To the extent that Khan’s politics have hindered U.S. tech, they have been a gift to the EU and China.
One of the most effective protectionists of recent years has been Margrethe Vestager. She was the EU’s top antitrust enforcer from 2014 to 2023. Since 2019 she has also served as an executive vice president with the responsibility for setting the strategic direction of the bloc’s political priority, “Europe Fit for the Digital Age.” It’s telling that the latter is considered to be a political priority, and that this “priority” is defined primarily in regulatory terms. The best thing that the EU could do to compete in the digital age would be to get its regulators out of the way.
In its Lisbon agenda (2000), the EU gave itself the goal to “become the most competitive and dynamic knowledge-based economy in the world” by 2010.
That didn’t exactly work out.
A little over a year ago, Ursula von der Leyen, the EU’s top bureaucrat, asked Mario Draghi, a former president of the European Central Bank, to write a report suggesting how to revive the union’s flagging competitiveness. It was a shrewd choice. Draghi is clever and well-respected; a sharp operator, he knows how to play the EU game. And so he recommended more Brussels, not less, and advised regulatory changes rather than deregulation.
I wrote about that report in a recent Capital Letter. But while Draghi’s prescriptions were either weak or would be counterproductive, much of his diagnosis was spot-on. He noted (how could he not?) that the EU was lagging the U.S. economically:
A wide gap in GDP has opened up between the EU and the US, driven mainly by a more pronounced slowdown in productivity growth in Europe. Europe’s households have paid the price in foregone living standards. On a per capita basis, real disposable income has grown almost twice as much in the US as in the EU since 2000.
Much of this was due to the U.S. outperforming the EU in the area in which the agenda-setters of Lisbon had focused their attention, the tech sector:
Draghi:
Europe largely missed out on the digital revolution led by the internet and the productivity gains it brought: in fact, the productivity gap between the EU and the US is largely explained by the tech sector. The EU is weak in the emerging technologies that will drive future growth. Only four of the world’s top 50 tech companies are European… the EU’s global position in tech is deteriorating: from 2013 to 2023, its share of global tech revenues dropped from 22 percent to 18 percent, while the US share rose from 30 percent to 38 percent.
The EU’s response has been to compete with regulation and lawfare rather than innovation, hoping to use the former to hobble America’s tech giants, and the latter to loot them of billions.
This thread on X today offers a neat summary by Lazar Radic (it begins with Japan) on this topic.
This is spot-on:
Zooming out a little, it is clear that the DMA [the EU’s Digital Markets Act] was born of industrial policy concerns: a desire for European digital sovereignty, closing the technological gap with the US, boosting European champions and — let’s be honest — expropriating some of big tech’s profits.
Radic:
There is a real chance that Trump, too, will see it like this: “US tech is being singled out for regulation to stifle American competitiveness, free ride off its successes., and help foreign businesses and competitors — including Chinese ones.”
Trump should see the EU’s approach to American tech companies like this, and the U.S. should retaliate. That retaliation should include reprisals for what Vestager has already done.
Given Vestager’s attacks on U.S. tech, it was not altogether surprising that the Davos and Brussels posse at the Financial Times named her as one of its 25 most influential women of 2024. She is, apparently, someone to be “celebrated” as one of “the women remaking the world we live in today.”
Well, looting is a remaking of a kind, I suppose.
But who wrote the paragraphs celebrating this anti-American?
Why, it was Lina Khan of the U.S. FTC:
Margrethe Vestager became the European commissioner for competition 10 years ago, at a time when policymakers generally viewed dominant tech platforms as benign, if not beneficial. But policymakers think differently about these companies in 2024, in part because Margrethe thought differently about them in 2014.
She was one of the first law enforcers in the world to take action against these platforms for undermining competition, harming their users and stifling innovation — actions that initially garnered reactions ranging from scepticism to scorn. But Margrethe had the courage to stand her ground, even under pressure from powerful figures. Now, governments around the world have followed her lead and taken steps to rein in these companies. Time has largely proved her right.
On the contrary, time has proved nothing other than (1) the reality of the EU’s mercantilism, (2) the extent of Brussels’ jealousy of American success, and (3) the degree to which the EU is prepared to loot companies from the country that defends it.
For Khan to praise Vestager is appalling, but, given her disdain for American tech and for the way that U.S. antitrust law has been practiced in recent decades, it is not surprising. Khan’s politics are what they are, and, to the extent that they have hindered U.S. tech they have been a gift to Brussels and Beijing.
And yet she has her fanboys in the GOP, including (judging by this WSJ article), Matt Gaetz, the inevitable Josh Hawley, and, regrettably, JD Vance, whom the newspaper quoted speaking at a conference in March (before he became a candidate for the vice presidency), where he said:
“I look at Lina Khan as one of the few people in the Biden administration that I think is doing a pretty good job.”
Low bar and all that, but no.