S1: Earlier this week, I spoke with Danish politician Margareta Vestager. She’s the European Commission’s commissioner for competition. And it’s not a stretch to say she’s one of the most important people in the world when it comes to regulating big tech. One newspaper article described her as putting the fear of God into Silicon Valley. For Americans who aren’t familiar with your work. How how would you introduce yourself and say what you do?
S2: I’m a member of the European Commission. I’m one of the executive vice presidents. But what it takes a lot of time in my everyday life is to make sure that the European market is open, that it’s fair, that everyone who does business here can do their business by the same rulebook.
S1: Vestager has pursued case after case against the biggest tech companies in the world. She’s won fines against Apple, Google, Amazon, Facebook and Qualcomm. Now she’s the driving force behind a landmark piece of legislation, the Digital Markets Act, which is likely to reshape how tech companies do business in Europe and around the world. Today on the show, a candid conversation with the woman Silicon Valley fears most. I’m Lizzie O’Leary and you’re listening to what next? TBD a show about technology, power and how the future will be determined. Stick with us. Margareta Vestager of the European Commission is coming off a busy few weeks. Her office has opened an investigation into an agreement between Google and Facebook, now meta to seemingly kill off adtech competition. And then in late March, European lawmakers agreed on the parameters of the Digital Markets Act, or DMA. It’s a landmark law that designates companies of a certain size as gatekeepers and says they can’t use their heft to box out competition. Companies that run app stores, for example, would have to let their users download apps from other places as well.
S2: The Did to Markets Act will make sure that those who have giant market power also have responsibility in the market to make sure that anyone else could do their business without being sort of held back or held down or demoted by those who keep the games.
S1: You know, the parameters of gatekeepers that you’ve defined €75 billion in market cap, 45 million active monthly users. Clearly, that is the big five Apple, Amazon, Google, Facebook and Microsoft. But I wonder, are there other companies that you had in mind when you were creating this or were you really thinking, let’s let’s go for the big five here?
S2: It may be a number of companies. What we have been trying to do is to translate our knowledge about market power. How does a company look that is dominant in the marketplace and because of that dominance, also have the kind of power that can make it really difficult for anyone else to make it in that marketplace. So I myself been really, really careful not to think about companies, but to think about market power and how to make sure that that market power gets the responsibility that comes with power.
S1: I think one could describe the backlash against big tech in the U.S. as looking at the major players and saying they’re too big, break them up. But when I look at the Digital Markets Act, you all seem to be taking a different approach. I wonder how you would describe that approach.
S2: Well, if it should be a slogan, you say, don’t break them up, break them open. In Europe, we do have legislation that would enable us to break up companies if that was the only thing that would make the market work. But we would not know what would happen in the European market by that kind of action. What we would know is that we would definitely end up in court. And while in court, you know, the risk was that the market was left unattended. So we chose to say, well, listen, you’re more than welcome to be successful in the European markets. But with success comes power, and with power comes responsibility. And that last link between power and responsibility, well, that needs to be reinforced.
S1: Well, let’s take, you know, the example of a company like Apple. They present their service as safer that the App Store is a walled garden. It’s private. It adheres to their security standards. Tim Cook has talked about this publicly. Clearly, they see that as a selling point for consumers under the Digital Markets Act. They would let users download apps from other places. Do you buy their contention that keeping things walled off is safer?
S2: Well, I think safety is that is a concern for everyone. No matter who you are, no matter what kind of phone you have, no matter what kind of apps you download. So I think it’s important that the question of safety is not used as a war against healthy competition, where also your competitors will have to answer to their customers about safety. If you’re not happy with the shop where you do your shopping, will you try to find somewhere else to go without having to change the entire city or to go, you know, to a different planet? You just want to be able to go round the corner and see what’s on offer there. And of course, you expect also the other store to have sufficient safeguards so that whatever you buy is actually not harming you.
S1: There’s also this idea of interoperability that I find really interesting that if, say, I use Signal as my messaging platform, that I could send a message to someone on WhatsApp. Why make that a part of this law?
S2: It’s to to enable convenience for users if that should be part of the character of the services that you’re offering. We know it from emails. You know, you can you can be in a very different email environment. And yet, you know, I can send an email to you even though you have a different provider. So it’s basically not a new thing. It’s just a new thing within messaging services.
S1: I want to talk a little bit about the enforcement part of this. How do you see the enforcement piece of the Digital Markets Act working? And I wonder if there are lessons you learned doing so much enforcement?
S2: Yeah, well, you know, I’ve had not one, not two, but three Google cases that we’ve finalized already. Now we’re on the fourth. We’ve had two Amazon cases. We have two again, we have three Apple cases. We now have a Facebook case as well. And what I have seen is that first, it takes a lot of time to prove that a company is dominant in the relevant markets, and only then can you look at the illegal behavior. And the second point is that all cases they work in the very specifics in that market with that illegal behavior. But it is as if they don’t spread. It is as if there is something systemic about some of the things that we see. And if something is systemically wrong, well, then you also need a systemic answer to that. And this is why, you know, I’ve come to see that for the competition, law enforcement in specific cases to be really effective. Well, then we need the regulation to work with it. Otherwise we will not be able to provide the change that is needed. And the change that is needed is for the market really to be open, to be contestable, for other businesses, to have a fair chance of making it in that marketplace to the benefit of us as customers.
S1: So basically putting the mechanism at the front end instead of at the back end after years of of legal work.
S2: Exactly. That was well put. I would remember that.
S1: Well, one aspect of this is obviously fines. But, you know, we have seen the big tech companies just say, okay, fine, we will pay. You know, but Apple just did this in the Netherlands. Don’t you run the risk of companies saying like, well, pay whatever we have to and keep business as usual?
S2: Well, I think I think it depends on the level of fines still in the law. And they paid a fine of €5 million. I think for most people, quite a lot of money, obviously not for Apple since they made that choice, but for they did to Microsoft. If you do not live up to your obligations, the cap of the fine is 10% of global turnover pretty big. And if you’re a repeat offender, then the cap is 20% of global turnover. So you’re talking about fines that you cannot just sort of push aside as a cost of doing business.
S1: Why do you think the U.S. lags behind Europe when it comes to enforcement and fines?
S2: Well, you know, actually, I don’t understand it. Take privacy. The U.S. is, you know, the prime defender of the rights of the individual, the rights to pursue your dreams, the right to have weapons, you know, individual rights beyond what what you see in many European countries. And yet it’s Europe who insists on the rights to privacy for the individual. And when it comes to the market, you know, I, I know no one but Americans say, you know, you can. Start a business, you can make it. This is the dream. You can challenge everyone out there in that market. So why is it in Europe that we try to make sure that that market is really open and contestable and that people are not being manipulated? So, you know, I have no answer to your question because I would think that it was a I think that would fit perfectly with with the US culture and the American dream.
S1: When we come back, how the January 6th attack inspired European regulators to move quickly. The Digital Markets Act is just one half of Margrethe Vestager regulatory push from the European Commission. It has a counterpart, the Digital Services Act. That piece of legislation is aimed at platforms and social media.
S2: They didn’t turn markets open to market. They did two services. That makes it a real thing that what we have decided in our democracy to be illegal when we are offline is also illegal and acted upon when we are online. So platforms would be obliged to take down, for instance, a post that is being flagged to them as as illegal in form. And then the one who put up the post can complain about it in order to make sure that freedom of expression is preserved. Because sometimes things are not illegal. They may hurt you, they may be gross, but they are not illegal. And that mechanism should enable that. And the second thing that they will be obliged to do is to make sort of a a general risk assessment. Can my services be misused to undermine democracy or be putting people’s mental health at risk? Or are they in themselves working in a way that would have these really, really bad effects? For me, that is really important that the two things complement one another, that as a platform you have a responsibility as to how do my services affect people and the society that I’m part of, and how does the use of my service in all of these many, many millions of individual cases live up to what has been decided in our democracy as being illegal?
S1: It’s very hard to to listen to you and not think about what we have seen on social media platforms in the U.S., particularly around the sort of insurrection on January six in the Capitol. To me, that feels like something that an under your laws would would cross the line.
S2: Well, I think exactly that attack on Congress also had a huge imprints here in Europe in an old, well established democracy to have such an attack and for that being so fueled by it, by social media and the use of social media. I think for us that was sort of a wake up call with no snooze.
S2: No time to wait. We need to get things done now in order for. For this not to happen, undermining democracy, it cannot take place. We do not accept it in the real world either.
S1: Europe has really been on the forefront of tech regulation. Are you hopeful that your work on the Digital Markets Act will become global, will be the sort of blueprint for how other governments should conduct themselves?
S2: Well, you know, when we adopted sort of this general data protection laws, Europe was way ahead of the curve. You know, this idea that you have rights to privacy also in digital. It was a new idea and it’s only a few years ago, which is mind blowing. And slowly that has spread to many, many jurisdictions. You know, in India, they have passed privacy legislation in many states of the United States that passed privacy legislation. So that is spreading. With this, the digital services and these Markets Act, Europe is still ahead of the curve, but not at all to the same degree. For instance, in South Korea, they had passed legislation that came into force 15th of April that looks very much like the provisions and app stores that we have in the Do to Markets Act. A number of of the proposals tabled in the U.S. with bipartisan support would have, you know, the same elements as either data services, according to Markets Act. So what I have experienced in these years is a lot of parallel thinking, sort of converging into alignment as to what needs to be done here. And you know that I find it really, really encouraging because we don’t have a global competition authority. We don’t have global data protection authorities. So when we’re dealing with global companies, well, then I think alignment will makes us so much more effective in making sure that citizens, they can stand their rights.
S1: Do you think there should be some sort of global competition authority? I mean, I wonder kind of where you draw the line between what regulators should be doing in their own markets and to what degree they should be coordinating, because these companies are, as you say, global.
S2: Of course, one is allowed to dream. But if one should be effective right now, you know, the task I have, the mission that that my colleagues and enforcement and myself that we’re on, is to make sure that things change for people in the market right now. So. The market serves us as consumers and not the other way around.
S1: In that vein, I noticed you tweeted a picture of yourself with Lina Khan from the FTC. Jonathan Kantor from the Justice Department. Am I wrong to read that as just a kind of a little poke toward the big tech companies?
S2: Well, I think it’s good for the world around us, too, to know that we know each other well and we consider each other friends and that we talk about. Of course, the only thing that we are allowed to talk about, but that we also that we do work together, if at all possible.
S1: I know we have just a little time left. I wonder if you could tell me what your digital life looks like and how it has changed. The more enmeshed you become in these issues?
S2: Well, I think, first and foremost, I have become increasingly curious as to, too, what is out there, how to do my shopping without using a giant platform, how to message my friends. Because actually, sometimes I find that sort of the convenience of the Giants is kind of numbing my curiosity. And it’s curiosity that keeps me learning, keeps me interested, keeps me challenged. I’m not an engineer. I’m not tech savvy as such. But but I think curiosity can can actually take you to some very interesting places.
S1: Margaret Sylvester, thank you so much for your time.
S2: It was my pleasure to be with you. Thank you very much.
S1: Margarita Vestager is the executive vice president of the European Commission for a Europe fit for the digital age. That is it for the show today. TBD is produced by Ethan Brookes or edited by Tori Bosch. Alicia montgomery is the executive producer for Slate Podcasts. TBD is part of the larger What Next Family, and it’s also part of Future Tense, a partnership of Slate, Arizona State University and New America. What next? We’ll be back next week. I’m Lizzie O’Leary. Thanks for listening.