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Adam Cohen (Google): “DMA poses a risk of tech stagnation in Europe”

Adam Cohen is Google’s Director of Economic Policy.

How does Google approach the strengthening of regulation in Europe?

The debate has accelerated with the GDPR and now the Digital Market Act (DMA) and the Digital Services Act (DSA). New rules have emerged. But while regulators tend to think that we are against regulation, we have always said that we would respect European rules on European soil. By opening the discussions, the regulators also realized that we had already anticipated several problems, and sometimes even found the solution. We can help them achieve their goals.

An example ?

Take data portability. If you use Gmail where all your contacts are, you can transport this data to other mail services. However, to set up this portability, it is necessary to work on the protection of personal data. Our experience in this area can be useful to the regulator. Our point of view can only improve the discussions.

How would you rate the quality of your dialogue with European regulators?

We have our disagreements of course, but overall the relationship is pretty good. Regulators have learned a lot from our business models and they know how to mobilize resources to achieve long-term objectives. Gone are the days of them looking at very micro points, as was the case in the Google Shopping case that we were in discussion for from 2012 to 2017. The exchanges around the DMA were much more open.

How did you work?

We looked at how to strengthen competition in an “ex ante” approach. The idea is to deal with problems before they appear. We support the process of offering more choice to consumers and ensuring the interoperability of our service technologies. On the other hand, the DMA defines in a very rigid way what is a search engine, a browser, an app store, and the way in which they must function. We can develop our compliance around this, but my fear at the macroeconomic level is that this rigidity leads to very static business models. This is likely to weigh on innovation as products and services are constantly evolving.

The tightening of regulations also poses barriers to entry that are unfavorable to small players, but favors giants like Google…

Absolutely, and we told the regulators. We need flexibility. In the long term, the way in which the DMA is written poses a risk of stagnation of the technology in Europe. We have to find the right balance between the lack of regulation which risks leading to a loss of confidence and an excess of regulation which risks blocking the system. The only way to achieve this is to intensify the dialogue between regulators and companies. We are working on it.

A new draft personal data transfer agreement between Europe and the United States is under discussion. For some, it could endanger European digital sovereignty. What do you think ?

This agreement is essential for the development of trade between Europe and the United States. We need to find a common basis between the two sides of the Atlantic on what is possible and what is not, in order to develop the digital commerce which concerns all sectors today. We also need more stability in these rules.

The Wall Street Journal has revealed that you are working on a plan to spin off your advertising business to avoid US Antitrust lawsuits. What about?

We communicate with regulators to address their concerns. As previously stated, we have no plans to sell or exit this business, and we are determined to bring value to our publisher and advertiser partners in a highly competitive industry. A competitive marketplace makes online advertising more relevant, lowers costs, and provides more options for publishers and advertisers.

Our responsibility has always been to go further than carbon neutrality by completely decarbonizing our activities. Our goal by 2030: to run all our offices and data centers with renewable energy 24/7

A word on the macroeconomic context. How do you see the short-term future, between inflationary surges, slowing growth, rising geopolitical risks and energy crisis?

This new environment pushes us to find answers more quickly to the challenges we have known for years. Digital is part of the answer. It has deflationary effects on goods and services. Take the example of the advertising market. In ten years, the cost of advertising has fallen by 25% and today offers a much better return on investment than yesterday. This is why everyone is migrating to digital. In other words, the share of advertising in the GDP of advanced economies is lower by a quarter in 2020 than it was in 2010, while spending has increased in volume. Accelerating digitization is a response to inflation.

What role can Google play in the energy transition?

We are a large company that consumes a lot of energy, whether for our data centers or our services. Our responsibility has always been to go further than carbon neutrality by completely decarbonizing our activities. Our goal by 2030: to operate all our offices and data centers with renewable energy 24/7.

My fear is that regulation will slow down innovation. If we had protected calendars, cameras, navigators or GPS too much in the 1990s, we would never have had smartphones. It was terrible for Kodak, but amazing for consumers

How ?

By being very aggressive on renewables. For example, we imposed a certain percentage of renewable energy for the new data center we built in the western United States, which led to the construction of a wind farm next door to supply part of the ‘energy.

What do you see as the main challenge for the next ten years?

How regulation will shape the world. My fear is that it will slow down innovation. If we had protected calendars, cameras, navigators or GPS too much in the 1990s, we would never have had smartphones. It was terrible for Kodak, but amazing for consumers. Let’s find the right balance in a world where digitization will accelerate no matter what. To make our economy more efficient and greener, we will need more integration. See you in ten years to see where we are.

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