Regulator takes on Silicon Valley, a continent away
COPENHAGEN — At first blush, Margrethe Vestager’s decision to investigate Apple’s planned acquisition of the music-identification app Shazam seems fairly minor, at least by her standards. As Europe’s competition commissioner, Vestager is known for aggressively pursuing big cases against Silicon Valley giants, and the Shazam deal is a smallish one, by most estimates valued at far less than $1 billion.
But what interests Vestager about the transaction is not the amount of money at stake, but the amount of data. In a rapidly expanding information economy, she believes the control of data is a new regulatory frontier.
“We’re really making an effort to understand the different laws of data — how it works as an asset, how it influences the marketplace,” Vestager said in an interview. “What will happen when the data that Apple holds combines with the data from Shazam?”
If not a household name in the United States, Vestager, 50 and a native of Denmark, is perhaps the world’s most famous (or infamous, depending on where you stand) regulator. She has spent the past four years investigating U.S. tech firms, finding them wanting and ordering them to pay billions of dollars in fines and back taxes.
Her rulings against Apple, Facebook, Google and Qualcomm have positioned the European Union, rather than Washington, as the world’s de facto Big Tech regulator — and established Vestager as an international regulatory celebrity, if such a thing is not an oxymoron. She helped to inspire the lead character in a Danish television series. Crowds flock to hear her speak.
“Europe is acting to enforce antitrust laws where the U.S. is not,” said Jeremy Stoppelman, the chief executive of Yelp, who feels that U.S. regulators dropped the ball when they decided not to pursue a case against Google in 2013 (Yelp is a longtime Google antagonist). “Ironically, many of the complainants in the E.U. antitrust case against Google are U.S. companies, pursuing justice in Europe precisely because the U.S. has not acted,” he said in an email.
While Vestager’s global influence is ascendant, her political fate is murky. She has made it clear that she would like a second term as competition commissioner, but there is no guarantee that the Danish government will reappoint her to the commission next year. In fact, the new prime minister, who comes from a rival party, has said he will not do so.
Although a long shot, Vestager is among the potential contenders for president of the European Commission, the executive arm of the European Union. It is the most powerful job in the bloc — one never held by a woman, or by someone with her public profile.
Her appeal partly speaks to a populist impulse from the political left, a David-versus-Goliath belief that it is high time someone stood up to giant corporations, particularly those that exert so much power. But not everyone views her as a heroic regulatory warrior.
Critics of Vestager include leaders of U.S. tech companies who have crossed her and who take issue with both her approach and her facts; Republicans in Congress; some members of the Trump administration; The Wall Street Journal’s editorial board; and groups like the Business Roundtable, a conservative-leaning, pro-business collection of U.S. chief executives.
Apple is especially aggrieved. In 2016, Vestager ordered Ireland to reclaim 13 billion euros in back taxes (about $15.5 billion), saying that the company had illegally received a tax break that was not available to others. Apple has begun paying the money into an escrow account, but both the company and Ireland have appealed the decision. They say it ignores how much tax Apple has already paid to Ireland, misrepresents the tax rate the company is subject to there, and reflects either a willful misreading or an ignorance of tax law.
Critics also accuse her of grandstanding, and of displaying bias against U.S. companies.
“I think she has this vision of what the law should be, and it seems to me that when this radically affects major companies that are headquartered in the U.S., you might want to have more of a dialogue with the U.S. regulators and the U.S. government about it,” said Joe Kennedy, a senior fellow at the Information Technology and Innovation Foundation, a nonprofit think tank based in Washington.
As the top European official enforcing competition laws, Vestager has primarily concentrated on how a range of companies use, or abuse, their market dominance. But she has also emerged as a major voice of warning about the effect of tech firms on our habits, our privacy, our ability to make human connections and even democracy itself. (Europe has a new data privacy law that is to take effect May 25.)
“What’s fascinating about her role is that in her mind, the new antitrust is about data, not about market power,” said Randy Komisar, a veteran Silicon Valley executive and now a general partner at the venture capital firm Kleiner Perkins Caufield & Byers.
He added: “I believe the European approach is more appropriate than the U.S. laissez-faire approach. The U.S. economy sort of lives or dies by the notion of free markets, and I think what we’re seeing is a perversion of free market economics that is very difficult to counter without regulation.”