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An op-ed from Martin Peers, "The Briefing," The Information.
Greetings!
Will Europeans start to regret their governments’ aggressive regulation of U.S. tech? That’s surely going to be a question sparked by Apple’s decision today to withhold a bunch of attractive new technologies—such as its artificial intelligence–powered offerings—from its products in Europe, citing the continental rules on how tech firms operate.
Many of the updates Apple unveiled at its Worldwide Developers Conference a couple of weeks ago won’t show up anytime soon on European iPhones, iPads or Macs. That includes Apple Intelligence, which upgrades what Siri can do, including searching across apps for hard-to-find information, and iPhone Mirroring, which allows you to manipulate what’s on your iPhone screen via your MacBook.
According to Bloomberg, Apple blamed its decision on rules imposed by the Digital Markets Act in Europe. Is that a valid excuse? Who knows? In a way, it doesn’t matter.
What’s significant is that a U.S. tech giant is finally responding to the increasingly demanding European rules. It feels it’s like only a matter of time before a U.S. company decides the European market simply isn’t worth the trouble.
The question now is what impact Apple’s decision will have.
Apple doesn’t have the same market power in Europe that it does in the U.S. Data from research firm Canalys suggests Apple has more than half the U.S. smartphone market but only about a third of the European market.
It’s possible the new features would have helped lift Apple’s share in Europe, of course. They only work on the latest phones, so they’re expected to drive iPhone upgrades, boosting sales of the device, which have been stagnant lately.
But Tim Cook may think taking a stand against European bureaucrat-in-chief Margrethe Vestager is worth the cost of lost iPhone sales.
If that’s what Cook is thinking, he should be applauded. There’s ample evidence Europe’s regulations are hurting the continent.
In this piece in The Wall Street Journal in January, columnist Greg Ip argued Europe was falling behind the U.S. and China in tech sectors such as AI and electric vehicles thanks to its rules. Apple’s decision suggests Europeans may soon have to be content with substandard consumer tech services as well.
Perhaps Europeans are fine with that. But if they’re not, they know how to fix things.
From the linked article:
These are humbling times for Europe. The continent barely escaped recession late last year as the U.S. boomed. It is losing out to the U.S. on artificial intelligence, and to China on electric vehicles.
There is one field where the European Union still leads the world: regulation. Having set the standard on regulating mergers, carbon emissions, data privacy, and e-commerce competition, the EU now seeks to do the same on AI. In December it unveiled a sweeping draft law that bans certain types of AI, tightly regulates others, and imposes huge fines for violators. Its executive arm, the European Commission, might investigate Microsoft’s tie-up with OpenAI as potentially anticompetitive. [Microsoft says it won't release its AI to Europe this year -- June 21, 2024.]
Never before has “America innovates, China replicates, Europe regulates” so aptly captured each region’s comparative advantage.
And we haven't even gotten to the energy desert that Europe is becoming.
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Coco Chanel
