The election of Donald Trump, and the Cambridge Analytica scandal that followed, set in motion what some have called the tech-lash—a bout of intense skepticism directed toward Silicon Valley. But long before it became fashionable to jeer Mark Zuckerberg, there was the Danish regulator, Margrethe Vestager. As the European commissioner of competition, a post she has held since 2014, she has fined Google billions for its bullying behavior toward rivals. Her investigations have shut down tax-avoidance schemes deployed by the likes of Apple and Amazon—and forced those companies to pay massive sums. Vestager is arguably the most important technocrat of the century.
This October she will leave her post—and there’s been talk of her ascending to an even more powerful position within European politics. But even Vestager concedes that her work has done little to diminish the power of Big Tech. Despite her efforts, 19 out of 20 European search-engine queries are still typed into Google. Based on her long experience tussling with these corporations, though, she has acquired a strong theory of how they can be tamed.
Vestager is a figure of media fascination. She inspired the Danish television show Borgen. In interviews, she often knits while fielding questions with wry wit. Last week she visited Washington, and we spent an hour talking in her hotel suite. Her knitting needle didn’t make an appearance. We discussed the power of Big Tech, the future of capitalism, and the perils facing the European Union. I condensed our conversation and edited it for clarity.
Franklin Foer: What about the trajectory of Big Tech causes you to lose the most sleep?
Margrethe Vestager: Sorry, that’s not a metaphor that works for me. To be at your best, you shouldn’t ever lose sleep … Now, the revolution that we’re in—and we’re definitely not anywhere near the end—it’s changing everything. It’s changing our democracy, our relationships, our society, and everything in the marketplace. What concerns me is that we have not fully started understanding, let alone clearly analyzing, what’s happening. We just see it as a slow tsunami that is changing us, without being able to really fend for ourselves or give direction to our society.
Foer: Doesn’t that suggest a different approach to dealing with Big Tech? If we’re merely reactive, couldn’t the tsunami wash us across certain irreversible and perilous thresholds?
Vestager: The same thing happened in other industrial revolutions. In the end, societies adjusted. They got control of working hours, child labor, harmful substances in the workplace. We are in the same process here. In Europe, we have the enforcement of the antitrust laws. And then we have all the regulation that gives direction to our society—data protection, digital citizen’s rights, the copyright law just voted through in Parliament, and so on.
Foer: In the United States, there’s a surge of new concern about the problem of monopoly—and a rethinking of competition policy. Ever since the 1970s, the Chicago School and its economically minded view of antitrust has dominated. Everything has been about protecting “consumer welfare,” which really just means keeping prices low. But these companies deliver everything at extremely low cost, if not for free.
Vestager: First of all, I’d never accept that they offer their services for free. It’s complete fiction, so discard that. And the second thing is that I think it’s important that you have a regulative framework that sets the direction. Take the safety of digital products. I think that it’s kind of absurd that you’re very, very careful with the substances in a feeding bottle and yet you just hand a toddler an iPad. That is very strange, because you have no idea of the effects of games played on an iPad, with the reactions of serotonin or adrenaline or whatever. Hundreds of questions have to be asked about the safety of digital products, just as we would regulate the safety of any other product that children would be exposed to. So you need to set up a framework for that outside of competition law and say, “Well, this is how things will have to be done in our society. Within this framework, go compete.”
Foer: But part of the problem with, say, Google or Facebook or even Amazon is that they’re gatekeepers for the flow of information. How can a government regulate that? I’d rather see government try to create a diverse marketplace than have government imposing standards for the dissemination of news.
Vestager: I think that diversity is the most sustainable situation in any ecosystem. But the other thing, if you are a platform, you should have a number of obligations of transparency. People who depend on platforms constantly complain about them; we don’t know what happened, we don’t know why it happened, and we don’t know who to turn to. You’ve got to be a really big fish to get one of these companies to pick up the phone and answer questions. They have to be more transparent—and there needs to be some arbitration mechanism, so there’s someone to turn to. You can impose principles without going in and saying this is right and this is wrong.
Foer: Since so much of Big Tech’s power is invisible and it’s not even clear that they always understand the way that it functions, or at least they always claim their algorithms are so complicated that they don’t fully understand them …
Vestager: But that, I think, is another thing that you shouldn’t accept: that this is just a black box and what happens in Vegas stays in Vegas. It doesn’t make any sense. If it’s your algorithm, it’s your responsibility. This is the only way that we can sort of sustain a world where we know who is responsible for what.
Foer: We know they have a pattern of recklessness. Yet with their algorithms, it’s hard to establish fact patterns, to show cause and effect. I might have done something to offend, say, Amazon, and might be low in a search result. But why exactly did that happen? Were they punishing me? Or was the algorithm doing its job?
Vestager: But this is why we are setting up our hardware so we can possess enormous amounts of data. This is why we specialize our staff to be able to do this kind of analysis. This is why we work with market participants—for instance, in the Amazon probe that we’re doing right now, asking businesses and other stakeholders to provide us with data. That said, I think that reckless behavior, greed, power grabbing—when it comes to these motives, nothing is new.
Foer: Kara Swisher asked you about Elizabeth Warren’s plan for breaking up Big Tech, and you seemed hesitant. You don’t think the companies have reached the point where that kind of invasive treatment is warranted?
Vestager: My guess is Warren and I, we have, more or less, the same objective. So how to achieve that? Breaking up a company is a very far-reaching step. We have no experience of doing that in Europe. It’s something that you’ve done here in the U.S. We’ve never done it. I’m told that we could do it. We would have a legal basis. But for us, it would be very far-reaching. Also, you could end up in sort of a Hydra … isn’t that when you cut off the head and suddenly more comes out? That you split up a company, but instead of just one giant, then you have four.
Foer: But we were talking about diversity and pluralism. Having an oligopoly is still preferable to having a monopoly—at least those companies have some reason to compete to protect my privacy better or to supply me with information that better suits my needs.
Vestager: But then it depends on how would you break them up. Would you say that shopping, local search, maps, should be independent companies? Should the search company be two, three different companies? And you would end up spending a decade-plus, if not two, in courts. And while you do that, the market moves on.
Foer: With Big Tech, do you think that there are any signs that the market will move on? Do you see any hope that a competitive landscape could emerge?
Vestager: No, not as such. But people are changing their perception of Facebook because of the Cambridge Analytica scandal—with people being more and more concerned about privacy. They’re concerned about overwhelming power that they don’t know how to control. Just five years ago, people thought, It’s convenient. I’m fine. There is a new line of thinking emerging that a convenient life and a good life may not be the same thing. And that can carry change.
Foer: So when I was recently in Denmark, your country, there was a sense of foreboding that Amazon is coming. It hasn’t yet made a big push into that market, but it will. I sensed a desire to resist, but also resignation that Amazon would dominate the Danish market.
Vestager: Yeah, but at the same time, the threat is providing a push for innovation. All of a sudden, you can have your groceries delivered again, which is something I remember from my childhood. That’s a good thing. The second good thing is that people are reluctant because of the stories they hear about the working conditions of Amazon employees. It gets people really, really upset. We have such a long history of unions and employers cooperating to make sure of decent working conditions.
Foer: Is there a doctrine to protect commerce and a way of life from the entry of a market participant that you know is going to be able to scale quickly and undercut everybody on cost?
Vestager: I think it would vary from country to country. But you could use zoning restrictions to preserve inner-city business life. We have, in my own home country, very strict restrictions on malls. You’ll find very few of them. So you have sort of a very strong preference for where to do business and the size of retail, so there’s a limit as to, per square meter, how big a business can be. It’s not hostile to foreign businesses. It’s more a line of thinking that people should be able to do their groceries without having a car.
Foer: Are you saying that antitrust is not the be-all and end-all of competition policy and the protection of markets? Maybe that’s a very American way of thinking, and we should be thinking more expansively.
Vestager: Well, I really don’t know what you should do. But I know what we’re trying to do. A diverse market is what drives innovation and quality, and serves the consumer. Of course, competition laws are well suited for that, and in Europe, it’s a very strong tool. It’s a big hammer, but that doesn’t make everything a nail. This is why I mention to you these new pieces of regulation that are now being passed by our Parliament. You need competition law enforcement and regulatory rules. One cannot live without the other to achieve the aims that we have.
Foer: When I went to Europe after the passage of the General Data Protection Regulation, I arrived with high hopes. But I found myself hugely disappointed. It seemed like I was still encouraged to surrender privacy. Opting out of data sharing was too complicated to quickly figure out.
Vestager: I agree, but it’s still early days. You have the regulation in place, but you need the market response, and you need the national regulators to be more vigilant. But I share your frustration. It’s great to have rights, but it’s even better to be able to exercise them. And a thing like ownership of data is a good thing, but I have no way to exercise my ownership. I have the frustration that if I disable cookies, then I have to redo my settings all the time. So I’m hoping—and people are telling me it’s coming—that you will be able to have an independent digital assistant that would know your privacy preferences and make sure that it’s all set in that way, according to your preferences.
Foer: Is that going to be provided by the market or by government?
Vestager: Well, it could be provided by the market. I think that would be the fastest.
Foer: How will Brexit reshape the political economy of the EU? Do you have concerns about the balance of power tilting more toward France and Germany, with their preference for industrial policy and the state championing industry?
Vestager: There will be a void if the U.K. ever gets to leave. If you have a void, it will be filled. And what you see is that you have a number of smaller countries who are connected to both the single market and the global economy. They realize that you’ve had spectacular failures when politicians started deciding who should win in the marketplace. But the good thing about the debate we’re having right now is that Europe can take a much more, how do you say, hard-nosed global position. When we ask for fair competition in the European market, we should also stand up for businesses in the global market. And we see a lot of unfair competition in the global market.
Foer: As you’ve had this panoramic portrait of capitalism, really global capitalism at this moment, do you find yourself questioning some of the fundamental precepts of capitalism, or has your faith remained intact?
Vestager: Economists have a lot of assumptions, and they truly are assumptions. When the internet got started, economists were very hopeful about the transparency it would provide, that you would have much more information about what goes on in the marketplace. Those hopes have been washed away. You don’t get to have more insight, more information about how the market works as an individual customer. So there are shortcomings when it comes to capitalism. That being said, it’s the least worst option. When the market serves the consumer, each and every one of us is empowered.
It occurs to me, involved in government and politics for 30 years, in many different roles: While I may be starting my day with politics and ending my day with politics, the majority of other people couldn’t care less. But even if they don’t care at all, even if they don’t even go to vote, they’re still in the marketplace. And if you can make the marketplace work for them, that sort of empowerment might rub off on the rest of society, which is, of course, much more than the marketplace.
Foer: The financial crisis, in addition to the heartache and pain it caused, also contributed to the loss of confidence in institutions and the loss of confidence in capitalism itself.
Vestager: Yes. This is why it was important to bring cases against tax evaders. This rings a very, very strong chord in Europeans. [Because of tax avoidance,] they have seen that they themselves have to pay more and get less. Most smaller businesses pay their taxes. They work very hard to make a profit. And then they see giant companies and compete for the same capital, skilled workers, sometimes for customers. These get away almost scot-free. That is not acceptable from a competition point of view or from a fairness point of view.
Foer: Yeah, we’re tax-avoidance pioneers here. Take our president and his tax bill.
Vestager: This is a very different country—you realize that. I’ve been coming to the U.S. for so long, and there are so many things I still don’t understand.