Will tech companies pay Europe?

Hi, it’s Jillian. The European Commission wants tech companies to pay their “fair share” for internet infrastructure. But first...Today’s mu [View in browser]( [Bloomberg]( Hi, it’s Jillian. The European Commission wants tech companies to pay their “fair share” for internet infrastructure. But first... Today’s must-reads: • Apple has begun [making its new iPhone in India]( sooner than anticipated • A 17-year-old teenager in England has been charged with [computer misuse]( not long after a spate of high-profile breaches • Walmart is making its first move [into the metaverse]( Pay to hit play Two and half years ago when we were all holed up in our homes, the European Union’s Internal Market Commissioner Thierry Breton had a major concern: The internet would be overloaded. During Covid-19 lockdowns, people were spending far more time on the internet, Zooming all day and watching Netflix all night. So Breton picked up the phone and called Netflix Inc. Chief Executive Officer Reed Hastings. Breton’s wish—which Hastings quickly complied with—was for the popular streaming site to decrease its video quality to allow more bandwidth for other sites. For two years, this seemed like the end of the story. But as companies like Netflix and YouTube would come to realize, it was just the beginning. European officials now want big tech companies to be [held responsible for the costs of the traffic they generate](, as my colleague and I reported Tuesday. Breton and competition chief Margrethe Vestager this past spring began openly talking about how they’re interested in making companies like Google and Meta pay their “fair share” to help telecom operators afford the next generation of internet infrastructure. Just saying the EU was looking into the issue has caused panic. Tech companies’ arguments boil down to three things: 1. It’s users—not the companies—that generate the traffic. 2. They do invest in infrastructure including data centers, underwater sea cables and server boxes. 3. While they make use of telecommunications industry groundwork, aren’t their products the reason that consumers pay for Wi-Fi and TV in the first place? Tech defenders often write off rising pressure to pay for connectivity as a product of lobbying from the European Telecommunications Network Operators’ Association. The industry group, ETNO for short, published a report this spring arguing that streaming sites and big tech should chip in some of the 28 billion euros ($26.9 billion) that telcos plan to spend ripping up streets and installing phone towers to make 5G and fiber a reality. Officials I’ve spoken to argue against this, with one saying Breton was looking at this idea back in early 2021. But there’s no clarity around how to actually make big tech pay. Would companies give money directly to telcos based on the amount of data they use? Would they pay into a fund for networks to use? Or would the technology and telecommunications companies be forced to negotiate deals? Some policymakers dream of just having a few operators across the union like the US. But telco operators’ long-held desire to consolidate has gone nowhere. This could increase profits, but would also reduce the number of operators in the continent. And with inflation and energy bills so high in Europe, the European Commission is unlikely to do anything that risks raising people’s Netflix bills too. When I sat down with Breton recently he suggested, essentially, that everyone in Brussels calm down. The issue is “probably pushed by lobbyists because it gives them some jobs,” he said. Breton said the EU will take time to create a thoughtful and responsible proposal after proper consultation early next year. Officials will determine what “we need for our infrastructure to be able to sustain and to support our digital space.” A full-fledged proposal isn’t likely until some time in 2023. Yet the commission is starting to run short on time. European elections are coming in 2024, meaning the EU’s executive arm has roughly a year left to make a proposal before its members become lame ducks. Even so, it could take years for the various players involved to solidify their positions. The likely outcome: The issue will continue to simmer for a long time to come. There will be more lobbying, more freakouts, and many more talks before the EU figures out what tech companies “fair share” actually is. —[Jillian Deutsch](mailto:jdeutsch24@bloomberg.net) The big story South Korea said the International Criminal Police Organization requested that law enforcement worldwide work to [locate and arrest Terraform Labs co-founder Do Kwon](, who faces charges related to the $60 billion wipeout of cryptocurrencies he created. What else you need to know Amazon will hold a second Prime Day sale on Oct. 11 and Oct. 12 to boost sales among cost-conscious consumers, who are expected to start their holiday shopping [even earlier this year](. TikTok faces a hefty privacy fine in a UK [children’s data probe](. Once-hot fake meat sees its sales slide on price concerns and for being [too “woke](.” Join Bloomberg Live in London for the [Bloomberg Technology Summit]( on Sept. 28 to see Europe’s business leaders, policymakers, entrepreneurs and investors explain how they’re adapting to this new environment—and discuss solution-based strategies. Follow Us More from Bloomberg Dig gadgets or video games? [Sign up for Power On]( to get Apple scoops, consumer tech news and more in your inbox on Sundays. [Sign up for Game On]( to go deep inside the video game business, delivered on Fridays. Why not try both? Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights.​​​​​​​ You received this message because you are subscribed to Bloomberg's Fully Charged newsletter. If a friend forwarded you this message, [sign up here]( to get it in your inbox. [Unsubscribe]( [Bloomberg.com]( [Contact Us]( Bloomberg L.P. 731 Lexington Avenue, New York, NY 10022 [Ads Powered By Liveintent]( [Ad Choices](