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This special guest commentary was written by Daniel Lacalle

Europe's Battles Against Apple, Google, Innovation & Jobs - apple image

"Our respect is so dry yet there's still this appeal that we've kept through our lives."

–Ian Curtis

One of the assaults that the European Union carries out with technological companies is that of the alleged lack of competition. We talked a few weeks ago in "put a technological in your life"  on the mistakes of attacking disruptive companies from a protectionism disguised as a defense of competition.

Well, the Australian Commission on Competition and Consumers (ACCC) has released its decision on Apple Pay. In its decision, it clearly emphasizes that Apple iOS and Android compete in the same market, and this was one of the issues that the European Commission doubted. The Apple Operating System is a differentiated offer that competes globally against other operating systems, such as Android ( "Apple's iOS operating system is a differentiated offering that competes globally against other mobile operating systems, particularly Google's Android" ).

Europe's Battles Against Apple, Google, Innovation & Jobs - quote callout lacalle

The European Commission refers to an "Android operating system" market to justify a supposed and non-existent monopoly risk. However, it is important to note that most media do not differentiate between an Android market and an Apple market. In fact, it is normal to always compare as competitors in the same market. It's like saying that Pepsi and Coca-Cola do not compete in the same market.

Apple has announced an app so they can switch from Android to iOS, which reinforces the fact that they are part of the same market. According to Apple, 30% of iPhone consumers in 2015 and 2016 replaced an Android device. In turn, Android explains how they can make the switch from Apple to Android. All this shows that it is the same market.

The reader is likely to find this issue irrelevant because, as a consumer, he knows perfectly well that he is winning from this competition and not only does he perceive no disadvantage, he receives a clear example of advantages in terms of quality, price and access to services.

If the consumer benefits, what is the problem?

The usual. For the European Commission, what is not controlled from a bureaucratic body is not transparent.

Recall that no one in the European Commission took their hands to the head when a minister of France put as essential condition for a merger between telecommunications operators that the state retains its power.

And I am very concerned that the European Union maintains itself a battle against the American giants while doing everything possible to sustain the position income of the so-called national champions. Trying to put doors to the field and attacking innovation will not create jobs or put the European Union at the head of the technological race that, unfortunately, is losing.

The big European telecommunications companies have to wake up from the protective protectionist dream and make a leap towards innovation leading, because the Brussels-conglomerate binomial is not responding to the challenges of the new technological revolution. As this great article by David Kenny explains, the solution to automation and technology is not to put doors to the field and taxes, but to lean

Honestly, I am very concerned that the European Union sees technology and consumer improvement as a threat and not as an opportunity. I am concerned that he sees the big technology as enemies instead of encouraging Europe to have leaders like them.

I am terrified that the bureaucracy assumes that the solution to our lack of competitiveness is to limit and put obstacles to the sectors of high productivity and to subsidize the inefficient ones. Instead of bemoaning the poor global leadership of those telecommunication conglomerates we have in Europe, which have become machines of destruction of value via inorganic acquisitions at gold prices, we should put all the stacks, companies and regulators, to change the Mentality of dinosaurs hoping that the change does not arrive at the one of leaders of said change.

We must make a very serious analysis on the error that entails putting constant barriers to sustain rentier sectors. Because global development will not stop happening because they do not like some. The European Union has the companies, the talent and the market to win competing, not to lose trying to prevent the future.


This is a Hedgeye Guest Contributor note written by economist Daniel Lacalle. He previously worked at PIMCO and was a portfolio manager at Ecofin Global Oil & Gas Fund and Citadel. Lacalle is CIO of Tressis Gestion and author of Life In The Financial MarketsThe Energy World Is Flat and the most recent Escape from the Central Bank Trap.