Europe, don’t regulate yourself to the dark ages

The EU prides itself on being the global shepherd of big tech. The reasoning is that European regulations make technologies and products worldwide better, safer, and fairer.

But reasoning is based on the assumption that there is one technology used for all products worldwide. This is the business model of much software – one centrally maintained source code, directly distributed globally to millions of users.

But what if this assumption comes under pressure? What if companies can no longer use a single source code but must essentially create and maintain two, just to serve Europe? Two source codes, with much added complexity and costs. This has already happened with Apple, and is threatening to happen with software from Nvidia, Microsoft, Meta, and Google.

In this situation, the business model changes drastically. The decision to serve the European market becomes more pronounced. A clear business case: How much extra cost must a company incur to serve the European market? Against how much potential revenue from that market? Against the risk of losing 10% of global revenue if fined?

Then it becomes less economically viable to serve the European market at all.

For example, 7% of Apple’s revenue comes from Europe. For this, it must now create a completely separate version of iOS and macOS (a version without new AI functionalities). A less competitive version, more expensive to maintain and develop. Does it balance out? Having 7% more revenue against greater costs and complexity, and a high risk of losing 10% of global revenue if fined. Why wouldn’t Apple simply split iOS? Leave Europe with a 2024 version of the operating system, never to be updated again. It wouldn’t hurt Apple much.

Many would consider that a success. Freed from big tech. And maybe there’s a point. There is certainly something to say about big tech being reckless in data collection and hostile in protecting its own (integrated) services.

The EU’s efforts are noble. To protect consumers from such practices. To force big tech to split their 'integrated services' strategy, favouring competition among different services. And while I fully agree with that goal, I strongly disagree with the means, namely creating an economically hostile environment for welcoming innovation.

Regulators – look closely at the incentives your regulations create. Understand the incentive and business case for the European market, from the perspective of (new) global innovative companies. Don’t retract your regulations, but refine them to find a better balance. A balance where it makes economic sense for companies to serve the European market and not have to split the source code. Ultimately, the EU will have a much greater impact and can truly take a global leadership role in regulating fairer, safer, and better technology.