Brussels is once again flexing its regulatory muscles. In its latest intervention in the technology market, the EU has dramatically blocked Amazon’s takeover of iRobot, the firm behind the Roomba automatic vacuum cleaner. Brussels bureaucrats might enjoy lapping up praise from antitrust enthusiasts across the pond for ‘taking on big tech’, but they must resist becoming drunk on power.
The EU’s insistence on centralising ever more lawmaking authority in their own hands looks set to backfire. By overriding them at every turn and making increasingly reckless market interventions, Brussels risks pushing member states’ frustration to breaking point. European Parliament elections in June will be just the start.
When the European Commission revealed it intended to block Amazon’s plan to buy iRobot, Amazon terminated the deal. As a result, iRobot announced it was scaling back its plans to invest in research and development, cancelling innovation in new product lines including lawnmowers and air filters, and firing almost a third of its employees. Amazon and iRobot are both American companies, but EU regulators have become so powerful on the world stage that their intervention was enough to kill this $1.4bn deal.
Even the most generous interpretation does not lend credibility to the European Commission’s reasoning behind this decision. There was no good reason to block the merger. The EU says it was concerned Amazon could, if it wanted to, monopolise the robotic vacuum market by kicking other sellers off Amazon.com and only selling iRobot products.
It’s a far-fetched hypothetical argument which doesn’t stack up against any common-sense interpretation of competition law. iRobot was struggling financially. Amazon’s injection of cash would likely have strengthened it against its rivals, making the market more competitive, not less. But with the deal dead, iRobot’s survival looks uncertain.
The consequences of hapless interventions like this go far beyond the robot vacuum market. Brussels is sending out a bat-signal to the world that Europe is closed for business. Blocking legitimate mergers on spurious grounds is a great way to encourage investors and innovators to set up shop elsewhere.
Tech founders want to know they can one day sell their business to a wealthy buyer. The EU is undermining that path. As the App Association puts it, ‘this possible limitation becomes a barrier to exit, and for [entrepreneurs], a barrier to acquisition equates to a barrier to entry.’ With Europe turning away investment and innovation at the door, is it any wonder the US so comprehensively dominates the technology industry, or that American economic growth leaves the EU in the dust?
The Amazon-iRobot verdict is just the latest in an onslaught of new tech regulations coming out of Brussels. Companies wanting to do business in Europe must now also contend with so-called ‘right to repair’ legislation, new laws around broadband, and fresh patent rules, not to mention the mammoth AI Act, which the EU boasts is a world first. Brussels says it wants to uplift a new generation of European startups, but its actions tell a different story.
The regulatory avalanche doesn’t stop with technology. From the environment to immigration to tax to health, the EU is expanding its remit on several fronts at once. The pretence of being a trade bloc dissipated long ago. The EU is now a superstate, shamelessly seizing policymaking power from national governments’ hands. Each of the 27 EU member states has its own institutions which are perfectly capable of setting policy in these areas, but Brussels doesn’t want to know.
The EU’s regulatory expansionism knows no bounds. There is no sacred policy area where Brussels will step back and respect the sovereign right of member state governments to make decisions on their voters’ behalf. Instead, through sweeping diktats, Brussels casts Europe’s governments aside in favour of its own bureaucracy. Before long, the EU’s regulatory landscape will look a lot like the USA, with state legislatures left impotent against the almighty power of the federal government – except Europe won’t have America’s economic growth, nor anything as untidy as a democratic presidential election.
The European superstate is failing on all fronts. Its power centralisation is out of control and its policymaking has abandoned all pretence of following the evidence, instead lurching for virtue-signalling which compromises Europe’s economic growth and the rights of Europeans, as in the Amazon-iRobot case. Member state anger is palpable, with Identity and Democracy groups polling strongly in the run-up to June’s parliamentary elections and the German AfD, one of Europe’s largest populist parties, calling for a referendum on Germany’s EU membership for the first time.
Brussels can sense the tide changing direction. Instead of changing course, it is doubling down. The EU threw member states a bone by rolling back new pesticide laws in the wake of farmer protests across the continent, but it didn’t make a dent in the polls. Europe is heading for an almighty stand-off between its democratically elected national governments and its power-hungry superstate. It won’t be pretty.
Jason Reed is a policy writer for media outlets around the world. He tweets @JasonReed624