Baldur Bjarnason has written an excellent piece to explain why, exactly, companies like Apple seem wholly incapable of working with the EU, instead of against it. He argues – quite effectively – that Apple, and US tech punditry in general, simply do not understand the EU, nor are they willing to spend even 10 minutes to understand it, which is really all you need. The core premise of the EU, its very primary function, is to enable and protect the single market.
A great example of this is the ban on roaming charges – mobile phone carriers in EU are not allowed to charge extra for using mobile voice and data services in another EU country.
From the EU’s perspective, taking action to prevent private parties from fragmenting and taking private control over the single market simultaneously grew the economy and increased consumer surplus.
This is the operating theory behind much of the actions the EU takes regarding market regulation and product standardisation: a single market built on standards is more profitable for both businesses and consumers.
↫ Baldur Bjarnason
And because Apple and its tech punditry refuse to try and understand the party they are dealing with, they get caught looking like childish idiots every time they open their mouths about it.
Normally when the EU regulates a given sector, it does so with ample lead time and works with industry to make sure that they understand their obligations.
Apple instead thought that the regulatory contact from the EU during the lead time to the DMA was an opportunity for it to lecture the EU on its right to exist. Then its executives made up some fiction in their own minds as to what the regulation meant, announced their changes, only to discover later that they were full of bullshit.
This was entirely Apple’s own fault. For months, we’ve been hearing leaks about Apple’s talks with the EU about the Digital Market Act. Those talks were not negotiations even though Apple seems to have thought they were. Talks like those are to help companies implement incoming regulations, with some leeway for interpretation on the EU’s side to accommodate business interests.
Remember what I wrote about electrical plugs? The EU is pro-business – often criticised for being essentially a pro-business entity – and not in favour of regulation for regulation’s sake.
If Apple had faced reality and tried to understand the facts as they are, they would have used the talks to clarify all of these issues and more well in advance of the DMA taking effect.
But they didn’t because they have caught the tech industry management disease of demanding that reality bend to their ideas and wishes.
↫ Baldur Bjarnason
What a lot of people – both inside and outside the EU – do not grasp is that while we all know the EU has shortcomings and issues, in general, the EU is uncharacteristically (for a government agency) popular among EU citizens, no matter the country of origin. That’s because we, as EU citizens, and especially as EU citizens who do anything international, know just how ridiculously beneficial the EU has been for trade, business, the economy, travel, and so much more.
Apple can keep acting like a whiny trust fund boy who thinks the world owes them everything, but they’ll have to deal with the consequences. Continued violation of the DMA can lead to fines of up to 10% of revenue. That’s 38 billion dollars. I secretly hope Apple keeps this childish behaviour up. It’s deeply entertaining.
US culture doesn’t understand the basic concept of “regulation” – they actually thing regulation is bad for markets, and economies. This place is full of absolute wack-a-doos in politics, people who without a hint of irony call themselves nutty things like “libertarians”, and capitalism ate our democracy long ago. There’s no cognitive framework in American power hierarchies (which control the media and government both), to understand properly regulated, competitive, open markets. We all drank too much of our own kool-aid in America.
…right up until the doors fly off the plane at 12,000 feet, at which point, the question is why there wasn’t a government employee inspecting every door.
(Note though this article isn’t describing a pro-regulation EU and an anti-regulation US; it’s describing an EU seeking to maintain an open internal market that feels forced to regulate gatekeepers to maintain that openness.)
malxau,
The Boing is a sad story of a reverse merger, and John Oliver did a nice story just this week:
https://play.max.com/video/watch/4860af2e-fadf-450a-8d98-a788a390f580/bc3e0bd5-ae90-4f13-aa57-e518e91cf9b5
(If you don’t have access, it should come up on https://www.youtube.com/@LastWeekTonight in a day or two).
Anyway, basically Boing outmatched McDonnell Douglas, and bought them after beating them in the market. But instead of incorporating their engineering force, they decided to do the smart thing and use all those MBA laden managers to make Boing better.
Long story short, it turns out McDonnell Douglas bought Boing with their own money, milked the company dry, prioritized shareholder returns and stock buybacks even when planes were literally falling from the skies and people were dying by the hundreds.
(This is one area free markets fail. Large companies can really become stupid as they have more money, and like flies, accountants, lawyers, wall street folks of all sorts will come to “help” make things better).
sukru,
I saw that as well. That’s the effect MBA culture has on a company with a former strong engineering values. I could have been an MBA instead of CS. I suspect my career would be better off in business, but computers were my passion.
Yep. The John Oliver piece did a good job highlighting just how much the company prioritized their stock over R&D and Q/A. Granted this was particularly egregious because the planes that Boeing builds become dangerous when shortcuts are taken. But even though the stakes aren’t as high in other industries, it’s really a systemic problem. Similar trends are happening everywhere we look, certainly in tech: apple, microsoft, google, etc. These corporations rake in so much money, and yet they still compromise on R&D and allow their products to suffer so the stocks can go a few dollars higher.
I wouldn’t say this problem is intrinsic to the free market per say. It’s more of a problem with the lack of competitive markets. When dominant corporations know their market positions aren’t particularly vulnerable, they really don’t have to fight hard to remain in control of said market. This explains why corporations with dominant positions in mature markets will stop investing and innovating. They’re already at the top and can focus on extracting more money from the market without having to spend money building & improving products.
Alfman,
I think you hit the point.
There was a common slogan in “occupy” days, which said “if it is too big too fail, it is too big to exist”.
National companies like Boeing, or Amtrak (or the equivalents in Europe and other places) get the benefit of government support and bailouts, while being able to take risks free of consequences.
(Another saying was “capitalized gains, and socialized losses” or something similar).