Has the EU Missed the Boat on Big Tech Regulation? Vestager's Impact and What's Next. Vestager's EU tenure was marked by bold action against big tech, but critics argue it stifled innovation and missed growth opportunities for Europe's digital future.

European Union's (EU) outgoing chief Margrethe Vestager, leaves behind a legacy of bold action and mixed results in the fight against big tech.

Widely celebrated for her assertive stance, Vestager recently reflected on her tenure, calling it "partly successful." Her 2014 appointment marked a pivotal shift in antitrust enforcement, ushering in a decade of landmark cases and transformative legislation that positioned the EU as a global leader in digital market regulation. In an interview with The New York Times, Vestager emphasized the need for deeper structural remedies to address big tech's entrenched power. "I wish we could have moved faster," she admitted. During her tenure, Vestager spearheaded cases resulting in record-breaking fines, including €8.25 billion against Google for abusing its dominance in search and Android, and €4 billion against Apple for its controversial tax arrangements in Ireland.

Despite her efforts, the tech giants she aimed to regulate have grown stronger. Critics claim her aggressive approach stifled innovation within Europe, cementing the perception of the EU as a bureaucratic obstacle to progress. "The EU has played a role in stifling the growth of domestic tech companies. It tends to enforce rigid, strict rules without considering their potential harm to the industry," Mikhail Taver, founder and managing partner of Taver Capital, tells me. "In contrast, the U.S. has regulations, but they apply them more selectively, judging each case individually. This allows them to prioritize the national interest, weighing the benefits of regulation against its costs."

"Be bolder," Vestager urged her successors in the interview. Her call for more decisive action now places significant pressure on the incoming team of commissioners, led by President Ursula von der Leyen. But has the opportunity to reshape the digital economy already passed?

Is the Digital Markets Act enough to curb big tech's power?

The Digital Markets Act, introduced earlier this year, is the EU's boldest step yet to challenge big tech's hold. It aims to hold "gatekeeper" companies accountable for unfair practices like promoting their own services in search results. The Act also addresses restrictions like Apple's ban on third-party app stores and has mandated Meta to make messaging platforms accessible to foster a competitive digital ecosystem. However, the effectiveness of the DMA is still yet to be proven. Taver argues that the lengthy timeline for its implementation has allowed tech giants to cement their dominance further. "Why the EU hasn't managed to produce any groundbreaking technologies or world-changing companies?," he adds. "There's also the possibility that the EU, perhaps subconsciously—or at least without openly declaring it—may be employing protectionist measures to reduce competition for its domestic companies and support their growth."

Moreover, structural remedies, such as breaking up dominant firms or imposing stringent interoperability requirements, were largely absent from her agenda. Meanwhile, the U.S. has grown increasingly assertive, with the Federal Trade Commission (FTC) pursuing high-profile cases, such as its lawsuit against Amazon, to explore structural separations. By contrast, Europe's cautious approach raises skepticism about whether regulators fear the economic fallout of dismantling tech giants.

"No European company has benefitted from the EU single market rules as US tech giants," Sebastiano Toffaletti, Secretary General at European DIGITAL SME Alliance, tells me. "They have had access to a market of 450 million with the EU working for them to lift diverging national laws. They have been allowed to establish headquarters in the most favorable of the 27 member states, securing exclusive tax deals that far outstrip what any European company can hope to achieve." Toffaletti believes the DMA's real flaw is its lack of clear, prescriptive guidelines on what companies can and cannot do. "Its provisions are open to interpretation, leaving it ironically up to the companies to decide how they wish to comply."

What's next for EU tech regulation?

Appointed EU President Ursula von der Leyen, who has led the Commission since 2019, has officially begun her second term with a new team of Commissioners as of December 1, 2024. In her opening address to the European Parliament, von der Leyen pledged to tackle Europe's "innovation gap" by simplifying regulations, boosting startup growth, and encouraging more private investment in research and development. "We will put research and innovation, science and technology at the heart of our economy," she said. "We will invest more and focus better."

Ekaterina Zaharieva, the new commissioner for startups, research, and innovation, was the first to be highlighted by von der Leyen in her speech. "Her leadership and experience will be invaluable to get more breakthrough tech from the lab to the market," von der Leyen stated. The president also pledged to break down national barriers across the EU to help startups secure financing and expand across borders.

However, balancing these ambitious objectives remains a delicate task. "Vestager's successor is even weaker and, admittedly, less interested in competition law. So, there's only little hope that the situation will improve," Toffaletti says.

As the EU faces these challenges, the future of digital markets—and the principles of fair competition—may depend on the boldness of the next generation of regulators. Toffaletti argues that EU regulators should shift their focus toward addressing the risks posed by emerging technologies like AI.

As generative AI continues to evolve and expand its capabilities, he warns, tech giants could soon wield enough power to dictate terms to national governments. "This poses a serious risk to our societies and economic well-being," he said. "Governments must collaborate with their national industries to ensure they jointly control the critical components of the technological stack—from connectivity and cloud computing to digital platforms and generative AI."