Features and Analysis

‘Brutal capitalists’ versus the bureaucrats

Some national and the regional European administrations are revving up for a fight against what Germany’s Minister for Economic Affairs and Energy, and Vice Chancellor, Sigmar Gabriel, describes as “brutal information capitalism”. They are seeking to protect the digital rights of its citizens against the power of corporations who profit from the collection and analysis of Europeans’ online activities.

In particular, Google, Facebook, Apple and Amazon are seen as being beyond the control of democratic governments and those they govern. On Sunday July 6, in the heavyweight German newspaper, Frankfurter Allgemeine, Herr Gabriel issued a passionate call to action, writing, “The future of democracy in the digital age, and nothing less, that is at stake here, and with it, the freedom, emancipation, participation and self-determination of 500 million people in Europe.”

Facebook admitting that in 2012 it manipulated newsfeeds to almost 700,000 users, without their knowledge, to see how it affected their emotions, is a great example of what is generally seen as unacceptable behavior. Even had people unwittingly given permission by implicitly agreeing with the ever-changing small print around Facebook’s data usage policies, outrage at the company taking such liberties was hardly surprising. In fact, it seems the ‘research clause’ was added to Facebook’s data use policy four months after the experiment.

Regulating the borderless digital world

While the difficulties of applying regional or national legislation and regulation to the borderless digital world are clear – the muddle resulting from the European Court of Justice’s landmark ruling in May that Europeans have ‘the right to be forgotten’ online is a perfect example – the ‘brutal capitalists’ would be wise to avoid inflaming the situation further. The European administrations mean business: They will strive to address the privacy issues, including the right to be forgotten, more effectively and are planning action on a number of fronts, from anti-trust measures to tax avoidance.

Many think that Microsoft almost ‘missed the Internet’ in the 1990s at least in part because it was so preoccupied fighting anti-trust regulations and rulings in Europe (as well as at home). Many also trace the beginning of Microsoft’s slow descent from its absolute peak to the bad publicity around the alleged abuse of its monopolistic power and the amount of top management attention it absorbed. Others should take note and look to working with, not fighting against, the European establishment.

And there is plenty for them to focus on. Germany’s Minister Gabriel is looking at whether Google should be regulated like a utility, due to overwhelming share of the German search market. A first approach could be to obligate Google to allow competitors to use its platform on an equal footing (just as European incumbent telcos were forced to allow competitors equal access to their infrastructure).

More radical action against Google could include forcing the company to unbundle its various activities (an approach European regulators tried with Microsoft) such as Gmail, YouTube and mobile so it can’t leverage its massive economies of scale across all its businesses. It is thought, too, that the next President of the European Commission, Jean-Claude Junker, has his own agenda regarding Google.

‘Unfair treatment’

There is also a determination to defend European companies from ‘unfair’ treatment by digital native companies. Last year Germany introduced legislation allowing sellers on Amazon’s website to list their goods more cheaply elsewhere, including their own websites. Amazon’s row over revenue share with the huge French publisher Hachette is on-going, along with the dispute about Amazon’s treatment of its German employees.

In June, the European Commissioner for Competition, Joaquín Almunia, announced he was considering reopening the investigation into Google’s search ranking practices as well as an inquiry into tax avoidance, which many Europeans view as immoral, if not illegal. The initial focus will be Apple, Starbucks and Fiat, and there are suggestions that Amazon, whose European headquarters are in Luxembourg, will be investigated too.

Again, one can detect a slow-burning fury at the perceived fundamental unfairness of it all.


    About The Author

    Snr Director, Research & Media

    Annie Turner has been researching and writing about the communications industry since the 1980s, editing magazines dedicated to the subject including titles published by Thomson International and The Economist Group. She has contributed articles to many publications, including national and international newspapers such as the Financial Times and International Herald Tribune, and a multitude of business-to-business titles. She joined the TM Forum in 2010 and is responsible for overseeing the content of the Research and Publications portfolio.

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