Macron and Trump Are Racing To Win At Regulating Tech Companies
Monday 15/October/2018 - 10:13 AM
By: Forbes- Nicolas Colin
Regulating tech companies has become the new rage. No more free rides—be they conservatives or liberals، politicians want to tame big tech. On the left، regulating is about curbing the inequalities that the rise of computing and networks brings about. On the right، it’s about making it harder for tech companies to beat old، rent-seeking incumbents. The direction of regulation will determine that of the economy: how value is created، captured and redistributed in the digital world. And the range of potential outcomes، depending on what kind of rules are enacted، explains why tech companies are now willing to sit down and talk things out with governments.
Indeed in the context of the “tech backlash”، preventing regulation altogether is not a realistic option. And the more that inevitable reckoning is pushed into the future، the higher the probability that governments will get hasty and enact backward-looking mechanisms that go directly against the interests of tech companies (and consumers، for that matter). Thus the smart move، from a public affairs perspective، is to proactively engage with elected officials that are friendly and imaginative enough to make the most of the opportunity.
France’s Emmanuel Macron appears to be an ideal interlocutor in that regard. First، he’s pro-tech and he has repeatedly voiced his support for innovative entrepreneurs. Second، he made the promise during his campaign last year to radically upgrade France’s social compact، which includes a new approach to regulating businesses. Finally، Macron is in Europe، and as US tech companies find it more and more difficult to do business in China، Southeast Asia، India and Africa، Europe is rising in importance as a relative fraction of their profits. This means that regulations in Europe have an ever higher impact on US companies and so they must find ways to constructively deal with governments in that region.
That being said، the success of Macron’s États généraux du numérique is far from certain. One danger is that the entire process will be hacked by old incumbents and that instead of regulating in the interests of the future، the French government may eventually enact rules that merely serve those of the past. Another danger is that the many task forces that are currently working to design solutions fail in terms of imagination. The current transition calls for nothing short of a New Deal-sized reboot. Yet there are signs that Macron’s reforms could be a mere collection of disappointing، small adjustments made at the margins of the economy and people’s daily lives. In that context، the US tech industry is rightfully refusing to bet everything on their current discussions with Macron. Instead، it is also lobbying the GOP-dominated Congress and the Trump administration to make progress on regulations at the federal level in the US. And if discussions in France don’t lead to a satisfactory، pro-tech outcome، it’s perfectly possible that the tech industry turns its back on Europe altogether and decides to negotiate with Trump to design new rules in fields as diverse as privacy، online content، competing on digital markets، and the social safety net.
The outcome of these two competing discussions، one with Macron and the other with Trump، will decide the direction of Western economies for decades to come. Large tech companies are powerful enough، due to their global scale and the power of their network effects، to turn local regulations into worldwide standards with which every Western country will eventually have to comply، either by way of trade agreements or simply through the power of regulatory arbitrage by the companies themselves.
And so it’s time to up the ambition: if Europe wants its values reflected in future regulatory standards، it has the obligation to come up with regulations that are in line، not in contradiction، with how value is created in the Entrepreneurial Age.