Margrethe Vestager’s second chance

Call it the paradox of Margrethe Vestager.

Europe’s top competition official has gained a global reputation as Silicon Valley’s tormentor-in-chief, doling out high-profile judgments and multibillion euro fines against some of the biggest brands in the tech industry.

And yet, even as the Danish politician prepares to take on an even more powerful role in the next European Commission, it’s unclear whether she’s made much of an impact on the region’s digital economy.

More than a decade after Brussels first started its investigations into Google, the search giant remains Europe’s dominant player, with few signs that Vestager’s efforts — including a more-than-€8 billion antitrust fine and demands that smaller rivals are treated more fairly — have diminished the company’s advantages in the marketplace.

Facebook and Amazon have similarly shrugged off Europe’s heavy hand, including a €110 million fine against the world’s largest social network in 2017 for misleading competition authorities over its acquisition of the internet messenger WhatsApp.

Even the Commission’s 2016 attempt to claw back what Vestager says is €13 billion in unpaid taxes from Apple and Ireland may soon evaporate, if a legal challenge in the EU’s highest court this week ends in a judgment against her sometime next year.

“She is an enforcer who has failed to keep these companies in check,” said Matt Stoller, a fellow at Open Markets Institute, a Washington, D.C.-based think tank, who has been critical of both European and American efforts to reduce the dominance of a small number of West Coast tech companies. “But if she learns from those failures, she could be a powerful force.”

As the next Commission takes shape, Vestager has been offered another bite at the apple — a nomination for a second stint as the European Union’s competition czar, with an expanded portfolio overlooking Europe’s wider digital strategy.

If confirmed as one of Commission President Ursula von der Leyen’s three executive vice presidents, Vestager will be responsible for pushing forward new tax rules for the online world, as well as efforts to regulate emerging technologies like artificial intelligence.

Not only will she retain her power as Europe’s top competition regulator; the Dane will have wide-ranging authority to set Europe’s agenda on controversial issues like making social media companies take legal responsibility for what gets posted on their platforms and preventing local tech jewels from being snatched up by foreign investors.

“It’s hard to see how all this will fit together,” said Mathias Vermeulen, an advisor to the Mozilla Foundation, a non-profit organization that operates the Firefox browser. “But if there’s one person who’s up to the task, then it’s probably Vestager.”

Public diplomacy

The Dane’s beefed-up role is an explicit response to some of the failings of her first tenure in Brussels.

According to two officials with knowledge of the incoming Commission’s thinking, Vestager’s promotion is an overt acknowledgement that the EU will only be able to maintain its status as the world’s most powerful digital policeman (outside of China) if it empowers somebody to cut through conflicting interests and enforce the bloc’s will on countries and companies.

As Silicon Valley expands into new industries, including financial services and the automotive sector, policymakers have struggled to keep pace with global companies straddling different regulatory fiefdoms like competition, consumer protection and banking.

“As the world changes, and new types of power and influence grow, the rules we have need to keep up with those changes,” Vestager told an audience in Copenhagen days after her nomination to the new Commission. “We’re keeping a close eye on how these platforms use their power.” Through a spokeswoman, Vestager declined to comment for this article.

During her current mandate at the Commission, Vestager deployed an approach that was as much political as it was regulatory, putting herself forward as a personable, elephant-knitting everywoman in a series of well-placed media profiles. Her deftness in harnessing the public’s growing wariness toward Big Tech and communicating complicated policy in terms people can understand brought her renown beyond the boundaries of the Brussels bubble.

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Her emphasis on public diplomacy is likely to serve her well. Where the EU was once alone in its regulatory pushback against Silicon Valley, other countries, mostly notably the United States, have started to follow suit.

Several tech executives, who spoke on the condition of anonymity because of ongoing cases with the Commission, admitted that Vestager had successfully changed the narrative, in Europe and elsewhere, about Big Tech, and that other politicians like U.S. Democratic presidential candidate Elizabeth Warren and U.S. President Donald Trump are tapping into similarly grievances in their own fights with these firms.

“Vestager was the beginning of the techlash,” said a senior U.S. tech executive, whose company has had repeated dealings with both U.S. and European regulatory authorities. He spoke on the condition of anonymity because of ongoing regulatory cases on both sides of the Atlantic. “The U.S. is poised to follow Europe’s and Vestager’s lead.”

Track record under threat

Insiders expect the Dane to push that advantage as she champions a series of digital legislative proposals planned from early 2020.

Those include efforts to introduce an EU-wide digital tax (in case a global push through the Organization for Economic Co-operation and Development fails), place further restrictions on how tech companies can use people’s data and chart a new approach to regulating emerging technologies like artificial intelligence.

“We have to improve on cybersecurity,” said von der Leyen when she announced Vestager’s new remit. “We have to work hard on technological sovereignty.”

Whether the Dane can make a long-lasting impact remains an open question. What’s clear is that she’ll be trying.

To help her navigate her new role, she appointed Kim Jørgensen, a fellow Dane and former ambassador to the EU as her head of Cabinet. Vestager will also have an expanded staff — drawn from both Europe’s competition body and the Commission’s Secretariat-General — to handle the ongoing antitrust cases and her wider digital priorities. More senior appointments to her team are expected in the coming weeks.

Her biggest challenge is in the nature of the new part of her brief: charting Europe’s digital course.

As Europe’s competition chief, Vestager could afford to be a one-person show, endowed with rare-in-Brussels executive power to enforce antitrust rules and set the region’s muscled response to Silicon Valley.

Her new role, though, will require the Dane to work with a wide variety of often-unruly, if not uncooperative, political actors — MEPs, national governments, industry groups — a task that will test her ability strike deals and shepherd legislation through the dark woods of EU policymaking.

Her dual role as the region’s digital chief and competition czar will also require to balance Europe’s digital industrial strategy with its antitrust efforts, potentially putting one side of her operation in conflict with the other. It’s a problem she has admitted may arise, but she has said will not affect the Commission’s day-to-day oversight of the digital world.

“It’ll be a challenge for Vestager and her team to change their mindset,” said Linda Griffin, co-founder of the European Tech Alliance, a trade body whose members include Spotify and Zalando, the German e-commerce giant. “When you focus on competition, you focus on Big Tech and reducing consumer harm. But she’s got to be able to reach out to entrepreneurs to understand what they need.”

The competition chief could also face trouble in court.

In addition to the legal challenge by Ireland and Apple to Vestager’s €13 billion tax ruling, Google has appealed it antitrust fines — cases that will also be heard during the upcoming Commission.

If those rulings go against Vestager’s original decisions — high-profile announcements that provided her with global cache to target other tech giants — it will likely erode her international authority and make it even more difficult for her to revamp the EU’s antitrust rules for the digital age.

“She’s been high-profile, but not had a meaningful impact,” said Stoller of Open Markets Institute. “I want to see her change something for good.”

CORRECTION: This article has been updated to clarify that Linda Griffin is co-founder of the European Tech Alliance.