Tom Lenard
Ok, good morning. And welcome back to Two Think Minimum. The Technology Policy Institute’s podcast. Today is Monday, November 18th. I’m Tom Lenard, president emeritus and senior fellow at TPI and I’m joined by my colleagues TPI president and senior fellow, Scott Wallsten, and senior fellow Sarah Oh Lam.
Today we are pleased to have as our guest, Nicolas Petit to talk about European competitiveness and in particular, the recent report on the future of European competitiveness, authored by Mario Draghi, the former president of the European Central Bank and the former Prime Minister of Italy.
Nicolas Petit is Chair in Competition Law and head of the Law Department at the European University Institute. He’s also an invited professor at the College of Europe in Bruges. Nick is on special leave from the law school of the University of Liege where he’s been a full professor since 2007. He’s the author of “Big Tech and the Digital Economy: The Moligopoly Scenario” and he is the founder of the Dynamic Competition Initiative, a multi-sided platform interested in advancing the study of competitiveness, industrial policy and innovation. Welcome to the podcast, Nick.
Nicolas Petit
Thank you very much. I’m glad to be with you, Tom.
Tom Lenard
You wrote a recent piece on the Draghi report and on the pro-market blog. So give us a little background on how the report came into being, what was the motivation for it?
Nicolas Petit
Ok. So it’s, it’s interesting to know probably for American friends that Europe has a long term trend of producing reports like these. Every 10 years, we have this sort of, you know, policy, wakeup call that, you know, I would say funnily, but maybe it’s not funny, we would ask an old retired Italian politician to produce. And so we’ve had a monthly report, we had the Letta reports, and now we have the Draghi reports only.
Tom Lenard
Only Italians need apply, is that it?
Nicolas Petit
Well, you know, it’s a good asset for getting the job.
Tom Lenard
Right.
Nicolas Petit
Now, you know this. I’m saying it’s a long, long and structural pattern for Europe because, American readers and listeners may remember this, in I think in 1967 a French writer called Jean-Jacques Servan-Schreiber wrote a very influential book on both sides of the Atlantic called, “The American Challenge.” And the book already back then was making the exact same points as Draghi is making. You know, of course, you know, corrections for the nature of the economy back in the day versus now, you know, no digital, no nothing. But Servan-Schreiber was making exactly the same point, that Europe had a very fragmented political, economic and legal set of systems. And American companies were basically dominating everything that has to do with creating new products and services. And European firms were lagging behind to the detriments of European society leading to, you know, massive delays and weaknesses in terms of prosperity, paying living wages and, and offering nice education prospects for future generations.
So Draghi today in his report is basically sounding the same alarm bell, but with the more I think, nefarious tone. So Draghi himself, I think when he, when he presented his speech in September 2024, pointed out to what you think he called, “an existential urgency for Europe. And he also, he also said that he couldn’t sleep at night since he had written the report. I think he said this thing as a joke, but it was giving him problems to sleep at night. Because if Europe keeps going, the same way, it’s not a given that in 2015, we will be able to manage the levels of public goods provision that we have today, but also maintain our strategic autonomy in a world that is increasingly polarized across large trade blocks.
So this was really a very, very dire and concerning message that Draghi has been sending here. Now, interestingly, let me just add one thing here. The reports of Mario Draghi follows by a few months, a report by another Italian policy, former policymaker Enrico Letta. And the Draghi report, that’s it’s an interesting, weak but strong, I think, data signal here. The report of Draghi has been more influential these days in the policy structure. I think the Letta report was much more diplomatic about the existing policy system then the Draghi report has been. If you read through the lines of the Draghi report it has a lot of diplomatic language in it.
But if you read through the lines, you can see, you know what people may call sort of environments of, you know, years and if not a decades of policy making and how we have gone into thinking about innovation in Brussels, and in the national governance, of course.
Tom Lenard
Do you think the Draghi, I mean, at least looking at it from this side of the Atlantic, Draghi is a kind of almost uniquely prestigious figure in, you know, economic policy making in Europe. Do you think, two questions— first of all, do you think his sense of urgency is more widely shared in Europe? And secondly, do you think the report will have more impact because it’s written by Draghi?
Nicolas Petit
Yes. So on the second question, I think it’s, it’s likely that this report comes with more credibility than any other documents because Draghi, you know, is revered in policy circles as you know, the saver of Europe during the financial crisis. He also comes across Europe as someone who has, you know, considerable private sector experience and also very strong academic credentials. So he’s a very gifted and accomplished professional across all dimensions. So that gives a lot of weight to what he says. He’s also, by the way, he’s also someone who’s not fearful of leaving a position of power as he did in Italy when he, he didn’t become a game prime minister. So it’s, it’s not— he doesn’t come across as someone clings to power because he likes power. So that, I think, gives him a lot of, of credibility.
I think only, you know, the, first segment of your question, it seems to me that the European population understands what’s going on. You know, lots of people across Europe understand that Europe has not created a Google and Apple, a Facebook and Amazon or Microsoft in the past 50 years, everyone sees that. And you know, even though you know, you may think this is a, a sort of irrelevant way of thinking about what the European economy should produce. I think everyone understands, as a citizen shareholder, as I often like to say, that these large companies are basically in the middle of large innovation ecosystems that create long term prosperity. That creates returns to education. And that gives people living wages and the jobs of their, the jobs that they will actually occupy in the future. And I think a lot of people in Europe today understand this very well.
It is, you know, a little bit of a joke that we crack sometimes when we go to Brussels, that the EU has really liked to regulate the big tech companies. But if you ask any policymaker in Brussels, you know, whether they would like to have a European Google or a European Amazon, they would certainly, they would certainly, you know, rush to saying yes, definitively, we want that. So all this talking about big tech is, you know, maybe not so much about big tech, but it’s maybe more about, you know, US big tech, not European, big tech. And I think there is a prudence of truth to that proposition that people would like to see these firms being homegrown, created in Europe and scaled here.
Scott Wallsten
So, this isn’t a, this isn’t a new issue like you, like you said. I mean, the, the book, “The American Challenge,” was 1967. And then, if I remember rightly, the, the idea was that Europe needed to embrace American management techniques or is more focused on the firm? I think. And now they’re still kind of trying to address the same issue, but from a policy perspective and you know, competition analysis. Do you think they’re getting it right, or— is, now, are they— or is this report focused in the right direction or is there something else that is keeping Europe from developing the kind of innovation in companies they want? Although of course, there are exceptions like in pharmaceuticals. But is this report, you know, getting it right?
Nicolas Petit
Yes, I think so, you know, the Draghi report has essentially two legs, right? There’s one leg that is, I would say, descriptive. So which, documents the state of affairs with you know, lots of sources, very deep collection of the evidence, theoretical empirical. And the other leg is the normative recommendations that you find here. I think that the descriptive part is probably, you know, the strongest in the report. And, and this is really what I like in that document, which is that it lays out in very diverse ways, the landscape that we have. And it diagnoses the problems that the European economy is facing. And you know, these problems are problems that people like me have been talking about for a long time. But you know, for some reason, the message, you know, we were maybe too optimistic and, and you know, these messages didn’t really cut across.
But I think these messages are extremely clear. So Draghi is saying that Europe has not produced any— so that Europe has a productivity gap compared to the US. That most of this productivity gap is digital. It’s not really anything else. It’s mostly due to the absence of creation and scaling of large digital technology companies in Europe. And that’s the problems of Europe is that its economy is composed of firms that are trapped in this sort of mid tech segment, like automotive, retail, fashion industry. So Draghi then you know, goes on to say that, you know, Europe needs to create these companies in these high tech segments.
The problem of course is that, this is not a clean slate. So you already have, you know, very large company that are in these segments in which and sometimes actually, Draghi writes, you know, this is lost. I mean, you don’t, we’re not going to create a European search engine or a large maybe e-commerce company in Europe. So we should now try to think more in terms of where is the comparative advantage in the technology, high tech technology segment, that can be a source of large prosperity gains, productivity gains. And Draghi goes on to identify a few of them, like you know, high performance computing, quantum computing, some segments in the cloud industry, or in the chips industry.
Now, besides this one thing that is also very clear, and that’s contrasts with previous reports, like the Letta report, for instance, see that Letta is all about its own. You know, we are not, we don’t have a single markets like America has right? Where you can, you can create a product in California, right? And there will be adoption in in New Hampshire. And you know, it’s going to be very easy to go from one state to the other. In Europe, it’s much more complicated for a whole host of reasons. So Letta was pushing this dimension a lot. Draghi also pushes that dimension a lot.
But on top of the single market, Draghi makes a lot of talking about, does a lot of talking about, business firms, business organizations. So in his opinion, the size of firms is insufficiently small in Europe. And this is a problem because technology adoption, digitalization adoption, correlates very well with large scale and large business size. It’s, you know, if you have small companies in your economy, it’s too expensive to implement these technologies, it’s just too expensive. So you don’t, you don’t have a lot of technology diffusion, which in turn is, you know, they give a sort of channel for prosperity.
So Draghi calls a lot for policies that would allow firms to grow bigger. And you know, these policies are policies which enable coordination and consolidation through M&A activity. So, you know, coordination through all forms of arrangements like R&D partnerships and chasing alliances, but also full scale mergers and takeovers between European companies.
Scott Wallsten
What do you think accounts for the exception industries? Basically, I mean, pharmaceuticals. Basically, where the biggest firms are in Europe and it almost seems kind of counterintuitive because the US doesn’t have many price controls on pharmaceuticals. And so you might expect it to be, you might expect the US pharmaceutical industry to be bigger, but it isn’t. Or at least most of the major firms are in Europe— probably the way to put it.
Nicolas Petit
Yeah, it’s hard to say. I mean, it’s hard to say these companies were mostly homegrown companies. So, you know, we have a very long history of in index segment of industry. So we didn’t lose this, you know, strengths, whereas in digital, all the companies were new, right? So you just, you know, come up with a sort of technological disruption that comes from, you know, a little bit from the sky, right? And so it’s a, it’s a completely clean slate. So I think Europe still enjoys some past dependent advantage in this. The empirical evidence though today seems to suggest that lots of, you know, key discoveries in pharmaceutical are occurring, not necessarily on my side of the Atlantic and that and actually that America is actually financing and subsidizing, you know, gains in long term health for the world’s population, not for Europe. So, you know, it’s not a, it’s not sure that Europe is still leading here.
Tom Lenard
So as you were suggesting before, so one of the major themes I think of the Draghi report is that a merger policy should be made more permissive. That there, I mean, there’s this whole concentration as you said about that the companies are not big enough or don’t have sufficient scale to compete with the American companies or Chinese companies. Is that, I guess it does say that, but it also doesn’t seem to me to go maybe the next step, and recommend creating the conditions for the kind of innovation ecosystem that we have in the US with the venture capital firms, with big firms being able to, you know, small firms being able to develop a product to develop a new product, you reach a certain size, and then get acquired by a big firm. As a matter of fact, there are several things that would, as I read the report, that would make that difficult, you know, for a dominant firm to acquire anybody. So I mean, what do you think? What do you think about that? I mean, it seems to me that’s an important part of the American innovation story.
Nicolas Petit
Yes, Tom. So that’s a good point. I mean, it’s these insights that for merger policy in the Draghi report are really difficult to unpack. So there are very clear statements about what Draghi calls the innovation defense in merger control. And he wants to see an innovation defense in the merger guidelines, which would, you know if we follow what rights would apply across sectors in the economy.
At the same time when Draghi talks about consolidation, so the areas or sectors in which he seems to be calling for a more lax, laxer merger policy. This is very clustered on very specific industries in the report. So he’s stressing out, you know, telecoms markets, right, where we have network operators that you know, are different in every member state. And he wants to see consolidation here. He talks a lot about defense as a possible sector in which he’d like to see more consolidation. But it’s for instance, if you know, if we go to digital platforms, it’s very unclear whether Draghi wants to have this innovation defense play in relation to things like, you know, that people like to call killer acquisitions or in the pharmaceutical sector. Because you know, as we saw with the illumina grail merger prohibition, it’s not clear that Draghi would find this acquisition unproblematic. So it’s really, it’s really hard to see what he has in mind here.
Now, you know, I’m part of the people that read the report saying that, you know, this broad call for increased consolidation and cooperation across technology industry, participants, small and large requires a more innovative and I would say, you know, flexible approach to thinking about small and large firms cooperation, small and large firm spinoffs and reverse M&A and these kinds of transactions.
I think Draghi’s philosophies to, you know, flexibility this entire economic structure and give more freedom to economic agents to merge and de-merge and enter and exit markets through these transactions. But I agree, it’s not very clear.
Tom Lenard
And as I read the innovation defense, correct me if I’m wrong, it involves a commitment to spend a certain amount of money, whatever it is, on innovation, however, that’s defined. And you know, over a certain period of time, that’s basically what it is. And how, and because it seems to me there’s, that certainly is important for innovation, but it’s not the whole thing.
Nicolas Petit
Yeah, that’s right. So this is one topic area that has I think, surprised people in the competition policy community, where most of the— so the traditional remedies to merger transactions are structural remedies, right? So companies want to merge and firm A and firm B want to integrate and you’re gonna ask them to set aside some business assets for purchase by say, firm C or firm D. This is the standard way and then, you know, it’s done and it’s clean and we can move to something else.
Now, Draghi says, oh wow, you know, we could have this innovation defense where emerging firms would basically promise to pledge to make certain types of investments over a period of five years and that would be touch points every year or so, I don’t know, to evaluate whether these promises are met and implemented. And I think, you know, people in the competition policy community, they hate this. I mean, because it’s like, it’s a lot of oversight, and process to create.
So it’s, it’s basically, it’s very, you know, it’s time consuming and I think what Draghi is saying if you read the report carefully, you will see in some lines, it’s a bit hidden. I think what he, what he is essentially saying is that we should basically have just a sort of expose system, right? Where the firms would be free to do what they want and there would be this condition and then in the future, expose, you know, if this is not met. You ask the companies to de-merge if this is met while the companies can just get off. But I think it’s more, it’s more saying let’s not put exante sticks in the wheel. Let’s try to, you know, do that exposed and give more freedom from the get go. I think that’s what he has in mind. Mind you, that this model is a model that’s very strongly advocated by people that like Mariana Mazzucato or Dani Rodrik, who say that, you know, modern industrial policy has to work on what they call conditionality.
So you basically have deals between the government and private economic actors over how to think about their investments. So maybe, you know, the I mean, I don’t know, I didn’t speak with people that wrote that, but I think this is maybe— this could be the inspiration. And then you have to ask yourself, learn lots of questions about, you know, what is the accountability? How are these deals negotiated? And you know, is the government, I mean, who is asking for the deal, right? Who is saying the investment should go on that project and not the other one, right? And how can the government know, you know, which is a good project? I mean, if we know something from the digital industries that these companies are basically this very large portfolio of activities like venture capitalists and they diversify enormously on the assumption that, you know, almost none of them will work.
So now if you have a government process that says we are going to condition investment in one particular activity, I mean, you are actually undermining this type of model of extremely experimental and probabilistic investment behavior.
Tom Lenard
Right. That’s a good point. Yeah, cause certainly companies of a certain size, you know, they internalize what a venture capital firm does and you know, they may only expect 10% of their projects to succeed.
Nicolas Petit
Exactly.
Tom Lenard
Yeah. How— let me ask you a slightly different question. How much do you think what has happened in the US in terms of competition policy in the last four years has influenced what Europe has been doing?
I mean, it kind of, in a sense we’re, you know— the current antitrust team in the Biden administration is following the lead of European antitrust enforcers. At least it seems that way to me. Do you think that reinforces this more strength and more pro-enforcement philosophy or?
Nicolas Petit
Yeah, it’s a good question. The way I’ve been thinking about this is, you know, I mean, this global conversation on antitrust is interesting because, you know, much of the ideas were developed in the US for these new movements, the neo-brandeis movements, and you know, all the Lina can work. So the inspiration is US and the implementation was European, right? So we, we got the DMA in place very fast. As I understand you, the US doesn’t have a DMA and it’s unlikely to have one in the near future.
I mean, you have these cases now in the courts and they are going to take more years to reach you know, a determination and remediation. But so it seems to me that all these movements in the US has given a lot of confidence in Europe that, you know, implementing the rules in a more aggressive way was the right thing to do. So we’ve basically been, I don’t know if I would say benefiting, but we’ve basically, you know, been doing what American scholars were saying about their antitrust rules for European law. You know, one thing that is interesting though is that, a lot of— I, you know, I can talk about the people I know. I mean, you know, a lot of young European scholars having extremely influenced by this, by this scholarship from the US. But sometimes without necessarily realizing that Europe has a very different political economic, you know, has a very different political economy relative to the US. So we have labor market regulation in place in most member states, minimum wage legislation.
You know, the possibility to dismiss someone or fire someone is extremely, extremely curtailed by, you know, things like trade unions and collective bargaining agreements and so on and so forth. Even the rules on, you know, political finance are extremely more, I would say, you know, more stringent in most places in Europe than you can probably see in America or, you know, even if you think about advertisements, I mean, we have regulate— very strict regulation on advertisements in most member states in Europe. And so I always, you know, say to my colleagues that we should not think about antitrust, we have this global conversation, but the world is not flat.
We have lots of guard rails in Europe that don’t exist in the US. And that may justify stricter antitrust enforcement in some areas of the economy. And this cannot be replicated as such in here. And sometimes, you know, I have been feeling very uncomfortable with that global conversation that tends to assume that you can have the same antitrust program across both sides of the Atlantic without really correcting for these very context dependent. It just increases.
Scott Wallsten
So let me ask that same question the other way though. When you see the scholarship in the US and you see the kinds of things that people like Lina Khan or, or even people who are likely to be as in the new Trump administration. Very anti-big tech. Do you look at, do you look at that and think, ok, given the lack of other guard rails in the US, this makes sense or do you look at it and say, oh my God, they’re making the same mistake that Europe made and it’s gonna be a big disaster, or, you know, obviously something in between,
Nicolas Petit
Yes, I would say that one, you know, one area, sorry, let me rephrase this. One reason why I am optimistic with the US pro-enforcement or aggressive enforcement agenda is that this is done under the scrutiny of the courts. And there is a lot of attention that goes into fact finding and so a very balanced and hard process of cross examination and so this process is a good tool to, you know, reach diagnosis that are fine brains and proportionate.
I mean, I don’t want to be ratifying the court system in the US because you know, there are lots of problems with your courts. But this process is disciplined by, you know, time and scrutiny in ways which we don’t necessarily have in Europe, where our process is extremely administrative.
Now we have legislation. This legislation was developed by part by, you know, people in parliament that just wanted to adopt legislation as fast as they could. And so, you know, if you read the DMA, you know, I hate to say this, but if you read the DMA, you can, you know, you can tell that this is a very wooden, rigid and extremely hard to understand legislation which will require months and years of debates and discussion to, you know, make impacts. I mean, this is clearly a tool that will likely not make the impact it was seeking to achieve.
So I think, you know, the what I’m trying to say here is that, you know, if assuming that foreign being more enforcement of antitrust law is the right, is the direction where we should be going in Europe and in the US. I think the US will, the US system, legal system, will make more impact on its targets relative to the European tool. That is much more political in a way, much less accountable, you know, much more the product of implicit bargains within the law making structure, not very explicit calls and very, very technocratic and cryptic, sorry specification of its in its drafting and provisions.
I don’t know if that makes any sense, but that’s my, that’s my understanding.
Tom Lenard
I mean, I think what you just said is assuming that more pro-enforcement is the way we should or Europe should go. But it seems to me, when I read the report, although it’s obviously, you know, ambiguous in various ways, it seems to me the lesson is that is the opposite. That just a general backing off from enforcement might have good effects on innovation, which is presumably the goal.
Nicolas Petit
Yes. So I think your reading is absolutely correct. And if you, if you read the entire Draghi year reports, you will find in places calls to, I think I almost, I can almost quote it, calls to safeguard some sectors from enforcement. So the term used is safeguarded from competition enforcement or protected from competition enforcement. So Draghi in his report highlights specific sectors and or types of practices that should be insulated from antitrust enforcement.
One area of ambiguity though is the DMA again. So in the chapter on consent policy, Draghi has lots of good things. It doesn’t have lots of good things to say about the DMA, but it’s very soft handed on the DMA. So that Draghi says the DMA should be applied and scrutiny of large tech platforms should be the rule. I think Draghi didn’t want to to throw the DMA to the bus by maybe courtesy to the European Commission which has recently adopted this.
And also, I mean, you know, in China, they are, like I was saying before implicitly, I mean, there are specific segments in digital platform industries which are subject to the extreme bottleneck effects in which you may indeed need some control of, you know, monopoly rents or through indirect or direct regulation.
What I think I believe Draghi thinks that this sort of broad attack on platforms is not warranted, right? I think you want to be, you want to be, you want to be tactical here, you want to be ballistic, you want to have petition.
Tom Lenard
So that kind of leads me to the question. So given the fact that you have the DMA and also that you have the GDPR, which some studies suggest has not been beneficial for innovation. And so they’re there and you know, fairly recently adopted. You know, realistically how difficult, yeah, how easy or difficult would it be to make anything more than very marginal changes, you know, in that overall system?
Nicolas Petit
Wow. Yeah, that’s a, that’s a another difficult question. So it seems to me that if we think about innovation, Draghi’s targets are GDPR and the AI Act. These are the sort of two instruments that get his attention in the report.
So for GDPR, it’s clear that this, there is a critic. There is a very strong critic of the infiltration with protecting privacy through this instrument that, you know, Draghi carries in his report.
You know, it’s gonna be very hard to decrease the weight of the GDPR on European economy. It’s been here for a few years now. There is a very strong privacy activist community in Europe that is making sure that this is nowhere to go. So I think where we can make progress is probably on the enforcement of the GDPR. And so Draghi wants maybe to have, you know, a policy that is more lenient towards compliance by small firms and also more harmonized. So less of this, less of these 27 member state enforcement system, you know, which really makes no sense when you think about it.
I think the prospects for the AI Act are better, because it’s not yet been implemented. Plus, unlike GDPR, it doesn’t build on a strong legislative tradition in the member states, right? The AI Act is the first instruments in that space. GDPR was built on a previous directive from the European Union. Which itself is built on, you know, lots of national legislation in place or national legal practices and traditions. So I think there is more prospect for a turning down in implementation of the, of the AI Act relative to GDPR which will not go away.
Tom Lenard
So there are other specific things in the, at least in the competitive section of the of the report, that I’d like to discuss. But I don’t think we have time to discuss all of them. But maybe we can just conclude with a discussion of, you know, what well, kind of what actions do you think will come out of the report? And what, you know, kind of what’s the procedure for, you know, what are the next steps given in the, in terms of taking the report and doing something with it, something concrete with it.
Nicolas Petit
Yeah. So the usual, if history gives advice here, the usual procedure has been that these reports, people talk about them for six months and then forget about them. Hence, you have another new reports, 10 years later by another Italian civil servants, who’s going to ring the alarm once again.
Now, for once, it seems that the procedure is slightly different this time. So if you read the, and this may have to do with the fact that this comes at the same time as the appointment of the new European commission. And also I would say, you know, a shift in the European political landscape that is a little more, you know, to the right.
So, you know, probably certainly not like the US but you know, more towards political forces that tend to, I would say accept the idea that extreme regulation is not the way to go to deliver an innovation economy. And so you know, the reports, the appointment of the new commission, the reconfiguration of the political landscape towards forces that do not fully believe that adding regulation is the way to go to create an environment, conducive to innovation. This gives me optimism that this there will be action. The fear that I have is that this process will be internalized and monopolized by incumbent services from the European administration that will face a very difficult task which in terms of trying to roll back what it had just rolled out.
So I think the prospects that of asking an administration that has rolled out lots of new legislation to roll it back is in itself a very weird exercise. And I cannot really think that even if the institution has to obey to the political instructions given by the citizens, the parliament, and the head of the political leadership of the European Commission. I don’t, I think you still have a lot of resilience and rigidity and past dependence here. So to me, the danger is that this has dependence towards past legislative activity. We limit the range of actions that could make the Draghi reports a reality.
And you know, you can already see this a little bit in, in the talking in there, you know, by senior officials from the European Commission. When they talk about the Draghi report, oftentimes what you’re going to hear if you go to conference is people will tell you, but we’ve been doing this for 10 years. But if that was the case, the tracking report would not be out so that you have this, you know, tendency of, you know, and it’s understandable, it’s just, you know, human nature of people in the administration to tell you.
Well, we are already doing this and of course we are going to do a little more, but I don’t think that’s what Draghi has in mind if you read the report carefully. When Draghi asks the European administration to rethink the way it’s been working and to be bolder, I think.
Tom Lenard
Well, this has been very— let me just ask one more question because I should know this maybe since I’m here in America. But what do you think the big tech firms, which are largely American, think of this report and what will their activity be in terms of either, you know, in this debate?
Nicolas Petit
Yes, that’s, that’s another good question. So I tried to, you know, speak to a diversity of factors. And I think, you know, and I’ve been writing about this, that, you know, these large American tech firms are probably, you know, a good model for us as inspiration about what we would like to build in Europe. So it’s interesting to talk to them and understand how they went about this and how they see the Draghi report.
So, you know, it’s what, let me just go over to your questions through a sort of indirect route, right? So lots of these American large tech companies employ lots of European people, right? I mean I have people that I talked to in these companies that are French or German or British just, you know, like lots of Europeans. And when they are in these firms and they talk about the Draghi report, they talk as of course employees of these organizations, but also as European citizens, right?
And when they talk about it, they say, well, you know, this is good because this is what we’ve been saying. I mean, we see that we’ve seen that from the organization where we work. We see what Draghi is saying. We see that we actually work for, you know, Google and Apple and Facebook, and what have you. But we couldn’t have a job in these non-existing and, you know, companies that work in these industries.
So I think, you know, lots of people in these companies believe that Draghi is making the right description of what’s going on. And you know, that’s, you know, what I heard in, in formal discussions with, you know, many stakeholders, by the way, you know, I think across industry in Europe, not just tech, but I think lots of people in industry completely agree with the findings in the report. They disagree maybe with the policy prescriptions. But I think most of most people in the industry believe that Draghi hit the nail right on the head.
Maybe just, you know, one thing that I want to add here, and it’s again about the DMA, because this is a piece of legislation I work most on.
One of the dangers of the DMA is that it is increasing the costs of cooperation between large and small firms, you know, by trading. So we have a set of large firms, the gatekeepers and the DMA, you know, unlike its stated ambition is actually increasing the costs of cooperation of with, you know, small and mid tech companies in Europe.
It’s limiting the incentives to do it because there’s less profits to entering into cooperation with other firms because then you are subject to all sorts of non-discrimination and fraud and whatever types of regulatory requirements.
And so by doing this, I don’t think the DMA is necessarily going in the right, in the right direction and the direction that Draghi is going. Which is, to reinforce cooperative ecosystems of innovation, not raising the cost of cooperation between large and small firms. So I, you know, I think, you know, maybe again on that point, the big tech companies probably find the Draghi reports useful and things like the DMA unuseful.
Tom Lenard
Ok. Well, we, I really appreciate you taking the time to do this and because it is always interesting to find out more detail, what’s going on in Europe and what the thinking is there. So I appreciate you coming on, a lot. And when are you coming to the US next?
Nicolas Petit
So I’ll be coming, I’ll be coming in in January to Berkeley. And so I’m gonna stay one week in the Bay Area, I think. And then I’m, I’m going to DC and Chicago in April.
Tom Lenard
Oh, ok. Well, when, when you’re in DC, maybe we can get together.
Nicolas Petit
So, are you, are you based in DC? Yourselves?
Tom Lenard
Yes. Yes. Yes.
Nicolas Petit
Ok. I’ll write myself a note about this.
Thank you so much. It was very nice for you to reach out and get me on your podcast. I hope I didn’t speak too much.
Scott Wallsten
Well, just fascinating. Thank you so much.
Nicolas Petit
You’re very kind.
Tom Lenard
Take care.
