EU, the worst of the four internets?
Ben Thompson has a publicly available follow-up post that expands the yesterdays analysis into a model of “four internets” (US, China, EU and India) in which he doubles down on his criticism of EU style internet regulation:
Europe, through regulations like GDPR and the Copyright Directive, along with last week’s court decision striking down the Privacy Shield framework negotiated by the European Commission and the U.S. International Trade Administration (and a previous decision striking down the Safe Harbor Privacy Principles framework), is splintering off into an Internet of its own.
This Internet, though, feels like the worst of all possible outcomes. On one hand, large U.S. tech companies are winners, at least relative to everyone else: yes, all of the regulatory red tape increases costs (and, for targeted advertising, may reduce revenue), but the impact is far greater on would-be competitors. To put it in allegorical terms, the E.U. is restricting the size of the castle even as it dramatically increases the moat.
E.U. citizens, meanwhile, are likely to see their data increasingly protected from the U.S. government, which is a win; other protections, meanwhile, seem unlikely to be particularly effective or outweigh the general annoyance and loss of relevance that comes from endless permission dialogs and non-targeted content. Moreover, per the previous point, the number of alternatives to established incumbents are likely to decrease, particularly relative to the U.S.
It also seems unlikely that European competitors will fill in the gap. Any company that wishes to achieve scale needs to do so in its home market first, before going abroad, but it seems far more likely that Europe will make the most sense as a secondary market for companies that have done the messy work of iterating on data and achieving product-market fit in markets that are more open to experimentation and impose less of a regulatory burden. Higher costs mean you need a greater expectation of success, which means a proven model, not a speculative one.
Worst of all, at least from the E.U.’s perspective, is that this approach doesn’t really have any upside for European governments. That’s the thing with rule by regulation: without a focus on growth it is harder to create win-win situations.
Again what this misses is that Europe might be shifting away from a model where the online services dominate the online space. This criticism only holds when one assumes that the online space is one that must be treated as a market where growth is the primary objective. In the concluding sentence of the post, Thompson correctly observes that…
What differs Europe’s Internet from the U.S., Chinese, or Indian visions is, well, the lack of vision. Doing nothing more than continually saying “no” leads to a pale imitation of the status quo, where money matters more than innovation.
which makes it clear that his analysis should not be read as a criticism of regulation but as a reminder of the need for a more ambitious vision for a Shared Digital Europe.