If Europe gives itself the means to do so, it can at last become a player in the digital economy.
The main thrust behind the digital revolution is an oligopoly. The five leading companies in the world in terms of capital are American technology firms (Apple, Alphabet Inc., Microsoft, Amazon and Facebook). At the end of 2016, the capital of these GAFAM reached 2,059 billion dollars; their turnover was 397 billion and their profits 66 billion.
But the golden age of the GAFAM is at an end, because the risks to the economy, society and democracy that result from their all-powerful situation are coming to light. The income these giants receive from their monopolies is being contested. Another formidable oligopoly is appearing in China with Alibaba (which recorded 25 billion dollars of online transactions in a 24-hour period during the Singles Festival), Baidu, Tencent, Xiaomi and Didi. Furthermore, monopolies commissions are emerging from their long apathy: the European Commission has fined Google 2.4 billion euros for the abuse of its dominant position in price comparison sites, and is pursuing its investigation into the Android operating system and the AdSense advertising network. In the USA, the states of Mississippi, Utah, Texas, and now Missouri are beginning investigations into Google’s improper use of personal data and its manipulation of research results.
The rule of law is catching up on the GAFAM. Soaring stock prices have been accompanied by massive stock purchases by oligarchs associated with démocratures (regimes that combine democracy and dictatorship), like Iouri Milner who acquired 8% of Facebook and 5% of Twitter with the help of the Kremlin, or linked to Middle Eastern funds that have been financing Islamic terrorism. More and more legal action is being taken against these platforms to make them give salaried status to those who work for them. Finally, these giants of the web are not paying enough tax – on average, they are taxed at 5.2% on their profits – but this is coming to an end both in the USA and in Europe, where the Commission has ordered Ireland to pay back 13 billion euros in tax advantages granted to Apple (who had their company tax reduced to 0.005%).
With its 500 million consumers, Europe is a key market for the GAFAM. It is on the political and moral fronts that things are changing the fastest.
There is increasing opposition to the monopolization of personal data and using it in a way that invades privacy. Numerous are the voices being raised in the refusal to leave it up to the GAFAN to decide on the issues of responsibility and ethics raised by artificial intelligence. Above all, there is an awareness of the threat to democracy arising from voter manipulation on social media during major elections: in the USA (26 million Americans were exposed to propaganda from the Kremlin on Facebook during the presidential campaign in 2016); in the UK (fake news came from 150,000 Russian accounts in the days preceding the Brexit referendum); and in Spain during the Catalonian referendum.
Europe is at a crossroads. Whereas it dominated the telecommunications industry in 2000, it has now been wiped off the map of the digital economy. But its 500 million consumers are a key market for the GAFAM who have had their access to China closed off. Europe has all the necessary means to become a test bench for regulation of the digital economy, provided it becomes a major player. By investing in infrastructures and in artificial intelligence. By not sacrificing its companies to consumers – as was the case with telecommunications. By putting controls on the investment and operations of the Chinese, Russian and Turkish démocratures. It is too late to “europeanize” the Internet, but there is still time to create a European digital industry.
(Column published in Le Point, 23rd November 2017)