Taking stock of Big Tech and Russian energy with Europe’s Competition Commissioner
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It’s been a busy year for Margrethe Vestager. For years, the European Commission’s Competition Commissioner worked to gather support for a set of landmark new rules to regulate the global technology industry. The Digital Markets and Digital Services Acts are guidelines that look to level the playing field for companies of all sizes, and protect consumers who want more control over their growing piles of personal data. In July, those rules got the green light from the European Parliament, and they’ll go into effect starting in the spring.
Vestager has gone head to head with titans in the tech world. She has lost two high-profile cases against Qualcomm and Intel. But last week, she got a win from one of Europe’s top courts. It sided with an earlier court ruling that found Google broke competition rules. Though the General Court reduced the original fine, it was still a record $4.13 billion, which Vestager called an important step toward backing the Commission’s enforcement efforts.
Reigning in Big Tech isn’t Vestager’s only priority. She’s also been working on a new state-aid funding scheme for projects that benefit multiple European Union member states. The Project of Common European Interest (IPCEI) scheme supports research and innovation for new technologies geared toward green energy initiatives – a priority that’s become critically relevant in the wake of Russia’s war in Ukraine and Moscow’s decision to severely curtain energy exports to Europe. On Wednesday, the Commission announced it has put $5.2 billion toward a second IPCEI project that looks to develop infrastructure to support hydrogen energy development.
The BBC’s Victoria Craig talked with Commissioner Vestager about the green transition and the role it can play in helping the continent decrease its dependency on Russian supplies, along with checking in on the commission’s progress on Big Tech regulation.
Below is an edited version of their conversation.
Margrethe Vestager: I’m very happy and obviously also relieved because we make our cases to be able to defend them. But I respect that the court can come to another conclusion. And here, you know, it was almost fully upheld. And that, of course, for us is a big win.
Victoria Craig: The court did, though, lower the fine for Google. Are you disappointed by that?
Vestager: No, not at all. You know, I fully respect the court’s discretion. And we will of course study in more detail what is meant for future exclusivity cases. But I think in general, this is a big positive push for what we’re doing in the tech sector. And also shows I think the importance of the case by case competition law enforcement’s to complement democracy, which is a regulation which will come in very soon to tell gatekeepers, what they can do and what they cannot do.
Craig: So you may not be disappointed, but obviously Google said that it was in it, it argued that pre-installed apps on its smartphones are actually beneficial to consumers, because it allows them to sell more ads that keep a majority of its services free in that case, are you preparing for an appeal to the European Court of Justice on this decision?
Vestager: Well, first and foremost, I think is really, really important to maintain that nothing comes for free. We getting used to pay with our data, what is still difficult is to assess how much we actually pay when we pay in data. And that I think is a really important thing to remember, once we are presented with sort of this fiction, that things are for free. Let’s see what happens when it comes to potential Google appeals in this case, and of course, we’ll take it from there. But as said, we are obviously ready to defend our case.
Craig: This ruling is a win for you and the commission after two recent losses against Intel and Qualcomm in the courts. Do you think that just the high-profile nature of some of these cases, despite even those losses, is having an effect on companies already adapting to this new environment of what you are bringing in with the commission?
Vestager: Well, I would sure hope so. The Qualcomm judgement is very, very specific, you’ve probably saw that we have decided not to appeal it. Because we find that reasons why we’ll also they’re very case specific. And we say OK, case over, but I would hope that at long last, it sort of sinks in, that we have the ambition to rein in market power, to allow the market to be fair open, that there is a competitive drive for innovation that every consumer can enjoy that message ought to have sunk in quite some time ago, because this has been, you know, a priority discussion, not only in Europe, but actually across the globe.
Craig: And you mentioned the Digital Markets and the Digital Services Act. In July, the European Parliament passed those new set of rules regulating this industry, but there’s still another about a year to go before they’re actually applied. What happens in this interim period, then?
Vestager: Well, the Digital Markets Act was signed this week. So it will come into effect by mid October. And then it’s applicable by next spring, mid April, which means that the designation process will start and by early 2020, for those who are designated as gatekeepers, those with real market power, they will have to comply. And that at least for our legal system, that’s actually record speed,
Craig: So what does it mean exactly? For those who are not familiar with these new rules? What exactly does it mean for companies like Facebook, Google, Amazon, what do these new rules mean?
Vestager: Our starting point is quite straightforward: With great power comes great responsibility. So if you fulfill a number of objective criteria, that sort of shows that you have this real market power that you can decide who is in the market who’s not, which is why we call it a gatekeeper. If you are then designated, well, there’s a number of things that you cannot do anymore. And there’s a number of things that you must do. For instance, you must allow for a second app store within your operating system. You must give people their own data in order for them to use those data to compete against you just to give you two obvious examples. And one of the things that you cannot do is that you can not promote yourself which was the subject of the first Google case.
Craig: And we’re talking to you now, as you’re on a trip to the U.S. And at the beginning of this month, the E.U. opened a new office there in San Francisco. It’s the hub of American technological innovation – do you think with that, there’s hope that a physical presence will sort of keep this new era of regulation at the forefront in a place where, as you sort of alluded to, the approach to regulation is quite different than that in Europe?
Vestager: This is a priority. We are following, you know, my own country, Denmark has invested in tech diplomacy, actually, for quite some time. And we now enforce that also from a European perspective, in order to have a presence still, you know, we have opened doors in Brussels for anyone who thinks, “May I be designated as a gatekeeper? What does this mean to me, in order for businesses to have time to prepare for compliance.” And that I think, is a very important part of the message to those who are really, really powerful, that it’s a planetary effort, actually to make sure that we have founders and competition.
Craig: And we’re talking obviously, about making sure competition stays robust in the tech sector. You’ve highlighted, though, that more competition helps keep prices down in all parts of the economy. And obviously, as we talk now, inflation is a huge concern for people all around the world. And it’s driven in part by Russia’s war in Ukraine and the impact that that’s having on the energy space. Do you think there’s more that the commission can do in terms of competition to help you government’s sort of eased the price pressures on consumers that we’re seeing now?
Vestager: We have one specific investigation towards Gazprom and their market behavior. And as you say, sort of the weaponization of energy from the Russian side, which started actually long before the invasion, that has driven inflation to a very high degree, I think energy prices is give or take 40% of the inflation pressure. So this is absolutely top of mind. For some families, you know, the, the energy bill takes up a huge proportion of their income, same for small, medium sized businesses. But here, competition, law enforcement is a subcontractor, we really need a general approach. But we of course, will play our part and my colleagues in the national competition authorities in Europe, they watch out eagerly to make sure that that no one take advantage of the situation to gain you know, a profit that is not warranted by problems in supply chain or energy prices, whatever legitimate reasons there may be for price increases.
Craig: Another part of easing these inflation pressures is perhaps more investment in new technologies. And in July, the Commission approved investment in the hydrogen energy sector, what what role do you see those kinds of investments playing in the need to diversify away from dependence on Russian energy?
Vestager: This is absolutely of the essence, the energy crisis is accelerating. The green transition is really important to keep the investment signal strong so that we invest in renewable energy in the hydrogen production. And these huge investments in in hydrogen, they are very important, they have a Pan European perspective, they are sort of in the cutting edge of how to make hydrogen industrial scale and how to find new ways of using it. So that is one part of it. And then we have the repower EU proposal, which will fast forward to permitting and investment support for renewable energy. Because we need to move on really, really fast in order not to prolong the energy crisis.
Craig: Are there any specific projects that you’ve seen through this important projects of common European interest projects? Are there any of those that stand out to you that are, you know, particularly helpful in helping Europe reduce its dependence?
Vestager: You see projects from Big and small member states, use your products from Big and small businesses, there is sort of a hydrogen ecosystem in the making that is really strong, while at the same time other technologies, they’re also being promoted, we have a project to decrease the energy use of semiconductors, because that is obviously also part and parcel of a technological future. And the carbon footprints of technology needs to be reduced, which is why these projects to find more and more energy efficient technology is integrated in what we do both in hydrogen but also in standalone projects.
Craig: It’s sort of twofold, isn’t it? Because it helps with energy independence, and it also works toward common goals of more environmentally friendly technologies.
Vestager: Yes, and I think it has made us see the world in a much more diverse manner. Right now. We have seen the success of diversifying into liquefied gas LNG instead of the Russian pipeline gas. So that storage is full we can come to look towards the winter that is coming. And that of course has It has made us more integrated with parts of the world where we do not have this sort of import of gas as a commodity. And I think that is also healthy for the future, that we need to diversify and much more when it comes to essential inputs also when it comes to raw materials, because a lot of raw material used to come from Russia, from Ukraine. And obviously, it’s not sustainable in the long run to have very high dependency and very few winters and risk areas.
Craig: I suppose the big question around some of these investments is how long it might take some of these technologies to really take off because the need is now do you think some of these projects have shorter term horizons than others?
Vestager: Some do. And we also have standalone projects to use hydrogen in Chi intensive energy usage that can be for instance, steel, to move forward to a production of green steel. So it’s not all, you know, gigantic projects integrated, it’s also big specific projects, to decarbonize production, so that everything in the value chain, eventually will become green. But the challenge, of course, is exactly as you say it is right here. And now that energy prices are really, really painful to people. And at the same time, we need to push forward with solutions that only would have a mid or long term effect. And that I think is really important for any policymaker to do our best to provide solutions here and now, but not losing the long term perspective, because that would only prolong the crisis.
Correction (Sept. 21, 2022): A previous version of this story misspelled Margrethe Vestager’s name.
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