Europe’s antitrust enforcer talks about the coming reckoning for Big Tech and corporate tax dodgers

This edited Q&A has been condensed for space and clarity.

Europe vs. Silicon Valley

In the past there has been a perception that you and the European Commission have been too strict in holding American companies in particular to account around issues of antitrust and privacy. Do you think the world’s attitude about the responsibility of tech giants is coming round to your way of thinking?

Vestager: I think very much so. It’s a nuanced and complex debate that has taken hold over the last two to three years with academic reports, research, policy reports, think tanks, political parties. That is a reflection of the fact that the digital marketplace is unregulated compared to all the other markets that we’re used to dealing in. We have a regulated financial market; we have a regulated energy market. So many markets are regulated; only tech has not been. And because of that it has become increasingly clear that it is not a given that these markets will stay open and competitive.

I think it has changed because it has become more obvious that what the antitrust cases should do is actually enable innovation to be worthwhile—for the market to stay open so innovation can reach potential customers. 

Distributing data

Last year the Commission proposed two blockbuster pieces of tech legislation.² Let’s start with the Digital Markets Act, which would force “gatekeepers” such as Google and Amazon to treat their customers more fairly—for example, by allowing business users to access the data they generate. Does a concept such as “data hoarding” fit into our classic conception of anticompetitive behavior, or has the rise of the digital economy changed how we define openness and competition? 

If you hold really, really big amounts of data, it becomes very difficult for people with less data but better technology to compete against you. It may very well be that it’s only the fact that you have a lot of data that allows you to stay dominant, not that you are excellent at what you are doing. And that of course becomes a problem for innovation.

I think basically it’s the same problems [we’ve always seen] … It’s greed, it’s power, it’s fear. If you ask people in the marketplace 100 years ago, they would also say some are trying to leverage themselves in a neighboring market or are trying to push the regulator of the marketplace to do them some favor that was not open to others. 

But, that being said, it’s a categorical change with the speed and the scope of digital technologies. [As a regulator] you need to have that double approach: On one hand to recognize what is the same … and then also to deal with them in a way that respects the fact that dynamics are so different.

You pioneered the use of antitrust law to tackle tax avoidance, targeting what you saw as illegal state aid deals between Apple and the Irish tax authorities, Amazon and the Luxembourg tax office, and so on. That strategy has taken legal blows, most notably in the Apple case.³ Do you still think this was the right approach?

I think the state aid cases have been helpful in the momentum of change. Just recently, country-by-country reporting was accepted, and the OECD is moving ahead on digital taxation.⁴ The state aid approach was never thought of to be the one and only tool. Tax justice that is firmly anchored needs proper horizontal legislation and, obviously, proper enforcement.

Inside the algo

The other big package you proposed is the Digital Services Act, which deals with protecting consumers online. Like the EU’s GDPR—the world’s toughest online privacy law⁵—it calls for companies’ algorithms to be explainable, though the full meaning of that concept hasn’t yet been tested in court. To what extent should companies still be able to keep their algorithms private?

We have our own ways of dealing with the strong regulatory culture in the European Union and respecting boundaries for elements of business secrecy; we have been trying to find ways to balance things. This is why explainability, to see how things are working, rather than an obligation that regulators should go through the code line by line, has been the approach.

The Digital Services Act appears to place new obligations on social media platforms like Facebook and Twitter but doesn’t plainly tell them what kind of information to remove from their platforms. Is your approach to content still one of self-regulation?

It puts a lot of responsibility on the platforms. The act in itself is not about content, also because there will be differences between [EU] member states. For instance, hate speech is not outlawed in every member state in the same manner. So here platforms will have to deal with the national provisions when it comes to content. 

When we say you have to take illegal content down fast … you need to have this system where people can protest against things being taken down, while at the same time saying, “Do not use general upload filters.”⁶ If you have an upload filter, then the risk of censorship becomes very big, and we don’t want to take that risk. That’s quite a strong principle in a digital world, even though it’s more resource intensive [to review and remove material after it’s been uploaded].

Won’t the platforms just decide it’s easier to comply by over-removing content, than it is to remove too little and face legal consequences?

What I understand from my colleagues is that they still find too little is being removed. Also, I think people would react very strongly if too much is taken down. 

“Digital sovereignty”—the idea that Europe shouldn’t be reliant on other parts of the world for technology such as A.I. and high-performance computing—has become an EU buzzword. Achieving digital sovereignty is your job now, so what does it mean to you? 

Europe has always been a great regulator, and that is part of some of [our] strength, because that allows more inclusive societies and creates a level playing field. The thing is, if you want to be a good regulator you really need to have a hands-on understanding of what you’re dealing with, and that’s why it becomes increasingly important to be able to do some things yourself.

To give a very banal example, I think I’m better at appreciating a nice piece of clothing because I am a sewer myself; I know the effort it takes to make a coat or a dress. But the fact that I occasionally do that for myself doesn’t make me want to create my entire wardrobe. 

We’re in the process of establishing a network of high-performance computers; [we want to develop] at least one quantum [computer] if we could before 2025. So not only do we want to know where can we push when it comes to regulation, we also want to push when it comes to innovation.

Facing the future 

How do you see the world, and Europe in particular, being different once the pandemic is over?

It’s such a big question. I think in practical terms, we want a new work/life balance, to be able to work more from home, because now everybody knows that this is indeed doable. At least in my organization, productivity has gone up, so shame on people who say people don’t work when they work from home.

We will also be more cautious realizing that the next crisis may not be another financial crisis, may not be another pandemic. So in our crisis preparedness we will work to be more broad, but also realizing that in handling crisis we need friends. We need to depend on one another, because dependency is not necessarily a weakness. The strength of the European Union is that member states depend on one another, that the single market is for everyone.

Dependency is not necessarily a weakness. The strength of the EU is that member states depend on one another.

Margrethe Vestager

In 2019 your name was bandied around for the presidency of the European Commission, but the role ended up going to Ursula von der Leyen. What are your ambitions beyond this term?

I know you don’t believe that kind of stuff, but I have not thought about it for a second. First, because we are crazy busy right now fighting COVID and shaping the future, but second because in my experience if your next job is going to be a good one, then better stay focused to do a good job in what you do now. The minute you lose focus because you’re thinking two, three, four years ahead, then you also lose your touch, and then people think, “Why would she be relevant for anything in the future if she is not in the job that she has right now?”

Between the lines 

(1) Big tech, big money. A few of the U.S. players the EU has hit with massive fines or back-tax bills:
$15 billion | Apple (2016) Irish back taxes (overturned)
$295 million | Amazon (2017) Luxembourg back taxes
$5 billion | Google (2018) Fine for Google search engine dominance on Android
$1.2 billion | Qualcomm (2018) | Fine for antitrust laws violation with Apple

(2) Plodding policy: The acts remain proposals for now. All EU legislation must also be considered by the European Parliament and member states, a process that often takes years.

(3) Apple bites back: Vestager’s department ruled Apple had to pay $15 billion in Irish back taxes, claiming it avoided them through a sweetheart deal. The EU General Court overturned the ruling in 2020 over a lack of evidence. The Commission is appealing that decision.

(4) Tax transparency: In March, the EU’s member states agreed to advance a law that will force large multinationals to publicly disclose how much income tax they pay in each country.

(5) Our data, ourselves: The EU’s General Data Protection Regulation came into effect in 2018, theoretically giving people in Europe strong control over the use of their personal data. In practice, enforcement has been spotty. 

(6) Policing the cloud: Online platforms sometimes use filters to scan what users upload, for example to check for copyright violations. The EU prohibits member states from forcing platforms to scan all user-generated content. 

This article appears in the April/May issue of Fortune with the headline, “The Conversation: Margrethe Vestager.”