(Wired) Europe vs Silicon Valley: behind enemy lines with the woman deciding Google’s fate
Update 27.06.2017: Since this story was published in April 2017, the European Commissioner Margarethe Vestager has fined Google £2.1 billion as part of its Google Shopping antitrust case.
Margrethe Vestager’s decisions on Google, Apple and Facebook will shape the future of technology. But has the EU commissioner bitten off more than she can chew?
Margarethe Vestager doesn’t like being told what to do. A liberal in the classic style, she believes in free speech, free assembly, free trade – and choices free from undue influence. “Part of being not only a liberal, but also a human, is to make your own decisions,” she tells me. As European commissioner for competition, Vestager regulates commercial activity across the EU, making her one of the most consequential politicians in Europe. Her drive to self-determination is shaping a confrontation that could change the way technology is used across the world.
The powerful men who run the world’s biggest technology companies have discovered how hard Vestager, 49, is to sway. On January 21, 2016, Tim Cook, Apple’s CEO, arrived in her office to discuss his company’s tax arrangements, which the European Commission had been investigating since 2013. Vestager (pronounced Vest-ayer), who is Danish, has a reputation for both niceness and toughness: she prefers cordial discussion but isn’t afraid of confrontation if it comes. Yet, according to people briefed on the meeting, Cook tried to intimidate her, interrupting and even shouting. He lectured her on the correct approach to corporate tax.
Seven months later, Vestager announced her verdict. Wearing a sky blue dress and a long silver link chain, she took the stage at the Commission press room, a muffled, sombre auditorium in the bowels of its hulking Berlaymont headquarters. In perennially gossipy Brussels, the delay sparked rumours that Vestager had cold feet. Instead, she calmly dropped a competition bombshell.
Declaring that “Apple’s tax benefits in Ireland are illegal”, Vestager ruled that the firm had colluded with the Irish Government to pay an effective tax rate of 0.05 per cent – and that it owed Ireland back taxes totalling €13 billion (£11bn), plus interest. In Cupertino, California, Cook was incensed. “It’s total political crap,” he fumed, promptly vowing to appeal.
No other watchdog has Vestager’s powers to prosecute tax avoidance, levy multi-billion-dollar fines or force companies to make wholesale changes to their operations. She is the person Silicon Valley fears. Yet, if she feels the political pressure directed at her, she shows no sign of it. She jokes that she’s a loyal Apple customer who just happens to oversee their business dealings. “I’m a law enforcer,” she shrugs. Her advice to Cook? “Play by the European rulebook.” Vestager says her decisions are based not on politics, but on facts alone. In her judgement, the facts show technology firms are abusing their power.
“Technology is, in many respects, an enabler for an open, transparent society,” she says. “But it’s also an enabler for supervision to a completely unforeseen degree. And for commercialising personal space to an unforeseen degree.” The invisible hand of Silicon Valley – the nudging swarm of algorithmically filtered data, pushing everything from travel routes to news stories – appears to her intrusive and dehumanising. “I know what I need. I don’t want people to tell me what I need.”
Apple is not the only firm facing questions from Vestager and her 900-person team. She is pursuing Amazon (over tax evasion), Qualcomm (for selling chips below cost) and Facebook (over its acquisition of WhatsApp). But the big test will be her antitrust case against Google, which accuses the search giant of using its dominance to stifle competition.
Vestager, who began her five-year term as Commissioner in 2014, didn’t initiate the case, but she has taken it on in the most assertive manner. Her ruling is expected in the coming months and she appears unlikely to stay her hand. “What she is doing at the moment, in terms of competition policy, is really quite remarkable,” says Jacquelyn MacLennan, European partner at law firm White & Case. “She has strong powers and she will use them,” says French MEP Sylvie Goulard. “She has the character, she has the guts.”