The European Commission is about to propose a “revolutionary” overhaul of digital regulation. They say it is to protect competition, and the little guy, but it is actually about using fines to fill budget shortfalls. 

These so-called revolutionary digital regulations will specifically target American tech companies, and we can be sure these new rules will be a pathway to target all successful American companies. Today all business is in some part digital. 

The EU through its Commissioner for Competition, Margrethe Vestager, says it wants to make tech giants more responsible for the content on their platforms, and ensure that competitors have a fair chance to succeed against the big firms. This is supposedly being achieved by numerous antitrust proceedings against primarily American companies. This is in combination with an eminent December announcement of the new Digital Services Act, which is expected to overhaul the management of content on platforms like Google and Facebook.

The EU claims to have the interest of fair competition at heart. But we don’t have to look very hard to find the true motives. Money. American money.

In a deal between the European Parliament and the German Council of the EU presidency, instead of requiring EU leaders to reopen a €1.074 trillion budget agreement reached in July, they found a creative way to top-off some programs at a price tag of €15 billion rather than the roughly €110 billion that MEPs had initially demanded. 

How did they get creative? Of the €15 billion, €12.5 billion will come from funding gained through competition fines imposed by the bloc on… American companies. 

This means Vestager has been directed by the EU to fill a budget gap with fines and fees resulting from competition investigations. Any company targeted by an EU competition proceeding can be sure that the proceedings won’t be fair – they are already guilty – and the fines will be high.  

Its no small coincidence that the same day of the agreement, Vestager announced two investigations on Amazon.

This isn’t the first time the EU looked to American companies to fund their budget shortfalls. Back in 2012 they planned to use nearly €3 billion in antitrust fines to fund part of their €11.7 billion budget shortage. Soon thereafter Microsoft lost their long-standing appeal on cases dating back to 1998 and 2008 with fines totaling out at €1.64 billion. At the time these were the largest fines the EU had ever issued, but they are on a serious upward trajectory. 

In 2017 the EU began a three-year series of investigations into Google. The initial fine in 2017 of €2.4 billion is greater than what 18 other countries contributed to the EU’s budget that year. In fact, Google’s fine would contribute more to the EU’s budget than the bottom 9 contributing countries combined.

But it didn’t stop there. Google saw another record breaking fine of €4.3 billion in 2018 and another antitrust fine of €1.5 billion in 2019 for a total of €9.3 billion in fines over three years. All fines are being appealed. 

The EU budget is unsurprisingly convoluted. Transfers from member states are one element of the budget. Fines, when collected, are used to offset transfers from member states. Overall, many states receive more back from Brussels than they contributed, making them net recipients.

The perverse incentive is clear, and the fairness of these proceedings is certainly in question. If these fines contribute more to the budget than most member states and fines are accounted for on the front end to fill budget gaps, no company can expect a fair hearing in the EU. They just want the money and will craft their laws however they need to fleece American companies.

It’s not new behavior either. The EU has been using its courts to fund its budget for decades. The EU levied 38 individual fines totaling €364 million on companies for breaching competition law in 2015. Uncontested fines from 2015 along with penalties collected from earlier cases that were upheld provided €1.4 billion in revenue in 2015, according to the European Commission.

With a total budget of around €165.8 billion in 2019, member states contributing meagerly, and in the wake of a global pandemic, we can be sure that rather than balance their budget or look to their own population and member states, the EU will be heaping on the competition fines for American companies.

Europe desperately crafts their laws for ill-gotten financial gains. They have been pushing a highly predatory digital tax structure that was written in such a way to only hit American companies after numerous European companies, including automotive manufacturers, pointed out that all companies are digital and that European “champions” would be swept up in the cull. This was confirmed when the OECD admitted that it would impossible to separate the digital economy from the rest of the economy for tax purposes. The digital tax structure, which in varying forms has passed in some countries but not EU wide, was revamped to specifically write out European companies. 

We can be sure the “revolutionary” Digital Services Act expected in December will be just another crafty legal avenue for Europe to fill its budget holes.

It doesn’t matter how you feel about any company. What’s alarming is that Vestager has a budget gap she has been directed to fill, meaning fines and settlements with these companies is a forgone conclusion and few of the companies targeted will be European.