Relations between the tech giants of Silicon Valley and the regulators of Europe have been tense for some time now. Disputes over taxes, labor practices, and concentration of power have left both sides struggling to find some kind of middle ground that continues to be elusive.
Over the course of a single recent week, we got to see how both sides are now shifting their approaches, in ways big and small, to try to gain leverage.
From the Silicon Valley side, after years of confrontation, there was a subtle tack toward diplomacy, or at least the appearance of it.
It started with Uber chief executive Travis Kalanick, of all people, who appeared in Munich, Germany, at the DLD Conference on January 18. Uber has come under fire in just about every corner of Europe with national and local regulators. But Kalanick said he wanted to reboot his company’s relationship with Europe.
In a blog post titled, “A New Partnership With Europe,” the company wrote, “This year, in close partnership with European cities, we can take 400,000 cars off the road, expand UberPOOL and reduce emissions, all while creating 50,000 new jobs across the continent.”
With a stagnant economy across much of Europe, Uber hopes the enticement of jobs, any jobs, will be persuasive with regulators.
Facebook delivered a similar message. Two days after Kalanick spoke, Facebook released a report it had commissioned that touted its positive economic impact around the globe. But Facebook also highlighted that impact in Europe in a separate post.
“In Europe, thousands of people are employed just to make Facebook apps, and technology manufacturers are selling smartphones and tablets to Facebook users who want to connect wherever they go,” the company wrote. “Facebook has an ongoing commitment to helping promote growth, jobs and skills across Europe.”
In both cases, Uber and Facebook had a second message: If Europe wants the jobs and the innovation, it needs to ease up on the regulatory front.
Speaking also at the DLD conference, on January 20, Facebook vice president David Marcus warned that the focus on tightening digital regulations by European governments and business leaders seeking to protect established companies would ultimately harm the region’s economy.
“Success doesn’t come because of regulation or a lack of regulation. Success comes because you create an environment where you deliver successful companies. As a European entrepreneur, I hope that we can create that environment here in Europe so that the next companies like this are actually built here rather that in the U.S.,” Marcus said, according to the Wall Street Journal.
But with a new European Commission just settling into place last fall, Europe is showing every signs of taking a more combative stance toward U.S. tech firms. Even as Silicon Valley was trying to highlight its positive economic benefits, the European Union was introducing a new plan to boost Europe’s homegrown tech economy.
Part of that plan would involve taking steps to create a true single digital market across Europe. Despite steps toward integration over the years, many of the countries in the EU are still governed by wildly different rules and regulations for things like privacy. That means if you are a German startup, for instance, just expanding across Europe can be a massive headache as you’re forced to adapt to dozens of different sets of regulations.
By making it easier for European startups to launch across the continent, regulators hope that startups here can scale faster and be more competitive with new U.S. tech companies.
At the same time, regulators hope that it will make it easier for them to enact tougher privacy laws that companies like Google and Facebook can’t avoid by setting up offices in jurisdictions that have less restrictive rules.
Also, as part of this single digital market initiative, the EU is looking at policies such as a tax on U.S.Internet companies who are seen as mining the information of Europeans for profits that flow to corporate headquarters overseas, according to the new EU digital chief Günther Oettinger.
Expect all this maneuvering to continue. Europe needs tech jobs but is increasingly anxious that Silicon Valley companies will now disrupt other industries like the automotive sector. U.S. tech companies want and need European markets to continue growing but don’t want limits placed on their ability to do business.
If there’s no compromise to be had, then the question will be which side blinks first.