The E.U. Goes Too Far

🌈 Abstract

The article discusses the increasingly fraught relationship between European regulators and major tech companies like Apple, Meta, and Nvidia. It examines how the European Union's regulatory approach, particularly through the Digital Markets Act (DMA), is impacting these companies and their ability to operate in the European market. The article argues that the EU's regulatory actions, while motivated by concerns over data privacy and competition, are overreaching and threatening to undermine the fundamental nature of technology and innovation.

🙋 Q&A

[01] Apple's Challenges with European Regulators

1. What are the key issues the European Commission has with Apple's App Store rules? The European Commission has two main concerns with Apple's App Store rules:

• Apple's anti-steering provisions that prevent app developers from freely directing consumers to alternative channels for offers and content.
• Apple's "Core Technology Fee" which allows it to charge developers a fee for every purchase of digital goods or services a user makes within 7 days of linking out from the app.

2. How does the author view Apple's stance on these issues? The author acknowledges that while Apple's policies come across as arrogant and dismissive of developers, the company does have a valid argument that iOS is its intellectual property and it should be able to charge for its use. The author is opposed to the EU compelling Apple to provide its services for free.

3. What is the author's view on the European Commission's approach to regulating Apple? The author sees the European Commission's actions as effectively amounting to a "de facto nationalization" of Apple's intellectual property by demanding the company make its technology available to third-party developers without charge.

[02] The EU's Approach to Regulating Meta and Data Privacy

1. What are the European Commission's concerns with Meta's "pay or consent" advertising model? The European Commission believes Meta's model, which requires users to either pay to avoid data collection for personalized ads or consent to data tracking, does not comply with the DMA. The Commission wants Meta to offer an equivalent service that uses less personal data without requiring payment.

2. How does the author view the Commission's position on Meta's business model? The author argues that the Commission's demands are unreasonable, as a non-personalized version of Meta's products would be far less valuable to both advertisers and users. The author sees this as the Commission effectively "nationalizing" Meta's private property by dictating its business model.

3. What is the author's broader concern about the EU's regulatory approach? The author is concerned that the EU is overstepping its authority by threatening to fine U.S. tech companies more than they make in the EU market, essentially regulating their global operations. The author sees this as the EU wrongly assuming the role of a "worldwide regulator."

[03] The EU's Scrutiny of Nvidia's CUDA Integration

1. What are the French antitrust regulator's concerns about Nvidia's CUDA technology? The French regulator is concerned about Nvidia's dominance in the CUDA software ecosystem, which is essential for accelerated computing and AI applications. They view Nvidia's tight integration of CUDA with its own GPUs as potentially anti-competitive.

2. How does the author view Nvidia's CUDA strategy? The author sees Nvidia's investment in CUDA as a legitimate effort to create a valuable ecosystem and moat around its products. The author argues that Nvidia should be rewarded for this innovation, not punished by regulators.

3. What does the author see as the potential outcome of the EU's actions against Nvidia? The author suggests the "logical penalty" for Nvidia could be the forced separation of CUDA from its own chips, which would amount to the EU "taking away Nvidia's property." The author views this as a concerning overreach by regulators.

[04] The Author's Broader Perspective on the EU's Regulatory Approach

1. How does the author characterize the EU's assumed regulatory power over global tech companies? The author argues the EU's power comes from the fundamental economics of technology, where large upfront costs but zero marginal costs allow dominant players to serve users globally. However, the author believes the EU is overplaying its hand by imposing such severe penalties that could make it uneconomical for companies to serve the EU market.

2. What are the author's concerns about the EU's regulatory approach? The author is concerned that the EU is moving beyond reasonable regulation into "theft" by dictating business models and forcing companies to provide services for free. The author sees this as a violation of private property rights.

3. How does the author envision the potential impact of the EU's actions on innovation and competition? The author suggests the EU's actions could lead to fewer new companies entering the EU market and existing companies withholding new features and technologies from EU users. This could ultimately reduce competition and innovation, contrary to the EU's stated goals.