The European Parliament has called for the dismemberment of Google, the French want “les Gafa,” as they call Google, Apple, Facebook, and Amazon, reined in, EU regulators are under pressure to get tough with the Americans. And the leaders of Silicon Valley’s non-tax-paying, privacy-invading, dominant tech firms, to use EU descriptives, are surprised. They shouldn’t be.
Regulatory and competition policy is not created independent of the values of the countries in which commerce takes place. And those values in Europe are far different from the American values that spawned and drive Google, Amazon, Uber, and other disrupters, as they like to be known. Throw in the success-bred arrogance and insularity of our American companies, their unfamiliarity with bureaucracies their lobbyists cannot influence quite as much they can America’s politicians and regulators, the incentive their law firms have to fight to the last billable hour, and Silicon Valley may find future success in foreign markets more difficult to come by than need be the case.
Start with a deep-seated American belief that markets trump ministers when it comes to making decisions about the goods and services that the economy will produce, the prices to be charged, the wages to be paid, the innovations to be applauded. Yes, there are times when threatened competitors seek shelter from capitalism’s perennial gale of creative destruction. Still, it is fair to say that American bias towards competition and markets is not fully shared by our EU counterparts. No surprise, then, that American competition policy reflects a higher tolerance of risk-taking, a lower level of concern at the disruptive effects of innovation, than is common among EU policy makers. It is that cultural difference that is reflected in EU economic policy towards U.S. multinationals.
Approval of disruption has not been a successful American export. Uber revels in the fact that it has invented a system that makes life better for consumers. If that threatens the prosperity of the taxi industry, so be it -- indeed, so much the better, for their fans measure Uber’s success in part by the injury it inflicts on outmoded competitors. In America, a few local regulators try to rein Uber in, but sympathy for existing drivers, who have seen the price of their medallions (permits) drop 17 percent to $872,000 in New York City, is limited. In Europe, the culture is less favorable to disrupters, and more sympathetic to those whose livelihoods are threatened by new systems of delivering services to consumers. In America, the consumer is king, the agent for whom store hours are tailored, the person who should decide on how his news is delivered; in Europe, although this is changing, consumers’ interests in availability of services takes second place to the interests of workers and of established, usually small merchants, and of powerful newspaper interests. Change is considered socially desirable in the U.S., more threatening in Europe, especially when the change agent is a foreigner.
This difference in attitudes towards change plays itself out in the application of antitrust policy. Google is deemed dominant, although the EU authorities are insufficiently confident of their ground to attempt to prove that accusation, and the fact that such dominance is continuously under threat of obsolescence is given little weight. Regulation is seen as a more reliable protector of consumers than the threat of potential competition, and any slowing effect that regulation has on future change is seen as a cost to be borne, or is actually applauded. Meanwhile, American policy is designed to put at risk the sunk investment of incumbents in retailing, transport, energy, communications, media, and other sectors in which firms not in existence a few years ago emerge as disrupters.
It's an article of faith among bien pensant liberals that all institutions in society must achieve perfect gender parity. Consider, for example, the left’s outrage at the dearth of women employed at Google and other tech firms (despite the fact that far fewer women study computer science than men) or its efforts to lower physical standards so that more women become firefighters (despite the fact that most people in burning buildings would rather their lives be saved than politically correct mandates be met).
For those of us who believe in the market system, there is something unsettling about the thought of the billionaire bosses of Google, Apple, Adobe, Intel, two Disney subsidiaries, and Intuit sitting around a table and agreeing not to compete for staff. Facebook declined an invitation to join the conspiracy. These are the self-styled “disrupters”, believers in the virtues of a market system that allows them to compete for customers even if, especially if, that competition destroys existing enterprises.
Some three hundred years ago Sir Walter Scott asked, “Breathes there a man with soul so dead who never to himself hath said, This is my own, my native land.” Well, in America corporations are legally deemed “persons,” so the answer to Scott’s question is “Yes,” at least when it comes to tax payments. In this globalized world corporations are “multi-national,” run by executives who may never have set foot in the lands they declare to be “home” for tax purposes. Nothing illegal about it all: These firms play by the rules written for them by the governments in which they do most of their business. And their executives do have a fiduciary obligation to the owners of the business, their shareholders, to minimize their tax payments to the greatest extent possible within the law. Moreover, to some extent their continued search for benign tax regimes puts something of a limit on the ambitions of national tax collectors, witness the unhappiness of France with the low taxes on offer in Ireland, which is coming out of the recession in which over-taxed France remains mired.
President Obama will partner with Google for the "first-ever Presidential Hangout Road Trip," Google announced today.
"Next Tuesday, at 9pm EST, President Obama will deliver his annual State of the Union address to Congress. Later that week, you'll have the chance to connect with the President and speak about his administration’s plan in the first-ever Presidential Hangout Road Trip," claims Google in a blog post.
In an NBC interview, Google's Eric Schmidt reminded America that "It's important to remember these 5 billion people are just like us. They're just trapped in bad poverty and bad governance and so forth." The CEO of Google was referring to those in the world who don't have smartphones: