Margrethe Vestager, retiring after ten years as the European Union’s top antitrust regulator, managed to fire one more gut shot at a leading American company on the way out the door.
The Danish politician, armed with the pompous title of Executive Vice President of the European Commission for a Europe Fit for the Digital Age, is determined to force Apple to open up its application programming interfaces, or APIs, to competitors and software developers. Such forced “interoperability” has a natural-sounding appeal for statist regulators. They see it as a digital land rush. By opening up the APIs of big tech companies, they mean to encourage Europe’s small tech pioneers to rush into this bonanza and create a more vibrant and creative ecosystem of apps. Vestager’s actions are an aggressive interpretation of the theory behind the interoperability mandate of the European Union’s landmark Digital Markets Act (DMA).
In truth, Vestager’s interoperability requirement will hobble and perhaps kill—and I do mean kill—America’s most successful companies. It is backed by DMA’s power to fine a big tech company 10 percent—up to 20 percent—of its global revenues. This mandate will prevent, not promote, the ecosystem the EU means to cultivate. And this mandate will do Europe no good, turning over global innovation leadership in technology to the People’s Republic of China and sparking a trade war with the United States.
Apple is a prime example of a storied American company in the crosshairs of the EU. Apple thrives by giving consumers elevated privacy protections. Apple can deliver this greater level of privacy for consumers by taking a guarded approach to how it grants access to its 250,000 APIs to outside parties. Apple further enhances privacy and user control by processing as much data as it can on each device.
Now the EU is insisting that Apple open its devices and consumers’ most sensitive data to other companies, some of which have long track records of treating privacy with less care. If Apple is forced to reveal its internal workings, a host of companies will be able to read all the private data on a user’s device. Third parties will be able to see every consumer’s messages and emails, every phone call they make or receive, track every app they use, scan all of their photos, look at their files and calendar events, and log all of their passwords.
Does that sound like a Europe fit for the digital age to you?
The EU’s action also threatens to transform one of the best technology companies in the world into a utility. Once Apple’s APIs are fully exposed, Apple investors and inventors alike will have no reason to continue to invest billions of dollars and work evenings and weekends. Why invest and work hard for competitors? Innovation machines like Apple rely on a virtuous cycle of investment and reward that includes millions of small investors and pensioners, Wall Street investment firms, and technologists. The European Union could not come up with a better way to jam a monkey wrench into this delicate machinery and stop it cold.
If that happens, there will be no digital land rush and no new ecosystem. Just a wasteland.
Worst of all, once Apple’s technology is opened up to the global market, some third party will transfer it to the world’s most prolific copycat—the People’s Republic of China. The strategy of small European firms using expropriated algorithms to piggyback on American success is bound to yield few results. Europe is a zone in which high-level innovation has been regulated and taxed to molecular immobility. The imagined benefits of expropriating American software won’t jump-start European innovation. What it will do is prompt incoming President Donald Trump to see Europe’s actions as nothing but rank, anti-American protectionism.
We can hope that Vestager’s successor, Teresa Ribera Rodríguez of Spain, will be more rational. The culture of European regulators is so benightedly ideological and monomaniacally focused on degrading American companies that the prospect of reform in Europe’s competition bureau seems a slender hope. The only effective response for soon-to-be President Trump will likely be a blunt one: Trump will get the attention of Europe’s politicians by retaliating with huge tariffs on their cheeses, their wines, and the luxury cars they sell in the United States. This may not move the EU’s doctrinaire enforcers to think twice, but it most definitely will get the attention of the presidents and prime ministers who still have power in Europe.
Only then, I am sorry to say, will we have the prospect of a rational conversation with Europe.
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Robert H. Bork Jr. is the president of the Antitrust Education Project.
They may just as well tell enemies how to hack.
Apple is the least vulnerable to software hackers. When they used the now defunct Motorola 6800 chip set they were impossible to hack. Unfortunately Motorola never kept up with Intel’s performance gains. And, that alone is the point. What point is there to innovation if your patents and successes are going to be made apparent to your competitors. Apple is not the only computer manufacturer and software company. There are plenty of others in the market where competition and not regulation makes for the best. Frankly it is not the government’s business. Europe may be big but if Apple refuses to comply what will citizens of Europe do? They will tell their government to get out of the way. The people and not the elites will get their way. The market is where democracy thrives - in government is where it dies.