GIANT TAMERS

We Are Apple, We Are Google

European Union's competition chief Margrethe Vestager speaks during a media conference regarding Google at EU headquarters in Brussels on Wednesday, April 15, 2015. The European Union's executive hit Google with an official antitrust complaint on Wednesday that alleges the company abuses its dominance in Internet searches and also opened a probe into its Android mobile system. (AP Photo/Virginia Mayo)
E.U. competition chief Margrethe Vestager takes on Google.
  • Why it matters

    Why it matters

    Reining in the Internet giants in Europe shouldn’t be a matter of stifling them, writes the author. Instead, it’s a matter of balance.

  • Facts

    Facts

    • The European commissioner for competition, Margrethe Vestager, said she suspects Google of abusing its market power in smartphones and opened proceedings.
    • Apple announced this week that it had earned less than usual in the first three months of the year, but nevertheless made €10.5 billion ($11.9 billion) in profits.
    • Through a deal with the Irish government, Apple has its European headquarters in Dublin. The corporation barely pays into government coffers in Europe.
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    Audio

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Talk in Europe about Internet giants Google, Facebook and Apple makes it sound like humanity has been captured by Cyclops-like monsters.

It sounds as though those hungry monsters – Google and Facebook – grab people in their clutches and stuff them down their throats. Resistance is futile against these all-seeing creatures.

Do those fears still reflect reality?

It is about time to celebrate Europe’s contribution to the great success of digital companies. Europeans not only made money available but also ideas – and some of their most gifted minds are part of it.

The European Commission will soon be taking on Apple. The exact date is a secret but the Financial Times writes it could be this month or next. Either way, Apple will probably have to pay several billions in back taxes.

Last week the executive arm of the European Union also took a swipe at Google. The commissioner for competition, Margrethe Vestager, said she suspects Google of abusing its market power in smartphones and opened proceedings. The Silicon Valley tech company will of course respond, deploying its lobbyists.

But it has no recourse but to go through legal channels.

Slowly but surely, the digital heavyweights are becoming normal companies. 

They have to pay back taxes, follow the rules of competition and decisions by European courts and now also have to stick to new data-protection guidelines.

Europe is no longer powerless. It is learning how to deal with these corporations. Now, just like in other industries, when disputes arise, it’s not just the law of the jungle. Sometimes the state and sometimes the company has the law on its side.

Sooner or later this will also change how we think. 

Everybody still remembers how Jaron Lanier, an Internet pioneer and winner of the German Book Trade’s Peace Prize, talked about “intangible technologies” that arbitrarily make the rules and to which mankind must submit.

He warned that with their algorithms, digital companies might manipulate behavior at will.

Then, two years ago, Mathias Döpfner, the chief executive of German media group Axel Springer wrote about how his company depended on Google.

Mr. Döpfner’s article “Why We No Longer Fear Google” explained why the search engine was a vital link for Axel Springer outlets — by directing visitors to the online pages of its newspapers like Die Welt and Bild, and its classified ads portals.

Mr. Döpfner wrote that the publishing firm also depended on advertising technologies that Google controlled, in order to master digital change and pay for quality journalism.

But, he added, no competition watchdogs were really watching this relationship.

It seems like a new division of labor might be developing between the United States and Europe. In the U.S., European companies are strongly controlled and, if necessary, penalized — like Deutsche Bank or Volkswagen. Here, the California tech groups are coming under tighter controls.

Mr. Lanier and Mr. Döpfner both felt at the mercy of the Internet giants: Mr. Lanier believed he had already been gobbled up by the Cyclops while Mr. Döpfner, like Odysseus himself, was trying to humor the beasts till he figured a way out.

That’s still his strategy: he just recently hosted a glitzy party for the founder of Facebook – and awarded him a prize.

Mr. Lanier and many other critics would say that Europe has “largely outsourced policymaking to outside corporations.”

But in Brussels, the world is changing.

It seems like a new division of labor might be developing between the United States and Europe. In the U.S., European companies are strongly controlled and, if necessary, penalized — like Deutsche Bank or Volkswagen. Here, the California tech groups are coming under tighter controls.

We have Google. It took a few of years, like at the start of the Industrial Age when governments had to catch up with new realities.

But the process has begun and that makes it easier to look with joy at digital companies. Who wants to go back to the world before 2007? A world without iPhones, when Amazon was mainly delivering books. Search engine accuracy was more like a shotgun, and Facebook had only a couple of thousand users in Germany.

No, that world is past. And it means we can embrace a fresh way of thinking: We have Google! We have Apple!

Some people might think, typical Europe — government watchdogs are having a huge party again.

That’s not how it is though. The American tech companies are rightly enjoying innovation-based profits. Europe hasn’t developed any comparable companies and probably couldn’t have. Thanks to their entrepreneurial spirit, founders like Mark Zuckerberg and Larry Page are super rich.

Not a problem in principle. It’s just a question of balance.

Take Apple. The company announced this week that it had earned less than usual in the first three months of the year, but nevertheless made $10.5 billion in profits.

Europeans might ask: How much of that was due to the iPhone? And how much to tax breaks that Apple has enjoyed for years?

Through a deal with the Irish government, Apple’s European headquarters is in Dublin. The corporation barely pays into government coffers in Europe though it’s one of its most important markets.

This deal has also helped the company amass $200 billion in offshore accounts, a situation that has driven stock prices skyward. That means Apple can pay for company takeovers out of petty cash, practically – be it with stocks or cash.

That’s why the European Commission wants to get a couple of billions back from Apple, arguing the company was given unfair subsidies.

How much in the end remains to be seen. But it’s only fair that Europeans should share in the immense profits. After all, Apple was subsidized, and the same can be said of Amazon and Google. Their economic success would have been huge without tax breaks, just not so huge.

Anyway, maybe it’s about time to celebrate Europe’s contribution to the success of digital companies. Europeans not only made money available but also ideas – and some of their most gifted minds are in the digital arena.

What would Apple be without Dieter Rams? The German designer worked for the Braun electronics group and designed record players, radios and pocket calculators that became icons. Apple co-founder Steve Jobs and top company designers adopted Mr. Rams’ design vocabulary at Apple.

At Google, there are other European influences. The head of sales is Germany’s Philipp Schindler and the chief of cyber security and privacy is an Austrian, Gerhard Eschelbeck. Swiss Urs Hölzle is responsible for Google’s IT infrastructure. And it is a German, a robotics engineer named Sebastian Thrun, who inspired and promoted Google’s driverless vehicles.

So much of Europe is part of these digital corporations that you could almost say: We, too, are Google! We, too, are Apple!

It’ll stay that way, too. Silicon Valley will still need know-how from Europe. Google and Facebook are investing in self-learning computer systems, or “artificial intelligence.”

A few weeks ago, when Facebook co-founder Mr. Zuckerberg came to Berlin, he said he wants to set up research partnerships with several universities in Europe. His top developer for self-learning computers is, by the way, a Frenchman; Facebook will open a research center for artificial intelligence in Paris this summer.

Google, meanwhile, took over the British company DeepMind Technologies in 2014. The artificial intelligence firm’s founders and early team members included students from Munich. Munich, Manno (in the Italian-speaking part of Switzerland) and Saarbrücken are world-renowned locations for associated basic research.

That’s how things are changing here in Europe. It’s not like ancient Greece. Back then, Odysseus was forced to blind the Cyclops to survive.

Today we are crowding into the cave together with the monsters. We feed them and nurture them, full of hope that we can tame them — or at least manage to get along with them, even if it’s gruff sometimes.

 

This article first appeared in Die Zeit. To contact the author: redaktion@zeit.de

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