When Article 13 got on the agenda, Youtube CEO Susan Wojcicki released a blogpost explaining that regulating Youtube will significantly affect consumer welfare because they’ll have to remove Despacito from the play store (or something – this veiled threat was a little too veiled).
It may or may not be coincidence, but Despacito contains all the elements of Europe’s anti-Google antitrust blitz to date.
Non Spanish-speaking audiences are frequently shocked to read the translation of the lyrics, because the music video isn’t at all suggestive. If you’re not already following Margrethe Vestager on instagram, you too may be shocked by what follows.
- RTBF – Y que olvides tu apellido
- Consumers – Tus lugares favoritos
- Pace – Empecemos lento, después salvaje
- Targeting – Me está gustando más de lo normal
- Business structure – Firmo en las paredes de tu laberinto
- Local clones – Muestra me el camino que yo voy
- Taxation – Si te pido un beso ven damelo
- Legislation – Hacer de tu cuerpo todo un manuscrito
- Victory – Hasta que las olas griten ay bendito
RTBF – Y que olvides tu apellido
‘Until you forget your name’
Obvious reference to RTBF, the right to be forgotten, the opening salvo of this particular trade-war-masquerading-as-a-consumer-action.
Speaks to the difficulty of separating trade policy from legit consumer interests in these rulings. For all the flak they take, Europe still has the best privacy laws.
Consumers – Tus lugares favoritos
‘Your favorite places’
Youtube’s response is that their service is the best compromise between serving content owners and consumers, it’s everyone’s favorite video site, and consumers will be harmed if Youtube goes away.
YT’s argument that the right price for 3rd-party content is ‘whatever allows us to make money’ is likely the prodromal phase of a psychotic break, but if we’re just thinking about consumer welfare, G’s freemium model is not bad. Consumers use G products in part because they’re bundled on Android but they use them on Apple phones too. People still haven’t switched over to Apple maps.
Pace – Empecemos lento, después salvaje
‘We start slow and then go nuts’
Lots of reasons to make this a slow process.
The appearance of legitimacy matters – don’t want to be exposed to ‘wet ink’ accusations, accusations of targeting just a few companies, or ‘this is the biggest fine ever it must be bogus’.
Also the EC doesn’t know what works yet, so they need to try different things and see what the impact is on tech giants, consumers, and local competitors. The local clones in particular will take a while to take over the ecological niche and removing the old apex predator too quickly can cause chaos. (Think of wolves in yellowstone).
Targeting – Me está gustando más de lo normal
‘I like you more than is normal’
Why are the American tech giants getting the bulk of this kind of attention? I think it’s because (1) the tech giants are foreign and perceived as ethically compromised, so are a popular target. And (2) they represent a slice of the new economy that Europe hasn’t been able to capture.
Europe (from my inexpert and outside view) has strong software, robotics and B2B SaaS sectors, but hasn’t been able to deliver global consumer tech since Nokia. I guess notable Swedish debtor Spotify is the exception here, but the EC still feels left-out.
Business structure – Firmo en las paredes de tu laberinto
‘I’ll sign my name on the walls of your labyrinth’
Big multinationals have varied businesses with labyrinthine revenue sources. Europe wants to understand how these business are structured and find a lot of different areas to attack (search, Android and Youtube so far) to generate revenue and clear a path for local competition.
The ‘signing’ part is about leaving a permanent mark. This is tricky – how do you keep multinationals off your back without also making things harder for local clones? Word on the street is that GDPR compliance is a fixed cost i.e. hurts smaller players worse than large.
Local clones – Muestra me el camino que yo voy
‘Show me the path I’m going on’
G is a blueprint for how to build a profitable internet company (albeit starting in 1998). Europe wants to follow that path and build local clones, and believes that getting the gorilla out of the room will clear the air for this.
‘Infant industries’ is an old concept and it’s not inherently evil for a country to have an industrial policy. If you believe the basic idea of antitrust (healthy ecosystems create healthy markets and consumer benefits), ‘local clones’ is a good thing.
Taxation – Si te pido un beso ven damelo
‘If I ask for a kiss come do it’
Governments don’t like you operating profitably in their country without giving something back. The 7% Czech digital tax is the most recent example and is aimed squarely at these guys.
It’s probably also about sovereignty and kissing the ring. When the French wanted G to enforce RTBF outside Europe G wasn’t really into it.
Legislation – Hacer de tu cuerpo todo un manuscrito
‘Make a long document out of your corpse’
This law is being written specifically to target a short list of big multinationals and make room for local clones. The desired end case is the tech giants & their business models being DOA or at least uncompetitive in Europe.
These are complex, bespoke laws and the legislators seem to have no idea what they’re voting for – they recently accidentally voted for the wrong thing.
Victory – Hasta que las olas griten ay bendito
‘Until the waves shout ay bendito’
The goal of this policy is likely to get the giants to retreat back across the pond. Europe wants to be Europe and can’t do it with powerful commercial institutions invading their people’s everyday life.