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Margrethe Vestager: “Twitter must ensure what is illegal offline is illegal online”

The EU commissioner warns that Elon Musk could be on the wrong side of her crusade against Big Tech’s dominance.

By Ido Vock

BERLIN – Elon Musk says he harbours ambitions of bringing free speech back to Twitter. But his sweeping changes since he bought the social network may be putting the company on a collision course with European regulations, one EU commissioner believes.

A few weeks after Musk took over the social media company on 27 October, I spoke to Margrethe Vestager, the European commissioner for competition since 2014, over video call. She told me she was, like many others, “concerned about the developments” at Twitter. Since purchasing the company Musk, the billionaire owner of Tesla and SpaceX, has made a number of controversial changes to the site’s functioning and content moderation, including easing its suspension policy. Vestager, 54, a former minister in the Danish government, said that it was “up in the air” as to whether Twitter would live up to commitments to ensure that “what is illegal offline is also illegal online”.

Twitter’s new management may lead the company into conflict with European rules, Vestager suggested. “We don’t know to what extent and in what form Twitter will live up to European legislation [which is due] to kick in in a very short time or to the code of conduct that they have indeed signed under their previous [ownership],” she said, referring to a 2016 EU agreement signed with tech giants including Twitter to combat hate speech and misinformation.

Musk recently reinstated the accounts of people suspended from Twitter such as Donald Trump, the former US president, who was accused of using the site to incite violence during the 6 January 2021 riot at the US Capitol, and the rapper Kanye West, who was suspended on 9 October after posting anti-Semitic tweets. When I asked about these decisions, Vestager took a conciliatory tone, and suggested that European laws against hate speech are more concerned with the substance of content posted online rather than individuals.

Since taking on her current position eight years ago, Vestager has accused tech giants such as Facebook and Amazon of abusing their dominant market positions to prevent competitors displacing them. The largest tech companies “must respect that with the power they have now comes the responsibility not to fortify that power by de facto closing down the market”, she said. “It has been the case for many decades: if the [companies] which were dominant in the market didn’t change, then they disappeared. And I think it is really important that the power they have in the marketplace is not used to prevent or delay this.”

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Yet in recent months, some of the giants Vestager has accused of shutting down competition have begun to seem rather vulnerable to displacement. Tech stocks have crashed this year: the five largest firms – Amazon, Meta (Facebook’s parent company), Apple, Microsoft and Alphabet (Google’s parent company) – dropped by a combined $950bn at their lowest point.

Meta in particular appears far less unassailable than it once did. Young users are shunning Meta’s core products, Facebook and Instagram, in favour of competitors such as TikTok, the short video app. It has the money and the user base to remain profitable for some time – the boomers have life in them yet – but the billions the company is sinking into its “metaverse” virtual reality, which has so far failed to convince, suggests that for all its cash it lacks a convincing answer to arrest its decline.

Vestager is the public face of the European Commission’s push to regulate the functioning of the largest tech companies in the EU. Among other fights, she has sought to take down alleged deals between member states and large multinationals under EU rules on state aid. A task force she set up in 2013 investigated how Ireland, Luxembourg, the Netherlands and Belgium allowed multinationals to channel income from across the EU to their jurisdictions.

A recent ruling by the EU’s highest court struck down one of these efforts, a significant setback to her strategy. The judgement, issued in early November by the European Court of Justice, held that a tax deal between the Italian carmaker Fiat and Luxembourg did not breach EU state aid rules. Although the sum involved – around €30m – is relatively small, the precedent set by the ruling means that larger deals may stand a better chance of surviving Vestager’s attempts to take them down.

“The judgement sets a very high bar when it comes to what is called the arm’s length principle, that basically all EU member states have accepted but have implemented in very different ways in national legislation,” Vestager said. The principle holds that transactions between subsidiaries should be based on prices an unrelated company would pay. The court found that the Commission could not provide its own interpretation of the principle, which undermines Vestager’s strategy. “We are in a serious situation and we are still analysing the effects [of the ruling],” she said, though she added, striking a combative tone, that the ruling would not deter the Commission from pursuing similar cases.

One of the most immediate challenges facing her is the EU’s diminishing competitive edge. European leaders are expressing increased concern that the combination of high energy prices in the wake of Russia’s invasion of Ukraine and newly introduced US government subsidies will push businesses to relocate some production and investments across the Atlantic.

Emmanuel Macron, the French president, recently hosted business leaders at the Élysée Palace to try to convince them to maintain operations in Europe. Thierry Breton, one of Vestager’s fellow commissioners, has warned that the Biden administration’s $369bn Inflation Reduction Act, which subsidises the purchase of electric vehicles, represents an “existential challenge” to the European economy.

The EU should be closely allied to the US on issues of global interest such as fighting climate change, Vestager said. She added, however, that the EU’s “legitimate concerns over competitiveness”, particularly over electric vehicles, their components and renewable energy production needed to be taken into account by the US. “The risk is that what we have ahead of us is a subsidy race that shifts the risk from shareholders to taxpayers.”

Individual businesses should resist the temptation of “attractive subsidies… and attractive energy prices” outside of the EU, she said, pointing to the bloc’s productive workforce and its health and educational systems. Yet that might be a hard sell in some boardrooms. 

[See also: Elon Musk inside the Twittering machine]

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