Uncategorized

Margrethe Vestager’s growing American fan club

European Commissioner for Competition, Margrethe Vestager | Olivier Hoslet/EPA

Margrethe Vestager’s growing American fan club

As America turns skeptical toward Silicon Valley, a familiar face from Brussels suddenly fits the changing mood.

By

Updated

Europe’s competition commissioners have never been the toast of Washington.

And few received as frosty a reception as the current commissioner, Margrethe Vestager, who has made repeat visits, sometimes just after slamming one tech darling or another. A year ago, she touched down weeks after ordering Apple to reimburse some €13 billion, to the outrage of the Obama administration.

But change is in the air.

When Europe’s top regulator and prominent Silicon Valley critic arrives in the U.S. on Monday, her first trip there since hitting U.S. tech titan Google with a record €2.42 billion fine, she will find the mood has veered against the U.S. tech giants and that U.S. lawmakers are open to once-taboo European ideas on antitrust.

In recent months, Donald Trump has derided Amazon as a “monopoly.” Steve Bannon, one-time chief strategist to President Trump, floated the idea of treating Facebook and Google as public utilities.

Click Here: Golf special

Top Democrats, too, are talking about reining in tech’s reach, saying antitrust regulators should look at how companies use personal data. U.S. Senator Elizabeth Warren, a Democrat, argued companies like Google, Facebook and Amazon are trying to “snuff out competition” and lauded Vestager’s cases against Apple.

And Thursday, Amy Klobuchar, another Democratic senator and ranking member on the Senate’s antitrust committee, proposed new legislation for “antitrust enforcement that meets the demands of the 21st century economy.”

With the rise of the digital age, Europe was first to push back against Silicon Valley, in political and regulatory terms, asserting its prerogative to write the rules that govern privacy, competition and data online. And for the past three years, Vestager has been the goblin under many tech giants’ beds, driving them to seek Washington’s help to defend themselves against her antitrust cops. Now they’re not getting as much of a receptive hearing.

“Ms. Vestager and her team appear more inclined to think ‘outside the box’ on a number of things, including the role of antitrust in emerging, disruptive and complex markets,” said Diana L. Moss, president of the American Antitrust Institute. “We can count the number of [U.S. dominance] cases over the last decade on one hand.”

The U.S. has no open antitrust cases against the Silicon Valley giants, and regulators recently waved through Amazon’s $13.7 billion acquisition of Whole Foods.

During the last decade, Vestager and her predecessors have done a lot, including levying billions in fines and tax clawbacks from Google, Apple and Facebook. Amazon has also been in her sights.

That makes Vestager an influential and sought-after figure, even as her counterparts across the Atlantic are rudderless, pending appointments and confirmations of new leadership for the U.S. antitrust agencies. Her words and deeds against Silicon Valley giants feed into a wider U.S. debate about the power of the world’s largest companies and make for an uncomfortable counterfactual for the U.S.’ more conservative enforcers.

On Tuesday, Vestager will for the first time meet with Senator Mike Lee, the Republican who chairs the Senate’s committee on antitrust. She will also hold meetings at the antitrust division of the Justice Department and at the Federal Trade Commission, although the situation is unusual in that Trump has yet to nominate a permanent head of the Federal Trade Commission, and his pick to head up antitrust at the Department of Justice is being blocked in the Senate.

Vestager — described by CNBC as “the woman taking on Silicon Valley tech giants, one fine at a time” — will also speak at a packed event Monday organized by the American Enterprise Institute and hold a press conference. She will give a TED talk on Wednesday. 

To be sure, not everybody in the U.S. loves the EU commissioner for competition. Earlier this week, Acting FTC Chairwoman Maureen Ohlhausen said tech firms’ high market shares don’t mean they are dominant. And, in what could be a jab at Vestager, she questioned whether antitrust enforcers were well qualified to pick the winners and losers in the digital economy. Vestager and Ohlhausen meet Monday.

Transatlantic currents

European antitrust enforcement is affecting the U.S. debate. Look no further than the ejection of the Open Markets team from the New America Foundation at the end of August.

On June 27, Vestager fined Google a record €2.42 billion for abusing its gatekeeper role in online search in was the first major antitrust setback for the world’s largest search engine.

Barry Lynn, the leader of the Open Markets team that campaigned hard for U.S. antitrust authorities to ramp up their enforcement, posted a statement on the website of the New American Foundation: “The Open Markets Team congratulates European Commissioner for Competition Margrethe Vestager and the European competition authority for this important decision. Google’s market power is one of the most critical challenges for competition policymakers in the world today.”

According to Lynn, that prompted an angry response from Eric Schmidt, Google’s executive chairman and a major backer of New America, leading to the team’s expulsion.

The allegations prompted a wave of criticism spanning the U.S. Senate and Congress to Fox News against Google — and further soul-searching as to why U.S. antitrust enforcers were being shown up by their European counterparts.

“For many years the Europeans were banging away at this and saying there is something wrong here,” Lynn said in an interview. “In the vanguard in the U.S. of the anti-monopoly community, there is a radicalization that is taking place here very rapidly.”

New US antitrust school of thought

By radicalization, antitrust scholars say the U.S.’ increasingly concentrated markets, growing inequality between the rich and poor and slowing rates of startups — evidence of a lack of competition across the U.S. economy. That has come about as a result of weak antitrust and merger enforcement, scholars, lawyers and politicians say.

There is growing concern “about bigness and size, and power because power corrupts absolutely,” said Luigi Zingales, a professor of entrepreneurship at the University of Chicago and a prominent advocate of more intervention. “Market power gives you political power and political power gives you more market power.”

Antitrust advocates like Zingales say their position merely reflects a more traditional U.S. view of antitrust — from a halcyon period that stretched from the breakup of Standard Oil in 1911 to that of AT&T in 1982.

“There is an awareness among practitioners and academics that the U.S. has lost its intellectual leadership on monopolization,” said Maurice Stucke, a lawyer, professor and author of “Virtual Competition,” a smash-hit on the antitrust conference circuit that explores how companies’ use of big data and algorithms will challenge antitrust enforcers.

The FTC’s actions against Silicon Valley firms extend to closing an antitrust probe against Google in 2012 in exchange for limited concessions, and forcing Apple to pay $450 million in court for conspiring to raise the prices of e-books. In recent years, EU and U.S. antitrust regulators reached diverging conclusions on Microsoft, Intel and Google, to name just the best-known examples.

Stucke lauded EU enforcers’ intellectual curiosity and leadership: “The EU presents a counterfactual.”

The current contrast between Vestager, a striking personality and bold communicator, and the U.S. agencies now operating without permanent leadership, is striking.

Zingales, the professor, said he is a “big admirer” of Vestager, whom he describes as “very brave.” He even changed the date of a big antitrust conference he organized earlier this year so she could speak. (Vestager eventually cancelled, as the deadlines for two big merger probes fell in the same span of time.)

“Europe’s approach to these issues has been encouraging to antitrust advocates here,” said Lina Khan, another member of Open Markets, who penned an essay exploring why Amazon has so far succeeded in evading antitrust enforcers. “I think she is like a rock star.”

Nancy Scola contributed reporting from Washington.

Authors:
Nicholas Hirst 

Leave a Reply

Your email address will not be published. Required fields are marked *