The Blog

  • August 28, 2015
  • Euro-troubles

    RodinThinkerKansasCity2American tech companies are having their troubles in Europe again; this time, it’s Google’s turn. According to an article in the New York Times, European newspaper publishers are up in arms about Google encroaching into the news business.

    There are numerous ways to approach this topic—that the Europeans were too slow to see the digital future (and some still don’t), that publishing on newsprint is a vanishing idea, that Europeans, rather than playing catch-up with the tech giants are engaging in political entrepreneurship.

    Political entrepreneurship is an interesting idea. If you’re familiar with garden-variety entrepreneurship where someone risks everything, borrows money, and builds a company, the political kind is just the opposite. Political entrepreneurs invest in the political process by lobbying lawmakers to write laws advantageous to their needs. This is happening at the European Parliament but at a laughable rate.

    According to the times article the European publishers don’t disclose what they’re spending on lobbying but one of the leading publishers in Europe was said to have put up about $55,000 in the effort while Google has spent $4.8 million.

    But the root problem isn’t law. It is Europe’s decades-long aversion to investing in entrepreneurship and technology leadership. While there are certainly bright spots in the European tech sector such as Siemens and Philips, I can’t think of a technology from the last hundred years that Europeans have invented. Think about it, electric light, the airplane, sound recording, video recording including movies, transistors, computer chips, whole computers, the Internet, social media, and operating systems are all American inventions. The Europeand and Americans tie on the invention of automobiles. The last real contributions that Europeans made to technology were the steam engine and the spinning jenny. Even the assembly line is an American invention. And this is all despite the huge brains trust resident on the continent.

    Not to be rude to our friends and allies but if there was a credible European alternative to Google the story would be different. Alternatively, if the Europeans tried to leverage Google rather than fighting it, the results might be better. The Times story was illuminating in some ways on this. For example, according to the article, “…print circulation for Europe’s newspaper industry has fallen a combined 21.3 percent, compared with 8.5 percent in the United States, according to the World Association of Newspapers and News Publishers, a trade body.”

    Moreover, when publishers tried to charge Google for linking to their content, thinking it would raise revenues, it had the opposite effect. Again from the Times, “…copyright rules already have been passed in several European countries, but have so far backfired against the publishers. In Germany, Google removed many local organizations from its news service, which led to a drastic fall in online traffic to some newspapers’ sites. Local publishers eventually agreed to waive any potential charges.”

    So, in many ways Europe is left in a tough spot, they are behind the tech curve and they are being colonized by U.S. tech companies which they don’t like very much. But the solution to their problems isn’t political entrepreneurship. We can already see that. It’s also too late to do much about Google’s colonization. True the Europeans might be able to hobble Google the way they hobbled Microsoft in the browser wars but it’s hard to see how that provided much advantage. The remedy resides in having policies that promote entrepreneurship in general and especially economic growth, which is diametrically opposite what they have right now.

    Published: 2 years ago


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