Europe's Techless Future
Europe is not a place to build technology companies. Nowhere in the world do you face more barriers, both in law and in custom. I posted this image a month or so ago, and recent developments are ensuring the trends stay the same:
Angel investing is also far lower in the European Union, and startups rely more on bootstrapping or turning earlier to the venture capital vultures to run. Startups also don’t give out much equity, which is a big part of the US startup scene to attract talent and offset a cash-only wage. In the middle of the AI boom, Q1 2023 saw the lowest tech fundraising quarter in over six years. That recovered somewhat throughout the rest of the year but ended barely over the mark from four years ago, slowing considerably after the COVID-19 boom in investment:
While technology companies have nearly subsumed the Fortune 50 and remain as the growth engines of the global economy, the European Union views the whole space with skepticism. They uniquely prevent and heavily scrutinize government investment in technologies, especially anything considered ‘start up’ aka essentially newly developed in the past five years. GDPR, content safety standards, new AI and ML standards all regulate companies before they start serving users at all in cross-cutting and opaque ways that change frequently depending on how many users your tool or platform ends up with. Getting to any mid-size growth begins unending rounds of environmental and digital data usage reviews. Become larger, and no big tech company today has avoided fines and fees for what the EU deems anticompetitive.
In hindsight we can see how these seemingly hugely important cases of the time shook out – was Windows Media Player bundling into Windows in 2004 a ‘hugely uncompetitive’ act that favored Windows so much it harmed the rise of rival music players? Did Google having a ‘Shopping’ page put into Search in the 2010s create anti competitive effects so no one would shop at Amazon or on brand websites? The answer in hindsight is obviously no, but the EU still levied hundreds of millions of Euros worth of fines based on an assumption of harm from tech’s reach, before any harm actually materialized.
Recently, Meta was forced to change how they operate under GDPR and long story short gave users an option to agree to personalized advertising, or opt out but pay a subscription fee to use Facebook. “This used "consent" under Article 6(1)(a) GDPR as the legal basis for processing users' personal data.” This paywall-or-consent approach has been used by dozens if not hundreds of news outlets and other digital services around Europe with no issue for years since GDPR went into place.
But to the European regulators in the EDPB, they say no Facebook must offer itself as a free service and also must break the data chain underlying personalized advertising that funds the whole operation. Users have to have their cake and eat it too, not for 99% of digital services but for Facebook specifically because the EDPB has decided that "subjects may suffer detriment if it becomes impossible for them to use a service that is part of their daily lives and has a prominent role.” Facebook is a public good, apparently, despite consistently being fined and restricted to ensure that it doesn’t become one by the same regulator.
As you can tell I find this logic ridiculous, and while journalists have been framing this particular story as a ‘win for privacy choice,’ users will now enjoy a Facebook with non-targeted ads, meaning less efficacy, meaning far more ads to compensate, meaning less advertising on Facebook and revenue for EU businesses per dollar. A worse experience and less ROI for all involved, in the name of not having Facebook work like it does in the US where apparently we all live in a panopticon of digital horrors.
The ‘consumer choice’ paradigm that the EU shoves everything into ends up with website options like this, where starting this year every site in the EU will have pop ups and side menus covering data collection in excruciating detail for users to consider:
Europe has decided that using data in any way for the growth of a technical solution is prima facie bad. When you, the user, decide to use services that take significant investment to create and run and manage, you can simply decide to unclick these boxes and make sure that the technology you’re using can’t use any data to improve itself. As you can see, the ‘statistics’ box is unchecked by default.
Is this what we want? The creation of a slew of digital services, invented to help make manual tasks more operationally efficient – which we have learned often includes a great deal of personalization to make even better – should be only semi-usable? Programs with no memory of what you’ve done before or saved preferences, affirmative consent forms for every step in every process, random unrelated advertising at higher frequencies to counter its ineffectiveness, and so on?
Our society needs standards rather than the constant call-and-response of technical development and rushed, largely aimless legislation. The goals of privacy, security, reliability, and the like are goals worth striving for. But without stepping back and defining what aspects of privacy are truly important to users and setting universal standards around that, or where data personalization crosses the line into nefariousness, we will only get more bloated confusing technical jargon to agree to before we use any digital service. This is rehashing of the Apple Terms of Service scandal of the early 2010s, where South Park poked fun at people who didn’t actually sit down and read the ~50+ pages worth of legalese. Just as then, no one is really asking the serious questions about privacy, and so legislation ends up being reactively targeted at individual firms under the guise of generalized policy.
Whatever the answer is, the EU and its regulators have so far decided they want no part in the digital era, and are satisfied being left behind technologically and economically as the US grows at twice the rate of its G7 peers. Something has to give - Europe cannot continue to demand economic growth while suppressing technological development if it wants to get out of its current status as the world's first continent-wide museum. Maybe it doesn’t.