crazy pizza unpacking

EU revealed more details about their plan to regulate Big Tech. If companies refuse to obey, they could be forced to hand over up to 10% of their European turnover.

It’s long due as the last scheme was made 20 years ago.

While the EU will never admit it publicly, this one looks like it’s particularly made as a groundwork for controlling more what Americans are doing in Europe.

The politics and regulators are far behind in understanding and controlling what businesses do with technology these days, and this is a catch up, reactive move.

There are some good points in there, there’s no doubt, but, in general, regulation is one of the main deterrents of innovation. And Europe badly needs incentives to be innovative and come up with strong stuff.

This ain’t one, as this aims to prevent the other guys from doing stuff. And it is inevitable that this is the kind of regulation that will, sooner or later, also affect equally European tech, should we ever have an Euro FAANG.

Here’s an example of a rule that will prevent competition and innovation:

companies will be obliged to not use data gathered via their main service to launch a product that will compete with other established businesses

This is exactly one of Spotify’s complains against Apple. Word by word.

While I agree with Spotify’s position that Apple is being unfair and aggressively using its Store power to promote their competing inferior service, they are not right in this case.

And moreover, making an unsubstantiated complaint a general rule with the power of law doesn’t make sense to me and think it is unjustified.

Let’s unpack it a bit.

Let’s say I have an Italian restaurant and my customers are crazy about pizza. I know that because I have a loyal clientele, I know everything about them and I make a good business out of it. That’s data.

However, I notice that there’s another restaurant, pizza only, which has a good dish that sells like crazy. A dish that I don’t have in my restaurant. That’s an established business.

Should I add a similar one in my menu? Yes, if I am business savvy, my customers will probably like it and my shareholders would say that I am a proactive manager.

However, the above rule would restrict me to sell a similar dish for my loyal clientele. That would be a new product competing with an established business.

And this, in layman’s terms, prevents competition. And that’s not right.

Other examples: banks complaining that Klarna is using its users data for launching banking services. Or Spotify complaining that a radio station is using its customers data to launch a digital music database service.

You get the idea. That is to say that the data gathered in a lawful way about your users behaviour and preferences is proprietary IP and is a competitive advantage. In a free economy, you should be able to use your competitive advantages against other players.

I understand where it comes from and I feel for Spotify as Apple is a rich loser abusing it in many ways but this ain’t one.

This kind of stuff prevents a market to work properly. Really hope there’s a larger context and clearer boundaries defined beyond that. Would be curious to hear other opinions.

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