On the latest episode of Recode Decode, Europe’s commissioner for competition Margrethe Vestager joined Recode’s Kara Swisher onstage at South By Southwest to discuss what is expected to be her final year in that role. She reflected on how her team of regulators have worked toward more accountability from the big tech companies and why she’s encouraged by Facebook CEO Mark Zuckerberg’s pledge to pivot the company toward privacy.
“The first step to change is good intentions,” Vestager said, acknowledging Swisher’s pessimism that Facebook will actually change for the better. “It’s good that people make up their mind. Do we want to contribute here? Do we want to pay with our data for this service? Or don’t we want to do that? It’s good if there then is a market response: ‘Oh, they want something else.’”
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Below, we’ve shared a lightly edited full transcript of Kara’s conversation with Commissioner Vestager.
Kara Swisher: Thank you. Thank you. Thank you. I’m so excited to be here. I’ve done a lot of events at South By Southwest but this is one of my favorites. I’ve met Commissioner Vestager many times over the years. And one of the things I would have to say is we talked a many years ago, before a lot of the election stuff that was happening in the US and across the globe, by Facebook and other companies. And one of the things that is really clear is she was very prescient about the damage that some of these companies could do; it was sort of at a very high time for these companies. And so I have to say, unfortunately, a lot of what you said is come true. So I’m very excited here to talk about what you think is coming next.
Let’s begin talking about some of these goings-on in this country, because regulatory scrutiny is starting for the companies of the US, by US regulators. For the most part, the US has abrogated its responsibility of regulating most of these companies in the interest of allowing them to get enormous and create innovation.
So yesterday or two days ago, Elizabeth Warren, one of the candidates for the Democratic side of the election against President Trump, put out a really, a pretty tough proposal to regulate big tech. I’d love to know what you think of those and how you look at her various proposals.
Margrethe Vestager: First of all, I think the good thing is that now the debate is really sort of taking off. When I’ve been visiting and speaking with people on the Hill previously, I’ve sensed a new sort of interest and curiosity as to what can competition achieve for you in a society. Because if you have fair competition then you have markets serving the citizen in our role as consumer and not the other way around. And when it comes to sort of the very far-reaching proposal to split up companies, for us, from a European perspective, that would be sort of a measure of last resort.
What we do now, we do the antitrust cases, misuse of dominant position, the tying of products, the self-promotion, demotion of others, to see if that approach will correct and change the marketplace, to make it a fair place. Where there is no misuse of dominant position but where competitors, small-like competitors, can have a fair go. Because they may be the next big one, the next one with the greatest idea for consumers.
So you don’t think breaking up is the way to do it. Explain why a little more, why you think breaking up is a last resort. You wanna try other things first.
Well, because it’s very far-reaching. We’re dealing with private property, businesses that are built and invested in and become successful because of their innovation. So to break up a company, to break up private property, would be very far-reaching. And you would need to have a very strong case that it would produce better results for consumers in the marketplace than what you could do with sort of more mainstream tools.
And so talk about how those tools have worked. Now some people feel one of the other proposals, I talked to Senator Klobuchar, Amy Klobuchar, who’s also running for president, a couple days ago. Before that, she had asked the FTC to renew the Google investigation over its use of market dominance, which ... they kind of sailed through the FTC here years ago and were investigated and nothing happened. You had a different outcome with them in Europe. Talk about that, this is another presidential candidate who is talking about these issues.
We’re quite busy in the day job doing our own cases so we do not sort of try to correct or do better with our colleagues because they know perfectly well their marketplace. But one of the things that I find to be very interesting is the initiative by Joe Simons, the new head of the FTC, to do a number of hearings. A sort of, as I see it, a stock-taking exercise to see what is the state of the marketplace right now.
We do something similar, we have done a sort of an e-commerce set inquiry to see how is e-commerce doing in Europe. That produced the number of cases where we see businesses do geo-blocking, not serving consumers as they should. So in some respects, we have a parallel development, except of course for the very basics.
So we have had now, we’re in the process of the last of three Google cases, we’ve had one Amazon case already. We’ve had the tax cases with Apple, with Amazon. We have now the new or sort of very preliminary looking into Amazon’s use of data more broadly. And of course we are also kind of hoovering over social media, Facebook, how data is being used in that respect.
So that’s a lot of cases. That’s a lot of cases and there’s none in the US right now. Are you cooperating with the Trump administration on any of this? You had done a lot more cooperation previously or not?
We always cooperate and that, it’s the same thing. We have I think a very strong working relationship not only with my colleagues and myself. We’ll meet on a regular basis but also on a team level when we have the necessary waivers from companies. We would compare notes, discuss theories of harm, in order to inspire one another. Of course, always recognizing different jurisdictions and different cases, but to be able to share what we think. Because, as in any other business, it makes good sense to discuss with colleagues.
Well, these are also global businesses.
It is, indeed.
And so how does that work now? Is it the same level of cooperation?
Yeah, give or take, I would say so. Yes.
You would say so. And when you think about the idea that these are global companies, how can you not work altogether as a group? Or do you feel that it just has to be in different marketplaces? Of how these are regulated.
Well, I’d say we do. We don’t have a global regulator. I think it would take some time and we would need to do much more before we would ever, ever get there. So what we do is that we have an international competition network. It’s 130 jurisdictions and law enforcers coming together. Very low on protocol, but very high on substance. So we discuss a lot, trying to inspire, to give impulses — well, how can things be seen, where you work, compared to where we work.
Second, of course, is when our legislator is doing things that will change the marketplace. Like last year in Europe we had what you can call the digital citizen rights, that I own my data, I can move my data, I can be forgotten, just to mention three things. It’s very encouraging to see that inspiring legislation in California. Being talked about, I think, around the globe.
In the US, privacy.
They’re not gonna do right to be forgotten. I think that’s not gonna be something that will ever pass in this country. But when you’re trying to inspire them to do those kinds of privacy. So there is no national privacy built in the United States. There’s one in California that will go in place in 2020, which many people don’t think has enough teeth to it compared to the European legislation.
I’d say also in Europe, we still have some way to go. Because as I really appreciate having rights, I would be even happier if I could exercise them. Because I know I own my data but I really do not know how to exercise that ownership. How to allow for more people to have access to my data if I want to enable innovation, new market participants coming in. If that was done in a large scale, you could have sort of an innovative input into the marketplace. And we’re definitely not there yet.
So one of the things Senator Klobuchar talked about was the idea of taxing companies for their use of data when they moved it to third parties. So when they use it for other things than what’s initially said — and you know there’s example after example of these companies, “Oh we used your data for this,” or Google, “Oh we put a camera in this that we didn’t tell you about,” or, “Oh by accident, oops, we gave it to Cambridge Analytica and they used it for nefarious things.”
And it’s always, “Oops,” and, “I’m sorry,” and, “We had no idea that this was being used.” And one of her proposals is they get taxed every time it’s happened and another proposal is for people to get paid for their data. If you’re using your data and they make $10 off of you, the consumer gets a few dollars of that bad money.
That would see, I think it’s still nascent in Europe, but since now we have the rights that establishes your ownership of your data, we see there is the beginning sort of market development of intermediaries saying, “Should I enable yourself to monetize your data?” So it’s not just a giant to monetize your data so that maybe you get some every month reflecting how your data has been passed on.
That is one opportunity second from a competition point of view. We are trying to figure out how to make sure that huge amount of data will not be a barrier to entry in a marketplace or will serve as only you who are holding the data being able to innovate. But I, as a newcomer, do not have access to data, which means that it will be extremely difficult to do innovation and to develop services.
So you’re leaving your office in how many months?
Oh, I don’t count that. That would be discouraging.
Just soon, though.
I’ll be done by the first of November.
First of November. One of the things that’s been really interesting over the years is how much the big tech companies really dislike you and find you to have been too harsh on them. How would you assess your tenure? And what are the successes?
If that is true, which I doubt...
But it’s true. They don’t dislike you personally.
But if that is true, I should take that as a badge of honor.
But if that is true, I think they sort of underestimate the team effort. Because yes, I may be gone by first of November, but there will be a new one and there will be a team and a second team and a third team and a fourth team. Because I think what we do is a reflection of the fact that we want our democracies to set the direction for our society and not for the businesses to set the direction for our society.
How do you think they’ve done at setting the direction for our society?
I think so far, they have done very well.
They’ve done very well financially. But how did you think they’ve done in being responsible for the data and information they have?
Well, we have seen interference in national elections, referendas. We have seen a lot of data breaches. We have seen a lot of an economy that is shifting quite a lot into a use of data that is unprecedented. We are in the middle of a revolution, a technological industrial revolution. And I think as societies we have quite a lot of catching up to do to get in control.
Just as we had back in the days where we had sort of the Industrial Revolution of chemistry, when pesticides and all of that became, you know, the big guy in town, people thought that you could do amazing things. Just spraying everything, adding everything to products. It took some time before we realized that we have to get in control because otherwise it would be damaging for our ability to reproduce, for clean drinking water, all of that.
Now [we are] to the very last degree in control of that, and I think we want to do the same thing. In my own home country, we had a lot of discussions about chemicals in feeding bottles. Huge discussions. If you’d say, “I’ve never ever have my baby have a feeding bottle,” but you have no second thoughts of giving them an iPad.
Right. Well, I have second thoughts, but then they’ll get it anyway. But why is that? Where do you think their awareness is? Is it because of the addiction of it or what do you attribute it to?
I think that the scandals, they triggered a lot of second thoughts. All of a sudden it was ... a sort of snooze button of the wake-up call had disappeared. It was just there in your face. Something will have to be done about this. Of course, we need to have more knowledge about what they do in the marketplace, which the teams and I are doing. What they do when it comes to the addiction, when it comes to do with fake news, when it has to do with interfering in elections.
Do you imagine, as you look upon, what the key attributes of your tenure have been? What are the, you think, the most important cases? Talk about a few of them.
I think that first of all a lot of people don’t see sort of what is under the iceberg, under the water. We still do a lot of things with quite traditional businesses because concentration in those businesses is also a problem. If there’s no one you can turn to when it comes to the price of cement, well then it reflects, it’s reflected in the construction business. And that’s important as well.
So we have a lot of things to do in steel, copper, cements, also the food industry. We have a number of agrochemical mergers. All of that is very important for us because they will also digitalize, one. And second, if first they are concentrated with that competition, we will see the effects.
That being said, I think that the digital cases, but also the tax cases, means a lot. Because we cannot have societies where only we are citizens pay taxes, and then all the many, many smaller businesses contribute. It must be so that if you do business in a country and you create value in a country, you’ll also tax to that country.
Now, is it that Google pays more in fines to you than taxes, is that right?
Oh, I haven’t done the math, but it’s not unlikely.
Yeah. So it is. It’s true that they do. How do you change the taxes? And now again, that’s being discussed now in this country. But a number of people are bringing up Elizabeth Warren, Representative Ocasio-Cortez, it’s being discussed, the idea of not just companies paying more but wealthy citizens, many of whom run the tech companies who happen to be the billionaires at the moment. How do you look on those efforts? The idea of changing tax systems, how much of an uphill climb has that been for you?
It may be an uphill climb, but it’s urgent to do it. We have, when you do sort of numbers that can be compared, we see that digital businesses, they would pay on average 9 percent whereas traditional businesses, in average, pay 23 percent. Yet they are in the same market for capital, for skilled employees, sometimes competing for the same customers. So obviously, this is not fair.
My colleague Pierre Moscovici is head of this work. So we have tabled a proposal to change this. In order for corporate taxation to understand, as a concept, how value is created in a digital world, what it means to have a presence in a digital world. Unfortunately, we’ve had a lot of resistance to that, which means that now, individual members stay in the union. In Europe, they’re moving forward, France will implement digital taxation this year.
Yes, I wanna get to that. But go ahead. Yeah.
And I think that is a thing that is absolutely necessary, but it’s very unfortunate because then you get a much more fragmented picture, get much more sort of unpredictable, how will the system work, seen from the business side of things. How will the system work for that to be predictable? So of course we hope that these individual pushes will get a European-wide way of doing things, and of course for the OECD to push forward for this. Because we sense in the OECD that a number of places in the world take an interest. Also in the US side of things.
And when you think about the taxes, there was that famous exchange at Davos this year with, I’m blanking on his name [Rutger Bregman], the historian who was arguing about the idea that taxes are the way to get this to happen rather than fines. You can levy all the fines you want, they can afford them. Google, they have money in their closet that they could just pull out and hand you, they don’t care. Is that the better way to do it? To create more of an equitable tax system on these companies? Or will you just be fining them into the next century?
You get a fine when you do something illegal. You pay your taxes to contribute to society where you do your business. And these are two different things, and I think we definitely need both. But we cannot have a situation where some businesses do not contribute, and the majority of businesses, they do. Because it’s simply not fair in the marketplace or fair towards citizens if this continues.
Do you imagine… One of the things they also argue against is the idea that GDPR and other laws that are being passed in Europe, or regulations, are easier for large companies. So you’re advantaging large, that’s their argument right now, you’re advantaging large companies. And I’ve heard this from the top executives at Facebook and Google and other places, is that they ... “We have as many lawyers as you want, we’re great, we’re fine with it. You can levy all the different rules and laws and everything you want because we are advantaged.” And it pushes down smaller companies who may not have the capabilities. That’s been one of the ... like, why we shouldn’t have your laws.
Well, we have sort of made different brackets as to what you’re obliged to do. Because if you have a small business and you do electricity installation or you do woodwork or whatever you do, well of course you don’t have the same obligations as Google when it comes to how to deal with your customer register, when you can send them an email to say I have a new promotion for you to do this and that.
So we have different brackets so that small guys don’t have the same responsibility as the big guy. And say if they find it easy, I think they can do better. Because I still find that it’s quite tricky to understand what it is that you accept when you accept your terms and conditions. And I think it would be great if we, as citizens, sort of really could see, “Oh, this what I’m signing up to, and I’m perfectly happy with that.”
I myself very often, you know, end up even though I think I have five minutes to try to understand, I sign off and still I don’t really know.
What do you use now? What else would you use? There hasn’t been, in Europe... What is the alternative for Europeans out there? Why hasn’t there been another company to match Google, for example? Or to match Amazon? It has tended towards largeness, and they own, I mean, Snapchat is struggling, lots of, maybe not in China, WeChat is doing just fine. But in Europe there’s not an alternative. What do you use to search right now?
Right now, I use a French thing which is called Qwant. They’re very strong in everything connected with culture, but in general, it works perfectly well for me. There’s a German thing as well called Clicks, which will also ... both will make sure you’re not being tracked, so you have a lot more privacy than you would have with the gigantic competitors.
Do you use Google at all?
It happens, but rarer and rarer.
What would you use them for?
Well, mostly I would use them to see if they changed.
Oh, okay. And? No. Do you use them for maps? Do you use them for mail? For anything like that?
No, I don’t.
Because I find that I have better alternatives that provides me with more privacy.
More privacy. And what about Facebook?
I have a Facebook page, but it has sort of grown into something where it’s my Twitter feed that feeds my Facebook.
Okay. And you use Twitter?
Why is that? Because you enjoy the cesspool that it has become?
No, but I come from a very small party. And when Twitter was all new, we said, oh wow, not only it’s new, it’s for free.
It ain’t free, but go ahead.
No, but you know, we don’t have much money.
So we entered into this. I was miserable in the start, but then we sort of got the hang of it and I got used to it. And the thing is that in the beginning, you wouldn’t find as much hatred, as in Facebook. Because the 140 characters seem to put a lid to that. I think it has changed, I think the haters, they get accustomed also to a 140 characters. But that sort of was one of the things I very much appreciated, that you can have an interaction. But it was very often on substance, or with a sense of humor, or irony.
Do you use Nest? Or Amazon Echo? Or any of the in-home devices that they have?
Okay. And why? And which is ...
Well, why would you?
I don’t know, you might need a recipe, know how much butter is an ounce or whatever.
And with that, you would pay with your life?
Yes. What do you think there that’s going to happen as things move into the house? I’m trying to get the idea of what you think, are these are way too invasive, all these things, as they move in.
One of the things that really is sort of mind-boggling for us is how to have choice if you have voice.
Because if you ask a device, “I would like to change for summer tires, where to go?” Then you would be very, way too impatient to listen into five different offers at, they could have a room for you ...
The voice search is a big deal.
So how to have competition when you have voice search?
That’s the point.
So how would this change the marketplace? And how would we deal with such a market? So this is what we’re trying to figure out. We’re trying to figure out how access to data will change the marketplace. Can you give a different access to data? Because the one who holds the data also holds the resources for innovation. And we cannot rely on the big guys to be the innovative ones.
Do you think they have changed with your influence, these companies? What is your relationship now with the Googles, the Facebooks, the Amazons?
Relationship and relationship. I don’t know, compared to what?
Compared to anyone? Do you have one? Do you feel like they’ve been listening to you? You feel like what you’ve been saying to them has sunk in? Or do they continue?
Well, yes, indeed we do have a relationship.
And we work ...
It’s not like, “Oh god, she’s headed here again, here she comes again,” kind of the thing.
Well, it’s the US, everyone here is very polite.
Right. What part of the US do you go to? Just here, perhaps.
No, but you really do appear quite kind.
Yeah, we really are. So, maybe compared to the Dutch, or whoever. The Dutch are always telling me they’re rude. You appear quite polite, but do you think you’ve changed their minds within these companies? Or changed the leadership’s mind about what they’ve been doing? Or are you a nuisance to them? Do you still feel ...
I think it’s quite difficult to know, because it’s difficult to see what are their future strategies, how are they going to relate to all the citizens, where their use is. It’s not the relationship with me or my teams that’s the important point. The important point is what do they think about the people that are not only users, but also part of their production? How are they going to relate to us in the future? As citizens who use the service? Or as part of a production machinery? As part of the way to monetize to build a still more impressive advertising business? I think that’s the sort of the more strategic for themselves. Now with the Facebook announcement, I think they call it the “Pivot to Privacy?”
If that is being ...
No, I really think, read my column.
But if they implement it ...
It’s an appalling memo of bullshit. What?
If they implement, if they do take action.
I think that is a sign of something changing.
Why do you think this memo, Mark Zuckerberg wrote it, he’s first of all merging, essentially merging all his things, WhatsApp, Instagram, and Facebook, in one unholy mush. And then he’s now decided that he would like to be Snapchat, I think pretty much that’s what he decided, that’s the better business for him in this environment. What did you think when you read that? I know you’re thinking, “Good intentions, suddenly he’s seen the light.”
Well, I think, well, the first step to change is good intentions.
Okay. The road to hell is, but go ahead… paved with them, apparently. So good intentions that ... Do you take him at his word that he thinks that this is, I think it’s ... I wrote a column today saying it’s all about data. He’s seen the data, young people cannot stand the big bloated blue app anymore and they don’t wanna contribute to it. And they’re interested in privacy and they’re interested in other issues. And so he’s seen the numbers, and he’s decided now to pivot into a new business where he can presumably figure out a way to make a lot of money doing that.
But a number of things ... and what you’re saying is good. It’s good that people make up their mind. Do we want to contribute here? Do we want to pay with our data for this service? Or don’t we want to do that?
And it’s good if there then is a market response that respect: “Oh, they want something else.”
“They want privacy. They don’t want to pay in this big sums with a data for a service that they don’t find is worth it.”
Do you trust this company with your privacy? If they decided to say now we really value privacy? A company that has over and over again violated ...
But no change comes with saying it.
It’s like, you know, “I’ll never eat these Belgian chocolates again.”
Only when I’ve kept that promise for weeks and weeks and weeks and weeks, it’s anything that anyone should ...
I guess what I’m asking is you think it’s a sincere shift in attitude towards — that this is important? Or is it just a business, you care, you don’t care? Which way it is?
Well, I care, but when I take note of this promise, I say, “Well, we take note, but when you put it into real life, then of course it’s something.”
Because then users will have a different not only user experience, but also have a different product that respects their privacy.
When you’re speaking of competition, one of the areas they’re moving into is, there’s several different services like this, Snapchat, in this country at least, and it is in Europe also. They’re moving directly into someone else’s business, a rival’s business. How do you protect the competition if that’s the case?
It’s weird, when Microsoft moved into AOL’s business, if you remember, they decided to get into it with a product that failed, obviously, because it was a terrible product. But they tried to move in and use their advantages to hop, skip, and jump into it.
The first Google case is a good example of this. Because here, you have someone trying to put themselves into the shop and comparison business.
The first Google product didn’t work.
Which was appealed, this was, they’ve appealed.
Yes, it’s appealed, but it’s just the mechanisms.
The first Google products in shop and comparison, it didn’t work. So they called in ...
Froogle. That was Froogle.
Yes, yes. So they called in sort of the big guns that search. And then, and they recreated their own product, and then they promoted that product so it would be the first thing you saw. And they demoted their competitors, their rivals, on average to page four. Anyone ever been there? On average page four search results?
No. You can go, my secrets are there, it’s because it’s an absolutely safe place. And that shows sort of the mechanism, if you’re a dominant company or you have a lot of muscle in the marketplace, you can promote yourself to the detriment of your competitor. And that of course is the kind of thing that we will look into. And what we have learned from the first Google case is that if something is happening, we wanna learn about it fast because speed is of the essence here.
But I’m saying, do you imagine that they have seen the light, from your reading, are you just going to wait and see?
But seeing lights is a religious thing; doing business and making money it’s another thing.
Mm-hmm. But sincerity, you feel that this thing was sincere? That we’re gonna actually, “privacy matters to us now.”
When you do what you say you do.
Okay, all right, you’re gonna wait and see. I don’t believe them from the get-go. I’ll wait and see if they actually do something.
I’m gonna assume the worse, I’m gonna assume the worse. Because I think that’s so far so, it’s been that way.
It may be a little far-reaching to assume the best.
Okay, all right. Okay, that’s a nice statement. See, that’s a really polite way of putting it, commissioner.
So, I wanted to talk about a few other things, and we wanted to get some questions from the audience.
What are you gonna do next? What is your next thing?
Well, I have asked to have another mandate as Competition Commissioner. Not with big applause from the people who would promote that idea, but I have learned that you have nothing if you don’t ask for it, not even a “no.”
So, what are you going ...
So, it remains to be seen.
Remains to be seen. But if you didn’t do that, what would you be interested in doing?
Well I have ... One of the many privileges in my life is that I have been allowed to work with something that makes sense for me. I’ve been serving citizens in numerous different post positions, so that would be sort of the thing for me to look for.
Thing in a same area? And the idea of privacy and/or competition?
Oh, on that, I have a completely open mind because I’ve seen that sometimes, you know, planning, it works like blinders. But the next best thing is out here. You don’t want the blinders of planning.
And running for office?
Well, I’m kind of running for office because just asking to have the next mandate, you’ll have to be approved by the European Parliament, and of course that would be the first hurdle, to be named by the Danish government.
Right, but I’m talking about office in your own country. Do you imagine doing more there?
Oh, maybe eventually. I really, really, really think I will be an old woman, really old woman, not as I’m now. So plenty of time to do that, because I have been very careful, I have never burned any bridges because Danish politics is, it’s quite good.
Do you imagine ever running the country?
Because I’m from a very small party, and that would be a, sort of, a real sort of historical glitch, if that was ever to happen. It has only happened once that someone from my party was running it.
Couple more things around where we’re going. If you had to think of where we’re gonna be in five years and 10 years with a lot of these companies, what would be your worst-case scenario? And your best-case scenario for each of those? Say 10 years out, because these companies are only 20 years old, or less, 10 to 20 years old.
Well, best case, a couple of things would happen at the same time. First and foremost that our legislature, would be willing to take sufficient steps, both in taxation and in regulating access to data, and fairness in the marketplace, as was just done in Europe with the business-to-platform agreed proposal to put in not only fairness and transparency, but also responsibility on the big guy to be available if things have to change.
And we would also need to see technology to develop, to have new players. Because we still have sort of, we still need to see what will happen with quantum computing.
What will happen with blockchain?
AI and robotics.
What other uses are there for all of that new technology. Because I still think that it holds a lot of promise, but only if, sort of, our democracy will give it direction, then you will have a positive outcome.
What’s your worst-case scenario?
That we have all the technology, but none of the societal, sort of, positive oversights and direction for our societies.
Is there one upcoming technology that you’re more worried about? Self-driving? AI? Robotics? Automation? Replacing body parts? Brains?
Well, we have a lot of robotics and automation. And I think self-driving cars is, well, it’s here, only not in full scale. I would wish for AI to be developed human scale so that we always make sure that it’s someone that serves our purposes and that we can have human oversight. And then of course there’s a huge risk that AI just reproduces the biases that we have already.
It does because of the lack of diversity in creating it, too.
Is that something that you are already thinking about? Regulatory frameworks?
My colleagues ... It’s not with me, we have been self-contracting, they’re in the process of finalizing, sort of, they are non-binding yet, but still, I think they are the first guidelines for a trustworthy AI. Because we tried to sort of think long-term that maybe you would think, “Oh, this will be difficult, how to develop AI if I have to make it trustworthy?” But the point is to say that if we’re not being very careful, then people will revolt against it and find that it is not serving our purposes, it is serving other purposes.
So for AI to be a real thing, we think it’s very important here, relatively early days, to make sure that we have an ethics framework.
Last question, where do you see innovation in Europe? Because there hasn’t been a giant company of the size of Facebook, Google, Amazon, and the Chinese companies, the WeChats and everyone else. Why has that not happened in Europe? There’s been Spotify, there’s been a couple of companies, but nothing of a massive scale. Is there a reason for that, do you imagine? Is there too much regulation? What is happening?
No. Three points in that, because we discuss that a lot. One thing is that the ecosystem, which is a very lively, interesting ecosystem that has developed very interesting businesses, a lot of that business has been sold to the digital giants. One could be DeepMind, that is now a Google property, doing amazing thing, actually with UK public data on health. So that’s the reason for it.
We have the ecosystem, we have the people with the bright ideas, the entrepreneurs, all kind of very skilled people, but we have been missing out on two things. One, to have a digital single market, so that you can think scale from the very initial starting point. That we have now and are developing.
And the second thing is to have a capital market that worked for you. Because I really envy the way it works here, where a lot of businesses will go into the marketplace, they would find capital, and they would find new competences. Because very often with money comes someone who will provide you with what you need in order really to scale your business.
In Europe, the tradition is much more going to the bank and create debts. And we would want a development of our capital market to be the same. That you go in the marketplace, you sell 5, 10 percent of your business, you get on board someone who will allow you to get the drive really to scale it. And this we have been in the process of making over the last five years, and we’re starting to see it taking off.
Are there other governors that keep it back? Because it really is, it’s an astonishing display of not enough innovation. Some people in the US say there’s too much regulation, that the risk tolerance is too low, that there’s not a mentality of entrepreneurship. Do you disagree with this?
Well, we are indeed different, but I don’t ...
But you like privacy too much.
More than that.
But I don’t think it’s that. You know, Europe is an amazing place. We have made it so far since the Second World War when things were ... Europe was destroyed physically, but also spiritually. With the transatlantic friendship we rebuilt it, and if we lack something I think it’s confidence, because it is as if we’re sitting on all this tacit knowledge about what we have achieved. Not realizing that when we had made it so far, of course we can make it even further.
Now having a much better capital market, a real digital single market, and having an ecosystem of innovators that has changed dramatically over the last 10 years.
So you see a big company coming out of ... because you can see them coming out of China one after the next. You see India is investing, there’s a lot of really interesting innovation coming out of France.
There’s some stuff going on individually in France, but do you think the next biggest company will come out? I was thinking about a debate I did at the Oxford Union, they had US people and British people talking about the next great company will come out of “blank,” US or Britain. There was our side that argued it would be US and why and the British side, because it was a game, the British side won.
The fact of the matter is what came out of the US was Uber— those Oxford people — was Uber, Pinterest, what’s about to go? You know, Lyft. All these companies are about to go public. Airbnb, and not the European company. What will it take to get a great important company out of Europe? A big one, I mean a large one? Leaving Spotify aside and some others.
I’m leaving SAP aside as well.
Because those would be the two main.
Yes. Those are the two main ones.
Well, of course it will take all the obvious, that you have a brilliant product, because I don’t think that should be underestimated. That one of the reasons why a number of these companies have been doing very well in Europe is because they have great products. They have disrupted markets that needed to be disrupted. They have created innovations that we really needed, so obviously, you need first of all a great product. You also need fair competition, which means that access to data, that no one is gaming the marketplace. That of course is why need strong law enforcement.
All right. Questions from the audience for Margrethe? Commissioner Vestager, sorry. Right here.
Bennett Richardson: Hi there. Bennett Richardson from Politico. I have a question from our EU political editor, Ryan Heath, for you, Commissioner Vestager, which is looking forward towards November, who do you think would make an amazing next commissioner for competition? And would you have any advice for them for what they should pursue in 2020?
Margrethe Vestager: I’m quite ... I take it as a given that whomever it will be, and every member state will put on some, name one. I think they should name two, a man and a woman, so that we could have a gender-balanced commission. That’s another thing. I do hope that we have over the next coming months have prepared for the next commission to take action, to see if we need new, sharper tools in a completely digitalized economy. Not only so the digital natives that we’ve been speaking about today, but also all the many other companies who do digital right now, on access to data, on the role of platforms in terms of innovation, to prepare for that push during the next mandate.
Then of course never to forget all of the amazing traditional industries, where we’ll also need to be aware of concentration. Then of course to work with other portfolios, because when we look outside of Europe to the global marketplace, we need a very strong push for fair competition. And here, tools from trades, from single-market tools like public procurement, a lot needs to be done. So just the suggestion that work is definitely not over. On the contrary, we’re in the middle of something.
When you think about what is unfair in other areas, was there one industry that you’re most concentrated on right now? Media or what?
Now what we see is that in the global marketplace also, for instance, state-owned Chinese companies will be very active. In Europe, you can of course be a state-owned company, but the state will have to act as a market participant. Otherwise it will be not fair, because a private company do not have all the taxpayers to potentially pick up the bills. We’re quite strict on this, you have to act as a private shareholder would act. It’s not a given that a Chinese state-owned company will operate on the same terms, so of course we’re very interested to see, how can we promote this? How can the fact that Europe is open for business be mirrored in other jurisdictions also being opened for business?
For instance, when it comes to public procurement — building bridges, roads, rails, whatever — in Europe, everyone is welcome. We want the same welcome when we make our offers in other countries. This is all outside of my portfolio, but I think we need that common push to have a much more fair global marketplace.
Are you worried about the impact of China? The active ... I mean, they talk about it a lot in Silicon Valley, that you have the choice between us and them. Like the Chinese, which have the different rules around digitization and privacy and everything else.
Of course I respect that this is, but it is a somewhat self-centered choice to set-up.
Yes, it is.
I think we have in Europe a lot of things going for ourselves, because to a very large degree we’ve been successful in building societies that serve citizens and market that serves consumers and tech that serves humans. I don’t think that this is a choice, but I think that, for real, we should of course reconsider what role we want to play in the global market and how we will play it. I think there’s room to be more confident and maybe also somewhat more hard-nosed.
Okay, next question. Right here.
Elise: Hi. My name is Elise and I’m a coordinator of a project that’s actually funded by both the EU and the Creative Europe Program. My question would be a bit more towards the European elections coming up and in this situation we see that there’s still ways of populism rising. And that Europe is still taken as a scapegoat for many things. My question for you would be, what do you think you should invest more on? And could, obviously, research and innovation be part of the solution to revive the European project, but also culture and education?
Margrethe Vestager: Indeed. I think this is very much to the point, your suggestion, and you see that reflected in our proposal for the next seven-year budget. I think that the main research program would be funded in our proposal with 100 billion Euros. Also tripling, no. Yes, tripling the number of people who can do what we call the Erasmus+, which is that you can do exchange in other member states. For studying, vocational training, also as an adult when you want to re-skill yourself during your working life.
The last part, it holds a number of different benefits, not only do you get skills, but you also get new competences in a much more diverse, multilingual, multicultural environment. That is part of the strength.
We focus a lot on the business side of what makes societies work well. Also, exactly, education, the way education is pushed for is very important. That also we do in a different way than both the Chinese and here in the US, but exactly that combination of a huge investment in research and innovation and then having culture education to follow that.
How do the forces of nationalism effect even throughout Europe? Even effect what you’re doing, the idea that there is one way to think of consumers, for example?
What do you mean?
How has that affected your work? Has it, the fracturing of the coalition?
I’d say that competition was ... enforcement is one other thing that has not been met with divided views. One of the things that we have been debating a lot in Europe is the question of legal immigration, how to protect refugees. I think as divided as in the US probably, but when it comes to competition or enforcement that has not been the focus on the ...
People feel the same about privacy throughout Europe, still?
I think to a very large degree, yes.
For most of the countries of Europe.
Is there any outlier?
Not in these areas, no.
Not in those privacy ...
Privacy, competition, law, no.
And data protection, okay. Another question. Right here.
Audience member: A lot of what I think is difficult about these big companies is that they’re really appealing to the demand side. You’ve got scale from the consumers, so we benefit from having a bigger Facebook or a bigger Google, etc. Since our network is becoming more valuable as these companies get bigger, at the same time, we do have these concerns over our privacy. How do we as consumers need to think about the cost and benefits of being a member of these networks? What as citizens should we be talking to our governments about as responsible stakeholders as well?
That’s a great question, because one of the issues is whether antitrust should change in this country. Whether it’s to ... right now, it’s consumer harm. As we all know, Amazon Prime rocks. You know what I mean? And the prices are low and wow, they deliver on time, and stuff like that. One of the issues they just recently, one of the subcommittees, the antitrust subcommittees has hired Lina Khan, who has some very different thoughts about how you look at antitrust. That it isn’t the consumer harm, it’s the competitive harm. In Europe that’s what they look at first, not consumer harm.
Well, in this country it’s different. It is based on consumer harm, where you can’t, you know, Google’s great, you get maps. Facebook is fun, I guess, for some people, because you get to meet people. Or Instagram, look, I put up a Story. It’s all fun and games until the bombs start dropping, as the old poem goes. So you get a lot of stuff, there’s a lot of benefits in terms of pricing. All kinds of things, delivery, convenience. What do you say to that when this is what happens?
Margrethe Vestager: Well, I think it’s part of a much bigger and much more fundamental conversation about what we really value. What is the good life? I don’t think it’s the same thing as a convenient life. I think a convenient life can be extremely boring if you’re never challenged with any hardship of everyday life.
I still think that it’s also an important discussion, because the convenient life would be wishful thinking for many people in every society still. For them, the everyday hardship is not the good life, it’s just hardship. We have a discussion both about inequality, inequality in opportunities and what kind of life should you be able to live in a free and open society?
And in that, competition or enforcement is only a tiny part of that answer, but it’s as if we’re not having this discussion. We just talk about convenience, “Oh, it will be convenient that my fridge is always full,” that is happening very fast.
Well, and then what?
Well, you do get Cheetos in two hours, I mean, come on.
Does it make you happy?
I don’t eat Cheetos, so no. But it does, there is an issue, there is some ... I tell this joke all the time, but in San Francisco you see a lot of this stuff come first. Because it’s a bunch of white guys designing for themselves, so they’re trying to make their lives as simple as possible, like as convenient. Convenient is exactly the right word. I always say San Francisco is “assisted living for millennials,” because they get whatever they want, whether it’s dry cleaning or cleaning or Cheetos in two hours or whatever. I’m not sure if they’re happy, because a lot of ... We just did a podcast with a guy named Chamath Palihapitiya, who’s a very well-known venture capitalist, and he was talking about the idea that you’re not actually happy with all this. Of course, he helped create it, so he would know, right?
It’s a really interesting question, but in the speed of it you do the stuff you get, maps, it’s hard to live without. It’s the addictive nature of convenience, really, and price too.
Yeah, but sometimes if you want to experience something new, you need to lose yourself a little.
You need to get distracted, you need to go left a way or to go right in order to challenge yourself and have a new impulse and meet people that were not in your Feed or in your bubble or in your echo chamber.
Well, it’s proximity. When your people are proximate to you, that’s who you reflect on versus ...
Yes. I think that since we’re just humans, our skills have now developed so that we can detect if you’re truthful and you really want to be with me. It’s very difficult to develop that skill into the digital sphere, into social media. I think we don’t have the same sense of who we are, so obviously, we need to insist that social media and what have we, it is something supplemented, a real democracy where we come together and disagree together. Instead of just shouting at someone who’s sitting around another campfire.
Okay. The final question, oh, here. One more quick one and then I have one more quick question.
Speaker 4: Hi. I’m Alex. I’m a European student and I’m a bit worried about some of these decisions, but these basically both things — a merger between Alstom and Siemens. The two basically big champions we do have in Europe for the railway industry. On the one hand we decided to block the merger, but on the other hand the Chinese did exactly the same as the opposite by merging their two champions and building a company which is now called CRRC. Obviously it will come in Europe, so don’t you think this decision could lead to bad news for European companies and European workers?
Margrethe Vestager: Well, exactly that, this question, they will eventually come in Europe is of course what has been center of our analysis. Because the thing is that if companies merge and you lose competition as we would in main line signaling and the very high-speed trains and the merging businesses chose not to solve that, then customers would have had to be able to turn to someone else.
In main line signaling, when we look into the future, there are no competitors. No one can live up to the European rules for safety, to be certified to do that. When it comes to very high-speed trains, as we speak, there are no very high-speed trains driving outside of China, so when you look five to 10 years ahead, we don’t see that in Europe.
That of course allows for two businesses who are not only European champions but also global champions to improve even more. Eventually, if the Chinese want to come out of the enormous Chinese single market, then they will have much more power to do so, because the benefits of competition is of course that it keeps the companies on their feet in order to be able to compete also globally.
Of course you need to push to make sure that then that global competition is fair, which is why exactly we need many tools. From trade, from procurement to work with us, because when we demand of our businesses to compete fairly then of course we need to stand up for them globally if they are being met with unfair competition.
All right. Last question from me. What do you think, of all the things you’ve done, your greatest legacy is going to be in this area?
Well, hopefully that when you’re our team, as we’ve been in the Commission as my services are organized when you work together then you can push change, not totally, not to the end, but you can contribute to something that will actually have hopefully a lasting effect to make sure that markets serve consumers, and that’s the point.
All right. Commissioner Vestager.
This article originally appeared on Recode.net.