I visited Brussels last week to take part in a panel discussion on
Competition and Innovation organized by the European Competition
Commissioner. Brussels is gorgeous: one of the main problems for
companies in Europe is getting people to move to where jobs are. If
other places are as pretty and livable as Brussels, I am not surprised
people do not want to move.
The meeting took place the day after European leaders worked out their
plan for bailing out banks, so Francois Fillon (the French Prime
Minister) could not attend – saving western capitalism is an
acceptable excuse for missing most meetings – but Neelie Kroes,
the Commissioner for Competition, was there, despite being very involved
in setting the rules for what governments could not do.
That was my first shock: Competition policy in Europe is a lot about
stopping governments from helping companies unfairly. I do not think
that America has any rules on whether a state can help out local
industry – state governments do not give money to companies, or at
least it does not seem to be a matter of perceived unfairness between
states. HP does not complain that Motorola is being given sweetheart
deals by Illinois.
My second shock was that there was an assumption that government
needed to be involved in setting innovation in motion. Anne
Lauvergeon, the CEO of Areva, the French company that runs nuclear
power plants spoke, and her attitude was representative; she suggested that
innovation was best achieved through large companies setting up a
joint venture with the support of multiple governments and possibly
some relevant transnational organizations. I cannot think of anything
further from the Silicon Valley approach, which is to get a more
efficient nuclear reactor running in your garage and run up Sand
Hill road to get VC funding to commercialize it.
My third surprise was how calm, laid back, and happy all the people
were. Europe seemed to run at a different pace than America. The
politicians were jovial and apt to drift into reminiscences of how
they had saved their countries’ financial systems when their banks had
failed, a strong contrast to US congressmen I have met who were always
scheduled up to the hilt, and are always focused on who to meet next,
and seem to have time only for people who have (or definitely will)
give them campaign donations.
The industrialists were remarkably forthright about their industries, with none of the usual marketing speak that US executives are expected to have. The CEO of TNT, Peter Bakker, spoke of how introducing competition into postal delivery would mean the loss of half the current jobs postal workers have, how wages for the rest would be lower, how the system would be focused towards industry rather than residential delivery, and how deliveries will be reduced to 3 a week. US CEOs do not tell people bad news, and definitely do not do it in as clear and forthright a manner.
After visiting I realize that Europe is a very different place for
industry, and it is no wonder the kinds of companies that start, and
succeed there, are very different. The ecosystem is much more
supportive of companies, and the pace of life and the associated
stress is much less. On the other hand, Silicon Valley’s dog-eat-dog
world is a much scrappier place, where stress is higher, disaster can
occur at any time, but the possibility of making it on your own, doing
it your way, and imposing your will on the marketplace, exists.
When I spoke I tried to give a sense of how America, and in particular
the West Coast, enables innovation. People seemed interested, but I do
not think that one ten-minute talk was enough to change the course of
a continent. I also spoke about other threats to competition, in
particular the problems that occur when existing monopolies interact
with government-granted monopolies (such as copyright). The
interaction of two monopolies (at different levels) can have much more
deleterious effects on innovation. For example, if Apple, who has
gained near monopoly position in online music sales (mainly though
making better products) bought a major record company, then they alone
could offer the full selection of music, making all other online
stores unable to compete. Without their natural monopoly it would not
make sense to give up the revenue from other stores, so they would not
deny other online stores the tracks, but as they have a near monopoly
it would make economic sense to only sell their music in their stores.
This differs from most vertical integration where a store sells its
own brand of goods, as for almost all goods there are other
manufacturers who produce products that are substitutable. In the
case of copyright, the government has granted a monopoly so that other
people cannot make a substitutable replacement – only Jive can produce
Britney Spears tracks.
This issue is important for Cuil, as our mission is to give access to
the broadest selection of information possible – this is why we have
indexed more of the web than anyone else. Developments where large
firms could wall off significant sections of information through
copyrights would prevent Cuil, and all other competitors, from
offering access to all the world’s information. This is already an
issue for us in some media types – for example a significant amount of
online video is hosted, not in individual web servers, but in
centralized respositories such as YouTube (YouTube does give
permission for search engines to index it – Thanks Larry – but the
danger of the concentration of market power with substantial copyright
portfolios remains).
Jwav3 · Nov 2, 06:03 PM
“government needed to be involved in setting innovation in motion.”
lol, how absurd. It’s not even a matter of opinion they are just dead wrong. One would think that type of thought limitation would place an anchor around them..
Chris Downing · Nov 3, 02:51 AM
I’ve found this is a real problem for USA business people. In europe we take a more holistic approach to business and life. Whereas in the USA people seem (to us in Euraope) to toil in the hope that one day, if they want it enough, they will become rich and successful, we take (to us at least) a more realistic approach that there are forces we cannot control and maybe we’ll become fairly rich and moderately successful if we want it enough. We’d say we are realistic, you guys would say we have an attitude problem. We’d then say you’re in denial about the reality of everyone in the USA becoming hugely rich just cause thay want it a lot. And then we’d both say, “Whatever!”
The main issue is about believing that Britain and the USA speak the same language – whereas in fact these two countries are very different in many ways – and Europe must be the smae as the USA – after all most Americans have European pedigree. (Don’t forget that your pedegree is made up of the poeple who got up, left and had the guts to start over in a new World – Europe is made up from the poeple who stuck with what they knew – however bad it got.)
Shekhar · Nov 3, 10:22 AM
Apologies to post this off the topic comment here. The candidate post for this comment would have been “Power Features” post by Heston. But there the comments are closed.
There is where I have been cribbing constantly about my blog not showing up for precise keywords like – shekhar govindarajan blog. But voila, just noticed, that it is showing up now against these keywords.
Updated my blog post to claim the same. :-)
Have you guys done some changes recently ? If yes, please announce it. I’m sure many more would be interested.
Or is it the result of “We’re working to smooth things out” (as said by Heston) ?