In September 2016, Apple’s chief executive Tim Cook described Margrethe Vestager’s efforts to make his company pay more tax as “political crap”. Three years later, Donald Trump called the EU competition commissioner the “tax lady” who “hates the US”.
In the past year, however, Washington and Brussels have become more closely aligned on the issue of the American tech giants. Shortly before Trump left office, the US Federal Trade Commission (FTC) took legal action against Facebook for “illegally” buying up its rivals. Joe Biden has continued the quest to reform the sector, appointing Lina Khan as chair of the FTC. The 32-year-old legal scholar had become one of the most outspoken critics of the tech industry before she joined the regulator in June.
Vestager, 53, spoke with Khan after her appointment. Did she give any advice to her American counterpart? “What we can do, at best, is to inspire one another by telling the story of what you’re doing,” Vestager told me by video call from the EU Commission’s Brussels headquarters.
During her seven-year stint as Europe’s most powerful regulator, Vestager, the former Danish deputy prime minister, has imposed multi-billion pound fines and tax orders on some of the world’s most powerful companies, including Google and Apple. But she has also learned that “competition law enforcement is not enough”. More than five years after it began, the legal battle over Apple’s tax payments hasn’t concluded. And last year, a study called into question the effectiveness of the Commission’s efforts to make Google resolve competition concerns: still less than 1 per cent of the traffic to its shopping search engine was being directed to rival sites.
To complement enforcement actions, Vestager believes competition regulation needs updating, and not just in the EU. She is encouraged that in the US “they are bringing cases to their courts, but they also have a very vibrant discussion in Congress about new regulation”. She plans to meet Khan face-to-face later this year and sees opportunities for closer collaboration with allies across the Atlantic. “We have strengthened the competition dialogue that we’ve been having for a very long time with our US colleagues, to lift that to a higher and maybe more strategic level.”
The daughter of two Lutheran ministers, Vestager was born and raised in western Denmark. “Ours was never a religious religious home,” she told the New Statesman in 2018, “because my parents thought of religion as something you do: it’s the way you engage in the local community. That has meant a lot to me.” She studied economics at the University of Copenhagen before beginning her political career aged 21. In 2011, she became Denmark’s deputy prime minister, serving under Social Democrat Helle Thorning-Schmidt, who also now seeks to hold tech executives to account as co-chair of Facebook’s Oversight Board.
Vestager joined the European Commission in 2014. “I remember when I had my first Google case, I was in the US walking up and down the hill with my case under my arm, and they were like, ‘Who is this woman and what is it that she’s doing?’” The consensus on competition in the tech sector shifted dramatically over the subsequent years. Vestager said that policymakers have concluded that “technological development is as unavoidable as climate change” and that they need to decide what role they would like to play. “Do you just want to let it go and let some of the most important decisions be taken in closed boardrooms? Or would you want to make sure that you can take them in an open, transparent manner in our democracies?”
Does she feel she can claim some credit for elevating the issue internationally? “That Europe was so far ahead of the curve, when it comes to privacy, I think was part of putting the light on what was taking place,” she said. “But it is the actions of the companies themselves that have pushed this forward, because all of a sudden people saw their power, with valuations bigger than many, many countries, and influence, not only in market developments, but also in how our democracies work.”
Nevertheless, critics of the EU’s sweeping GDPR privacy laws that came into effect in 2018 argue that the rules have been co-opted by the tech giants to entrench their market power. One legal expert told me earlier this year that there “may not be a perfect equilibrium where you have as much privacy as you would like and as much competition as you would like”. Vestager concedes that “perfection, no matter how you combine it, is out of reach, no matter what you’re thinking about”. She believes that giving consumers control over who accesses their data is essential, but a key part of her work is also introducing new legislation to prevent the digital gatekeepers from abusing their powers.
When Ursula von der Leyen was appointed European Commission president in 2019, she made Europe’s technological sovereignty a key focus of her term. She promoted Vestager, expanding her role to “executive vice-president for a Europe fit for the digital age”. Vestager had already been accused by critics such as Cook and Trump of pursuing a political agenda. The new dual remit, focused on making Europe less dependent on foreign suppliers while holding primarily American companies to account, risked legitimising their claims.
“That was my first concern, obviously, even daring to ask for the work that I do now,” she said. “That, of course, would have to be solved. The European Union is built on the rule of law and it cannot be that there is any suspicion that political priorities are allowed to interfere in our law enforcement practices.” Vestager said the Commission “is really strict when it comes to the checks and balances… There is a strong focus on the casework, making sure that our criteria is whether or not our cases will hold up in court.”
Reflecting on her work so far, Margrethe Vestager said she is “acutely aware that competition law enforcement, as we have done it, is not in itself sufficient, which is why we now have the Digital Markets Act”. But she is not convinced that pursuing legal battles to break up the tech giants is a viable solution. “What we’re trying to do is to get the necessary speed to keep the market open and contestable, and not to be hung up in court for maybe a small decade, before any results could be achieved.”
This article appears in the 15 Sep 2021 issue of the New Statesman, The Fateful Chancellor