Wolff: EU regulators kneecap U.S. tech titans

What must Bill Gates think about Europe's ever-expanding efforts to impede, frustrate, bully and cut down to size America's most powerful technology companies?

It is some rough and peculiar justice that all the bureaucratic forces and local protectionism that help put the brakes on Microsoft in the late 1990s might now waylay Microsoft's most aggressive competitors, Google, Apple, Facebook and Amazon.

Gates might feel something like the parent to the children, the old man who knows that, no matter your wealth and standing, a humbling awaits you. Microsoft, then even richer and more powerful than the four horsemen above, was slowed and distracted enough by the thousand cuts of European regulators (and, at the same time, by the U.S. Justice Department) to enable those self-same competitors to grow. European regulators, with a little critical interpretation, helped Google take the future from Microsoft.

The historical point that Gates might make is that there simply is no winning in Europe's regulatory Golgotha (Microsoft in fact is still being pursued, incurring a new $731 million fine last year for anti-competitive practices). This is in stark contrast to the public point of view of the Internet giants who yet seem sanguine about their strength, influence, inevitability and legal resources. Gates might point out that Microsoft had all that and more, but that it didn't amount to a hill of beans against a near-decade of unremitting regulatory challenges, the Lilliputians swarming over Gulliver.

Worth noting that since then, Europe, Brussels and general EU administrative orthodoxy has only grown more confident and resolute.

Gates might add that there can be no winning because there is no resolution. It is something of a pillar of European Justice (indeed, perhaps of regulatory law everywhere), that there is no guilt or innocence, no disposition, no end. It is not even the long and grinding process that, finally, humbles you, but rather the symbolic uses to which you are put. America's beloved tech companies become, for the rest of the world, a treacherous octopus, who bureaucrats far and wide become heroes for standing up to.

It remains an extraordinarily effective function of modern government, perhaps its central and most popular one, to humble the mighty.

There has been, for Google, the right to be forgotten issue, with European regulators saying Google has to take responsibility for the legitimacy of its search results, and the personal pain and suffering they cause. That had been restricted to European searches, but now regulators want these protections expanded to searches everywhere (rather altering the most basic premise of a search engine).

There is a widening anti-trust investigation of the company. There is, too, in the U.K., new tax rules — a.k.a. the "Google Tax." For Facebook, there are persistent privacy issues in a European environment where privacy is as paramount a right as free speech. Apple has tax and anti-trust problems. And now France and Germany are calling for vast, new Europe-wide anti-competitive regulations that would target "Les Gafa" — the collective Google, Apple, Facebook, Amazon. And, to boot, the European Parliament has passed a non-binding resolution calling for Google's breakup.

All this is treated by the corporate targets as, generally, nuisance sort of stuff. It is an old-order Europe not having yet caught up to the new realities — in other words, just a culture lapse. A public relations battle. A process issue with the future surely being on the side of Les Gafa — because, well, they are the future.

And yet, this seems like a stubborn misreading of what has happened in the past.

Beyond the warning and bad press stage, through the litigation phase, and then on to the protracted adverse rulings and appeals period, you finally reach the point where — understanding that you can't function internationally if you can't function in Europe — you start to change your business. In fact, as with Microsoft, your business will have already largely changed. You will have made settlements and compromises; you will have diverted resources from growth to defending the status quo; and your competitors, new and old, will have taken advantage of your exposure.

Arguably, reaching the first stage, a company ought to recast its business from maximum reach to maximum profit — instead of becoming the kind of utility that everyone relies on and that is invariably regulated, it might become a more exclusive and valuable service to a more limited group (an ironic turn, given Europe's theoretically more democratic intentions). Or, at the second stage, settle as fast and as cheaply as possible — but certainly settle. But all seem, by force of righteousness or hubris, to push on.

It is then for others to grasp the historical context. The opportunity for them to do this might actually be large because it is far from apparent to most Americans who are reluctant to acknowledge historical context. That is: American corporate power, particularly technology power, hits a glass ceiling in Europe. Reaching it, you lose influence, prestige, support and that sense of being the certain future that fueled your growth.

Another difference between the U.S. and Europe is that Americans tend not to believe that obstacles can't be overcome, that better lawyers can't find a way, that history is already written. Europeans, on the other hand, with a lot more history are usually more or less sure of the outcome.

Perhaps Gates is even pleased that if Microsoft couldn't escape Europe, nobody else can either.