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HomeEuropeEurope’s Enforcer Wants Big Tech to Play by His Rules

Europe’s Enforcer Wants Big Tech to Play by His Rules

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 Thierry Breton was visibly pleased after meeting with Mark Zuckerberg. The 68-year-old Frenchman was suppressing a smile, his feathery white hair still perfectly in place following a late June stroll through the rooftop gardens of Meta Platforms Inc.’s sprawling Menlo Park complex.

Breton was in California to meet with the heads of big US tech firms. With the European Union’s content moderation rules set to go into effect in a mere two months, the internal market commissioner wanted to get a sense of how prepared the tech titans were to take down illegal content, moderate their platforms in each EU language and open up their algorithms, among other requirements. The leadership at Meta, he said proudly, had done its homework: Chief Executive Officer Zuckerberg had referenced specific acts of the law and had even asked Breton’s advice about how best to comply.

It was a remarkable change from their first encounter in Brussels more than three years earlier, when the company then known as Facebook had taken a more high-handed approach. At that time, the EU was drafting what would become the bloc’s landmark content moderation and competition rules, and executives had come to present their perspective.

Back then in February, Zuckerberg sat in silence while his chief lobbyist Nick Clegg fielded questions for the CEO and walked through a 22-page white paper detailing how Facebook envisioned government regulation. Breton, new to his job, asked Zuckerberg to answer for himself, then rebuked the company for not doing enough to oversee its platforms, said three people in with the meeting who weren’t authorized to discuss it.  And then, in a move companies would soon learn was typical Breton, the commissioner went off-script and surprised the CEO by asking him to speak with the reporters assembled outside. He did, briefly.  

At the time, the world’s biggest tech companies—Meta and also Amazon.com Inc., Apple Inc., Alphabet Inc.’s Google and Microsoft Corp.—didn’t really think that European legislators could regulate them, the commissioner reflected. Years of US attempts to rein in these companies had largely failed, and tech companies thought they could successfully thwart oversight in Europe. But now, Breton boasted, the most powerful companies in the world were taking Brussels seriously.

Whether that proves to be true could be the defining question of the commissioner’s tenure.

This story is based on conversations with dozens of people who’ve worked with Breton on tech policy issues or companies that have been in conversation with Breton, who requested anonymity to recount private meetings and views they aren’t authorized to speak about.

The EU’s Digital Services Act (DSA) and the Digital Markets Act (DMA), the EU’s two landmark Big Tech laws, have just gone into effect and give the European Commission unprecedented power to tell tech bosses how to manage their businesses—and to levy steep fines if they step out of line. The DSA dictates how social media platforms and online marketplaces must respond to illegal and harmful content, while the DMA restricts dominant tech firms from engaging in anticompetitive behavior. 

Before Breton, tech companies feared Margrethe Vestager, the EU’s two-term competition chief. Vestager became something of a celebrity in regulatory circles a decade ago when she dragged Google and Apple to court for allegedly abusing their dominance and not paying taxes. While some of her more ambitious cases ultimately fell flat, the EU has in the past decade become the world’s watchdog for tech thanks to groundbreaking data protection rules and a series of major antitrust and tax rulings that happened under her watch. To keep up with the rising tide of misinformation and emerging technologies such as artificial intelligence, the bloc is moving ahead with more regulation. 

Enforcing these rules will be a challenge, and Breton—formerly CEO of French software maker Atos and France Telecom, France’s finance minister and a bestselling sci-fi writer—is making himself the face of this effort. That’s put centerstage the two, sometimes conflicting, sides of Breton’s public persona: the assertive regulator who likes to tweet provocative warnings to the likes of Elon Musk, and the former CEO who wants to maintain chummy relations with those very same tech giants. 

This, in practice, has meant vying for the title of EU digital enforcer previously held by Vestager. It’s well known the two don’t get along, clashing over their regulatory approaches and personalities. While Vestager advanced her carefully crafted lawsuits with intimidating calm, Breton acts more like a bold — often  brash — CEO. Vestager worries big companies would only benefit the EU’s largest economies, while Breton thinks governments should help create European champions to compete globally. Vestager is wary of subsidies; Breton thinks they’re often needed to attract private investments. And while Vestager wants to make sure all companies play by the rules, Breton wants to write new ones that favor European businesses. To Brussels bureaucrats, Vestager is emblematic of northern, laissez-faire values long dominant in town, while Breton embodies a French interventionist mindset gathering momentum as the EU tried to limits its dependence on China and the US. 

These differences were exacerbated by a convoluted hierarchy that put Vestager in charge of the competition portfolio and also had her overseeing digital portfolios alongside Breton, who was technically her subordinate. Vestager, however, stepped aside from her role last week to seek a different job with the European Investment Bank, while Breton is angling for a second term in the commission. 

Not that Breton has ever let technicalities stop him. Regardless of the industry or whether the topic falls within the confines of his job, Breton is constantly advocating for more regulation, more government intervention, and more generous  state aid. His 2022 Chips Act unlocked EU funding for semiconductor production (a first) and stipulated that in the event of an emergency (like, say, a pandemic) companies had to prioritize regional orders. He has pushed for subsidies to encourage investments from companies such as Intel Corp. and Taiwan Semiconductor Manufacturing Co. (TSMC), backed procurement rules that would favor European businesses and advocated for provisions that would let governments intervene in company supply chains. To some, this legislation is visionary; to others, it’s a protectionist nightmare.

With an assertiveness that can border on arrogance, Breton likes to say the bloc can “no longer be naive” about what he calls the “geopolitics of supply chains” and must cultivate its own resources. It’s all about rapports de force, or balance of power, Breton often says. If the EU can’t stand on its own, it’ll be bossed around by everyone else. Breton’s vision is to “build a future in Europe, with European workers, with European companies, with European made products” as he described recently in a speech. While his views were once dismissed as too protectionist, too French and anti-American—charges that particularly rile him given that he lived in the US for years and almost got a green card—the world has changed in his favor. The Covid-19 pandemic, a war on Europe’s borders and a race among Western governments to create domestic supply chains have given Breton his moment. 

Breton has a reputation for unpredictability—he once inserted himself on a trip to Senegal that was intended to be only for the commission president and a handful of Nordic female EU commissioners, according to people familiar with the mission. He also has a habit of making off-the-cuff comments that sometimes become policy. Google CEO Sundar Pichai learned this firsthand when he sat down with Breton for a one-on-one conversation during a spring trip to Brussels. While discussing AI regulation, Breton asked Pichai to support the “AI Pact,” which Pichai had never heard of but nonetheless agreed to, according to people familiar with the meeting. By the time Breton tweeted that Pichai had committed to some set of voluntary obligations, there was no way to back out. It was later clarified they had to do with mitigating AI use in risky contexts and labeling deepfakes.

Pichai wasn’t the only one caught off guard—as Vestager made clear to two of Breton’s cabinet members during a heated exchange in an elevator, according to people familiar, she was the one who came up with the plan.

Breton’s approach in Brussels, a town notorious for bureaucracy and caution, has been controversial. The commissioner has been accused by non-EU business interests and liberal critics of being a mouthpiece for France, both its companies and government. Tech companies argue that his efforts to force large streaming sites like YouTube and Netflix to help pay for internet infrastructure are nothing more than a gift to telecoms providers such as Orange, which Breton used to run. They also point out that a cybersecurity certification proposal he’s backed would mainly benefit French cloud companies. An aide to Breton called these accusations false and prejudiced, as the telecom legislation hasn’t yet been proposed, and the cyber plan would help all European companies be competitive.

The commissioner’s frequent meetings with CEOs have also drawn criticism. Some argue that Breton is too close to the CEOs he regulates. (Pat Gelsinger, the new CEO of Intel and the biggest beneficiary of Breton’s Chips Act, is a longtime friend.) Others say that these relationships are more for his own benefit than that of the regulation. Before Musk purchased Twitter, Breton flew to Texas and got the world’s richest man to film an awkward video saying he agreed with the EU’s ideas about content moderation. In contrast with Musk’s contentious relationship with US regulators, Musk and Breton have developed a rapport over the past year, in part through their shared affection for semiconductors and satellites.

“I find it problematic that he considered the balance of power with Musk was going to be established with a handshake and a gentleman’s agreement following a discussion behind closed doors,” Jean Cattan, secretary general at the French National Digital Council, a policy research group that advises the French government. “That’s the best way to be fooled.” Breton’s aide said the commissioner has been publicly critical of Musk and that while relations are cordial with Gelsinger, Breton has no problem making a strong point to the CEO.

Breton’s used meetings with CEOs to become the center of the EU’s efforts to persuade companies to take the bloc seriously. He paid a visit to X, then known as Twitter, on his tour of Silicon Valley in June and greeted Linda Yaccarino, less than three weeks on the job as CEO. She offered Breton a coffee, the only amenity available at Twitter HQ, before a very tired-looking Musk popped up on the big screen for a “stress test” of Twitter’s ability to comply with the DSA. Musk kicked things off by saying that Tesla—er—Twitter, he corrected himself, planned to comply with the EU’s content laws and that the company seemed to be on the right track. 

In addition to content moderation, AI regulation is likely the last big issue Breton will work on during his five-year term, which wraps up next year. As a trained engineer, the commissioner has claimed he’s uniquely well suited to understand AI’s technical complexity and the regulatory challenges it could present. During a presentation at OpenAI’s headquarters, Breton grew irritated with the company’s oversimplified explanations, according to people in the room. A demo of ChatGPT, its flagship generative AI product, did not bolster confidence. The chatbot claimed that Breton had worked for fellow politician Nicolas Sarkozy—he hadn’t, and had previously been highly critical of Sarkozy—and programmers demonstrated how the software would refuse to tell users how to build a bomb, only to have Roberto Viola, one of the commissioner’s chief civil servants, then trick it into providing instructions.

The EU is years ahead of the US in regulating AI. While US lawmakers just got major tech companies to agree to voluntarily invest in cybersecurity and share safety information with governments, Breton is pushing the EU to move faster in setting mandatory rules that could require companies to audit AI use in “high risk” situations, such as for hiring or in law enforcement, and to label deepfakes and AI-generated content as such. He’s told EU negotiators the AI Act needs to be passed by the end of the year and has stood firm on Europe setting its own rules. At a May meeting in Sweden, according to people familiar, Breton told US Secretary of State Antony Blinken that he needed to respect the EU’s democratic process after Blinken criticized the European Parliament’s proposals for overseeing generative AI.

But continued regulation comes with a price. Companies are increasingly delaying the EU rollouts of their products. The bloc was one of the last places to get access to Google’s Bard chatbot, and Meta has no plans to launch Twitter rival Threads in the EU because of questions about how competition rules will play out. Two tech companies, Amazon.com Inc. and Zalando SE, have already sued for allegedly being singled out by the Digital Services Act, and in June more than 150 European companies signed a letter expressing concern that too much AI regulation could jeopardize their competitiveness.

“If the EU starts embracing digital protectionism, there is a risk that techno-protectionism will become the global norm,” Columbia Law School professor Anu Bradford warned in her book Digital Empires. “After all, EU regulators should keep in mind that the Brussels Effect—the EU’s ability to externalize its regulations—is a potent mechanism for exporting both good and bad regulations alike.”

After slightly more than 24 hours in the US, the last stop on Breton’s whirlwind tour of tech company headquarters was Nvidia Corp., which was first valued at $1 trillion about a month earlier. Energized after spending nearly two hours talking about industry—his favorite topic—Breton was all smiles when he walked out to speak to the press with CEO Jensen Huang. Wearing his signature leather jacket, Huang commended Breton’s “great passion and expertise” in supercomputers, and Breton, in a matching EU pin and blue Dior tie, praised Nvidia for paving the way on “everything we do on AI.” Breton said he had invited Huang to visit him in Brussels, and the CEO brought up Breton’s “wonderful idea” that Nvidia invest more in Europe.

Source : BNN

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