate speech.
"It stems from very different economic traditions in how much of
a role the state should have in resolving problems," says James
Waterworth, vice president for Europe at the U.S.-based Computer
& Communications Industry Association, a lobby group that
represents U.S. tech companies including Facebook and Google. "In a
globalized world, with large transnational companies, these things
increasingly come into conflict."
Some free-market supporters in the U.S. and Europe view the
moves by regulators as cover for political interventions and even
protectionism. Europe dominated the early mobile-phone era but now
has no tech companies on the scale of Google or Facebook.
Mr. Obama in 2015 said the EU's investigations into big U.S.
tech companies were "more commercially driven than anything else,"
suggesting the EU was trying to help out European competitors.
EU officials deny such accusations but frequently say that if
large tech companies, which are primarily American, want access to
the bloc, they must "play by the EU's rules."
The EU's antitrust watchdog is still investigating other aspects
of Google's business and Qualcomm Inc. for allegedly abusing their
market positions. The watchdog also has been probing whether
Amazon.com Inc. paid appropriate taxes in Luxembourg. The companies
all deny wrongdoing.
Meanwhile, the EU is considering proposing more rules for
internet platforms to prevent them from offering unfair terms to
small businesses that use their services to sell or promote
products.
And Europe's national privacy regulators -- who next May will
get the power to issue fat fines for privacy rule violations -- are
coordinating multiple investigations into Facebook's handling of
personal information from chat service WhatsApp.
"These companies have become so dominant, so powerful, when
[they] demote rivals, who puts the limit?" said Ramon Tremosa i
Balcells, a liberal lawmaker from Spain who backed the European
Parliament's resolution in 2014 calling for a breakup of
Google.
Regulatory scrutiny in the U.S. may never match that of Europe,
but some American politicians have raised concerns about the size
of tech companies and their power in the market. President Donald
Trump's nominee to be the Justice Department's antitrust chief,
Makan Delrahim, has promised to "investigate and vigorously enforce
the antitrust laws with respect to online platforms."
One factor in the change has been tech firms' disruption of
traditional industrial giants in Europe. In response, many legacy
players have lobbied for new rules and tougher enforcement against
the interlopers -- and found open ears. European telecom firms,
angry about seeing their revenue from text messages undercut by
chat apps, were among the first to advocate new legislation to
mandate a "level playing field."
More recently, European car makers have lobbied EU officials to
support industry proposals that car makers should be the primary
gateway for drivers to share car data. Some executives fear Silicon
Valley firms could hoard vehicle data, turning cars into low-margin
devices like many mobile phones, one auto executive said. German
publishers also lobbied for copyright proposals that would help
them seek remuneration from Google and other news aggregators for
snippets of articles used on their websites.
News Corp, owner of The Wall Street Journal, has formally
complained to the EU about Google's handling of news articles in
search results.
"The revenues generated by creators, performers and those that
invest in creative content are accruing disproportionately to a few
large players who themselves do not engage in content creation,"
Günther Oettinger, the EU's German commissioner and former digital
chief, said in November, defending the commission's proposed new
copyright rules.
--Eun-Young Jeong in Seoul and John D. McKinnon in Washington
contributed to this article.
Write to Sam Schechner at sam.schechner@wsj.com and Natalia
Drozdiak at natalia.drozdiak@wsj.com
(END) Dow Jones Newswires
June 30, 2017 15:21 ET (19:21 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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